Draft Supplementary Planning Guidance Affordable Housing

BOROUGH OF POOLE

LOCAL ECONOMY OVERVIEW GROUP

SPECIAL MEETING 22 SEPTEMBER 2003

DRAFT SUPPLEMENTARY PLANNING GUIDANCE

AFFORDABLE HOUSING

1Matter for Consideration

1.1 Draft Supplementary Planning Guidance on Affordable Housing.

2. Recommendation

2.1 That Members consider the Draft Supplementary Planning Guidance prior to their recommendation to cabinet that this document be approved for public consultation.

1. Background

3.1Poole Local Plan was adopted in August 1998. A review of the Local Plan commenced immediately to take it forward to 2011 to be in line with the Structure Plan.

3.2The Poole Local Plan First Alteration: Revised Deposit Plan was published in November 2001. Policy H2a of the Revised Deposit Plan places a requirement on developers to provide affordable housing on suitable sites.

3.3Draft Supplementary Planning Guidance was prepared in support of this policy, and following approval by the Environment and Prosperity Policy Advice Group, was published for public consultation in October 2001.

3.4The Revised Deposit Plan and the draft SPG were placed on deposit together for consultation from November 2001 to January 2002 at the Civic Centre and in local libraries. Representations to the draft SPG with proposed responses, were reported to the Environment and Prosperity Overview and Scrutiny Group in October 2002.

3.5A Public Local Inquiry was held from October 2002 to January 2003 into the objections to the Poole Local Plan First Alteration Revised Deposit Plan. The Inspector's Report, published in April 2003, recommends that modifications be made to Policy H2a, as highlighted in the previous committee item (part A of the Statement of Decisions and Modifications Committee Report). It is, therefore, necessary to update the draft SPG accordingly to supplement the newly worded policy as proposed. The principal changes being:

• To amend policy H2a Affordable Housing to state that negotiations for affordable housing will be to achieve 40% provision rather than a minimum of 40%
• To clarify where social housing grant will be made available
• Include the payment table for 2003/2004 on the basis of which the developers’ contributions are calculated and update the examples of the calculations for developer contributions
• Update the house price figures to 2003
• Include the level of developers’ contribution for shared ownership provision.

1. Draft SPG on Affordable Housing
   

4.1 The updated Draft SPG on Affordable Housing is attached for Members inspection.

1. The next stage

5.1Following agreement by the Overview Group and authorisation by Cabinet, the draft SPG on Affordable Housing will be put out for public consultation for a period of 6 weeks in parallel with the statement of decisions and modifications to the emerging Poole Local Plan First Alteration. Representations and proposed responses will subsequently be reported to this Overview Group together with a recommendation to move to adoption.

DAVID RALPH

Head of Strategic Planning Services

If you have any queries on this report, please contact

Sue Thurley, Strategic Planning Services, on 01202 633329

Background Papers

Poole Local Plan First Alteration PLPR14 Revised Deposit Plan, November 2001

Inspector’s Report, April 2002

Statement of Decisions and Modifications to the Revised Deposit Plan, PLPR 21

DRAFT SUPPLEMENTARY PLANNING GUIDANCE AUGUST 2003

AFFORDABLE HOUSING

Delivering Affordable Housing through the Planning System

1. Planning Background

1.1 ‘A community’s need for affordable housing is a material planning consideration which may properly be taken into account in formulating development plan policies and deciding planning applications’. Circular 6/98

1.2 The Government first set out guidance on planning for affordable housing in 1991 in Circular 7/91. This was consolidated in March 1992 in Planning Policy Guidance Note 3 on Housing. PPG3 set out the Government’s view on how planning policy could be used within the development plan process to ensure the provision of affordable housing. Planning policy was initially directed towards the provision of affordable housing in rural areas but was extended by PPG3 to urban areas.

1.3In March 2000 a new Planning Policy Guidance Note3: Housing was published stating that the detailed guidance for planning and affordable housing remains in Circular 6/98 Planning and Affordable Housing. The guidance has amended the reference to what constitutes a material planning consideration to include a community’s need for a mix of housing types, including affordable housing. Where a local panning authority has established that there should be an element of affordable housing provided as part of a proposed development, there is a presumption that the provision should be made and failure to do so could justify refusal of planning permission.

