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Affordable housing exemption could lead to loss of thousands of homes

Words: Laura Edgar
Housing / Shutterstock_141093886

The Local Government Association (LGA) says communities across England could have missed out on thousands of homes if the government’s proposed planning reforms had been in place over the past five years.

Specifically, removing the requirement for developers to build affordable homes on small sites is being consulted on and is set out in the government’s consultation Changes to the Current Planning System, which was published as part of the white paper Planning for the Future.

The consultation for the former has now closed.

It proposes “temporarily lifting the small sites threshold below which developers do not need to contribute to affordable housing, to up to 40 or 50 units to support SME builders as the economy recovers from the impact of Covid-19”.

The LGA, the representative body for council in England and Wales, asked market analysis firm Glenigan to consider what would have happened had this been applied between 2015/16 and 2019/20. During this period, 119,505 private homes were on sites of 10 to 49 homes. 

According to Glenigan, based on an average of developers being required to make 25 per cent of new housing affordable, this would have resulted in the building of 29,876 affordable homes being delivered for either rent or purchase. 

Under the government’s latest proposals, these homes would not have had to be included in developments.

The LGA says it is concerned that removing this requirement for affordable homes to be delivered would see the total amount of affordable homes delivered in England decline. In addition, David Renard, housing spokesperson for the LGA, warns that the measure “risk[s] allowing developers to game the system by only putting forward schemes for fewer than 40 or 50 homes, and so avoid building any affordable homes at all”.

Regional breakdown - Homes built 2015/16 to 2019/20 (and affordable housing provided based on 25% estimate)

  • East Midlands - 11,764 (2,941)
  • East of England - 14,350 (3,587)
  • London - 11,975 (2,993)
  • North East - 5,442 (1,360)
  • North West - 15,680 (3,920)
  • South East - 21,351 (5,337)
  • South West - 15,028 (3,757)
  • West Midlands - 12,945 (3,236)
  • Yorkshire & the Humber - 10,970 (2,742)

This would see proposals put forward of 39 or 49 or fewer homes respectively, on sites that have the capacity to take more in order to “avoid affordable housing requirements”

For example, the analysis found that between 2015/16 and 2019/20, Elmsbridge Borough Council would have delivered 271 homes rather than the 486 homes either built, under construction or granted planning permission. 

The LGA says this contradicts the government’s ambitions to reform the planning system so it can “deliver at least as much – if not more – on site affordable housing as at present”. The LGA wants councils to be able to determine local affordable housing thresholds, rather than them being decided centrally, as this “fails to take into account the wide variation in housing markets across the country”.

Further, to help address the housing crisis, the LGA wants the government to use the forthcoming comprehensive spending review to empower councils so that they can build “significantly more” council housing and increase the supply of low-cost homes to rent and buy across the country.

Renard said: “Proposals to exempt developers from having to build affordable housing on certain small sites are of huge concern.

“With rising housing waiting lists and record numbers in temporary accommodation, we desperately need to be building more affordable housing, not less. We need to build homes that are affordable to local people and help to reduce homelessness, rather than contributing additional funds to developers’ and landowners’ profits.

“We want to work with government on reforming the planning system, which ensures that it is improved and strengthened, delivering beautiful homes and places for communities. But this also needs to see the requirement for affordable housing retained as a key element, by giving councils the power to determine what is right for their local area.”

In a blog, the Ministry of Housing, Communities and Local Government (MHCLG) said the LGA’s “claims are fundamentally flawed” as they take “a short-term Covid-19 support package for smaller developers and apply it over the last five years, resulting in a figure that is not relevant to what we are proposing”.

The MHCLG says the proposal seeks to support small developers through the pandemic and the economic uncertainty it has created.

It adds that “the LGA’s analysis completely ignores the wider measures we’ve proposed”, citing a new infrastructure levy as set out in Planning for the Future that “will deliver at least as much affordable housing as today – and to suggest otherwise is simply misleading”.

The full blog can be found here on the MHCLG website.

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