1.4A Consultation Paper on a Proposed Change to Planning Policy Note 3 Housing entitled Influencing the size, type and affordability of housing was issued by the Office of the Deputy Prime Minister in July 2003. It is intended that this guidance will replace the relevant part of PPG3 and Circular 6/98. The Consultation clarifies that failure to comply with development plan policies on affordable housing could justify refusal of planning permission. It also states a presumption that affordable housing should be provided on the development site rather than off-site or through a financial contribution.

2. Definition of Affordable Housing

2.1 Circular 6/98 defines affordable housing ‘to encompass both low cost market and subsidised housing (irrespective of tenure, ownership - whether exclusive or shared - or financial arrangements) that will be available to people who cannot afford to rent or buy houses generally available on the open market’.

2.2 The local definition adopted by the Council defines affordable housing as both subsidised affordable low cost owner occupation and affordable rented accommodation. Affordable low cost home ownership equates to a household on an average household income being able to purchase a 50% equity share in the property. Rented accommodation provided as affordable housing should not exceed target rents derived from a formula based on 30% of the relative social housing property value at January 1999, 70% based on relative local earnings and including a factor for bedroom numbers. The formula follows the DTLR social rent reform calculations.

3. The Scope of Planning

3.1 The relationship between house prices and local incomes dictates that many households are unable to gain access to housing on the open market. The availability of affordable housing has been reduced by a number of changes in housing legislation. The inability of Local Housing Authorities to build council houses, the loss of stock through the ‘right to buy’, and declining financial support from the government for social housing has reduced the role of the public sector in funding social housing and placed the responsibility with the private sector through provision by Registered Social Landlords (RSLs) directly, and indirectly through the planning system.

3.2Government guidance in Planning Policy Guidance Note 3: Housing states that one of the Government’s objectives is to plan to meet the housing requirements of the whole community, including those in need of affordable and special needs housing. A community’s need for a mix of housing types, including affordable housing is a material planning consideration which should be taken into account in formulating development plan policies and determining planning applications. It is important to achieve mixed and inclusive communities with a choice of housing and lifestyle. Local Plan policies should define what is affordable housing, how many units should be provided and where. Where the Local Planning Authority has decided that an element of affordable housing should be provided as part of a proposed development then there is a presumption that this should happen and failure to do so could justify refusal of planning permission.

3.3Circular 6/98 Planning and Affordable Housing gives greater detail on the contribution which planning can make towards achieving affordable housing. The Circular sets out the site size and physical criteria for assessing the suitability of a site for affordable housing as detailed later at Section 7 in this Guidance. In addition, the Circular considers the economics of provision whereby the costs associated with development and the realisation of a range of planning objectives will be relevant in negotiations. Details as to the type of affordable housing which should be built should reflect local housing need and should be a matter for discussion and agreement between the parties involved. The provision of affordable housing on site is the preferred mechanism. However, where a site is suitable for affordable housing but both the local planning authority and the developer consider that it would be preferable that a financial or other contribution should be made towards the provision of an element of affordable housing on another site then this would provide an alternative to provision on site.

3.4 Planning policies must ensure that affordable housing is occupied by those who need it. The involvement of a Housing Association, as approved by the Borough of Poole, providing housing for rent or shared ownership will ensure control over the occupation in the future. Where there is an identified need for affordable housing and a requirement for affordable housing has been specified on a site then secure arrangements must be set up to ensure that the housing will remain as affordable housing.

3.3Planning applications for housing, like all other planning applications, should be decided in accordance with the policies of the development plan unless other material considerations indicate otherwise.

4. Housing Needs Survey

4.1 A Housing Needs Survey conducted in Poole in June 2001 provides an estimate of the level of affordable housing need in Poole for the next five years. The Survey has been conducted in line with the DTLR guidance: Local Housing Needs Assessment: A Guide to Good Practice July 2000.

4.2The DTLR guidance defines what is meant by housing need and this indirectly affects what constitutes affordable housing. Affordable housing is designed to address the identified housing need. The DTLR definition of housing need is: ‘Housing need refers to households lacking their own housing or living in housing which is inadequate or unsuitable, who are unlikely to be able to meet their needs in the housing market without some assistance’.

4.3The survey includes 4 main assessments:

1. Backlog of existing need

2. Newly arising need

3. Supply of affordable units

1. Overall affordable housing requirement.

Summary of housing needs situation

(per annum 2001 – 2006)

4.4 The survey deduces that there is an existing requirement for 256 affordable homes per annum. In addition, through household formation and household moves there will be a further 1,148 households falling into housing need per year over the next five years. This gives a total requirement for 1,404 affordable homes per annum. It is estimated that there will be a supply of dwellings from relets at a level of 437 dwellings per annum leaving an estimated annual shortfall of 967 dwellings.

4.5 The Housing Needs Survey found that 75% of newly forming households could not afford to rent or buy market housing. For housing to be affordable to significant numbers of households in need, housing costs will need to be considerably below market levels.

4.6 Survey evidence suggests that a proportional target of 40% with a site threshold of 15 dwellings is justified given the level of need in the Council area. This target will be the minimum element for negotiations for affordable housing on suitable housing sites.

4.7 It has been identified in a study conducted for the South West Regional Planning Conference, Government Office for the South West and the Housing Corporation SW that Dorset is the County with the greatest need for social housing in the Region and Poole has the lowest affordability in Dorset with only 34% of new households able to buy homes. Regional Planning Guidance for the South West RPG10 at Policy HO3 sets a provisional indicator of 6,000 to 10,000 affordable units a year for the South West which represents 30-50% of the total annual housing provision.

4.8 A range of indicators including house prices and rents, incomes and the supply of affordable housing both social and low cost is being monitored to indicate changing housing need and to allow comparisons with neighbouring authorities.

5. Local Plan Policies

5.1 This SPG supplements policies in Poole Local Plan First Alteration Revised Deposit Plan as modified following a Public Local Inquiry. The policies relating to affordable housing read as follows:

“H2aAFFORDABLE HOUSING

AN ELEMENT OF AFFORDABLE HOUSING WILL BE SOUGHT TO MEET LOCAL NEEDS ON ALL SUITABLE HOUSING DEVELOPMENTS OF 15 OR MORE DWELLINGS OR RESIDENTIAL SITES OF 0.5HA OR MORE IRRESPECTIVE OF THE NUMBER OF DWELLINGS.

ON THESE SITES THE COUNCIL WILL NEGOTIATE TO ACHIEVE AN AFFORDABLE HOUSING PROVISION OF 40% ACROSS THE RANGE OF HOUSING ON THE SITE HAVING REGARD TO:

1. THE SIZE OF THE SITE;
2. THE ECONOMICS OF PROVIDING AFFORDABLE HOUSING;
3. THE EXTENT TO WHICH THE PROVISION OF AFFORDABLE HOUSING WOULD PREJUDICE OTHER PLANNING OBJECTIVES TO BE MET FROM THE DEVELOPMENT OF THE SITE; AND
4. THE MIX OF UNITS NECESSARY TO MEET LOCAL NEEDS AND ACHIEVE A SUCCESSFUL DEVELOPMENT.

THE HOUSING PROVIDED UNDER THIS POLICY SHOULD ALWAYS BE AVAILABLE TO MEET LOCAL NEEDS. TO ENSURE THAT THIS IS SO, WHERE A REGISTERED SOCIAL LANDLORD IS NOT INVOLVED THE COUNCIL WILL EITHER IMPOSE APPROPRIATE PLANNING CONDITIONS OR SEEK TO NEGOTIATE A PLANNING OBLIGATION.”

H3 AFFORDABLE HOUSING - DETAIL

DEVELOPMENT OF AFFORDABLE HOUSING WILL BE ACCEPTABLE ONLY ON LAND APPROPRIATE FOR RESIDENTIAL USE. THE DESIGN, LAYOUT, PARKING GUIDELINES AND INFRASTRUCTURE WILL COMPLY WITH THE REQUIREMENTS FOR ALL HOUSING DEVELOPMENT.

H4 AFFORDABLE HOUSING - GREEN BELT

DEVELOPMENT OF AFFORDABLE HOUSING WILL NOT BE PERMITTED WITHIN THE GREEN BELT UNLESS IT INVOLVES THE SUBDIVISION OF EXISTING DWELLINGS AND COMPLIES WITH POLICY NE12.

6. Affordability Gap

6.1 PPG3 states that local plan policies should define what the authority considers to be affordable in the local plan area in terms of the relationship between local income levels and house prices or rents for different types of households. Policy H2a in Poole Local Plan First Alteration Revised Deposit Plan indicates that the affordable housing should be for those households whose incomes do not enable them to obtain adequate housing on the open market.

6.2 A general formula for estimating what constitutes a price which is affordable to households with average earnings, or mortgage affordability, is as follows:

average annual earnings x 3 = affordable price.

(this calculation is based on mortgage lenders being willing to lend 3 times the household’s income).

6.3In Poole the Housing Needs survey estimated the average household income excluding benefits was £21,798 per annum. The average house price in Poole in June 2003 was £202,378 as provided by Land Registry data. The average is distorted by some exceptionally high priced properties in Poole but the average prices for semi-detached houses was £156,690 and for terraced properties £165,175.

6.4 £21,798 x 3 = affordable price of £65,394. Thus the average earnings of a household in Poole will be sufficient to purchase a house at £65,394 which is £136,984 short of the average price of a house in Poole. An annual household income of £67,459 would be required to purchase the average priced house in Poole. The price of the cheapest property for sale in Poole at September 2003 was £74,950 for a one-bedroom studio flat (rightmove website). An annual household income of £24,983 would be necessary to purchase the cheapest property. The Housing Needs Survey shows that 55% of the households had annual incomes of under £20,000. The mismatch between earnings and house prices creates the affordability gap and, with a shortfall in the provision of subsidised housing, the need for affordable housing.

7. Suitability of Sites

7.1 In considering applications for residential development the suitability of the site for affordable housing will be assessed. The identified affordable housing need in the area will be estimated from data collected in the Housing Needs Survey.

7.2 The criteria for suitability of a site for affordable housing are:

1. the proposed development should be in conformity with the policies and proposals of the Local Plan
2. there is an identified need for affordable housing in Poole
3. a housing development of 15 or more dwellings or residential sites of 0.5 hectare or more, irrespective of the number of dwellings
4. the development should have proximity to local services and facilities and access to public transport
5. consideration of any particular costs associated with development of the site
6. consideration as to whether the provision of affordable housing would prejudice the realisation of other planning objectives which need to be given priority in the development of the site
7. the ability to achieve a successful housing development in terms of the mix of affordable housing types and the proportion of affordable houses and their delivery and management.

7.3Reference to dwellings includes all forms of housing including flats.

8. Planning Application

8.1 The procedures for the achievement of affordable housing apply to suitable sites for residential development. Each site will be considered as to its suitability for affordable housing and the need for such housing in Poole.

8.2 Developers should enter into negotiations with the Planning Authority prior to taking an option or purchasing land for residential development. In this way the developer will be able to negotiate land values with the landowner in the knowledge that there may be a requirement for affordable housing. However, in practice, many sites will already have options on them or will be in the developer’s ownership and the negotiations will have to commence with pre-application discussions and the submission of a planning application.

8.3 On receipt of an application for residential development on a suitable site, the developer will be notified of the Local Plan policies regarding affordable housing and invited to discuss the application with planning and housing officers.

8.4The proportion of affordable housing to be included on any suitable site will depend principally on the local need for affordable housing but will also take account of the developer’s requirements, site characteristics and market conditions. The Housing Needs Survey of July 2001 suggests that an affordable housing target of 40% on suitable sites is justified. The need to achieve a successful housing development in the mix of housing types, level of affordable housing and management of the affordable element will be important issues. The type of affordable housing to be built should meet the need for such housing in Poole.

8.5 Planning applications will be considered in the normal way taking into account the scale, design and layout of the residential development but the inclusion of affordable housing will be material in determining the application. Failure to provide affordable housing on a suitable site could justify the refusal of planning permission.