The requirement to contribute to local affordable housing used to be targeted at big developers. No longer, finds our planning expert Sally Tagg

For the first time in the history of Affordable Housing Contributions, self-builders are beginning to see the burden of expectation laid at their door — this at a time when (the entirely separate) Community Infrastructure Levy is beginning to impact on more and more projects, too.

For many years, local affordable housing was predominantly provided for as a planning condition on the provision of larger schemes, e.g. 15 dwellings or more. However in recent years, as the number of houses being built by developers has slowed, fewer affordable dwellings have been built — just at the time in the economic cycle when they are needed more than ever.

In order to address this deficit, some local authorities have implemented – and others are preparing – new planning policies to ensure that sufficient affordable housing can still be provided. As a result, the provision of affordable housing is now often being linked to the creation of one or more market units — meaning that self-builders will increasingly be asked by their local planning authority to provide a financial contribution towards the provision of affordable housing.

Contributions in respect of affordable housing are set in relation to the size of a new property, either in terms of the number of bedrooms or floor space.

The Affordable Housing Contribution recently set by Three Rivers District Council in Hertfordshire in its highest value area would be £187,500 for a 150m² property, and even in its lower value area would total £52,500 for the same-size dwelling, which is still a significant sum — a demonstration that there is a dire need for affordable housing in this district. However, there is no doubt it is also as a result of average house prices being some of the highest outside London.

Even before CIL contributions are taken into account it is clear that self-builders are going to be hit hard by this new approach.

In addition, it should be noted that the new Affordable Housing Contributions will also relate to developments such as barn conversions, as the creation of a new dwelling through this route will still trigger a contribution in most cases.

Sally’s View

Affordable Housing Contributions for self-builders are counterproductive — it is a huge additional financial burden on ordinary families trying to build homes for themselves to live in.

Guidance does indicate that if it can be demonstrated that a scheme is unviable with an Affordable Housing Contribution, some or all of the cost can be offset. However, assessments consider costs against market values and as such it is considered that most self-build schemes in this regard would be adjudged to be viable even if the self-builder cannot afford to pay.

Our advice would be to look for plots in areas where burdens like these are less stringent. Identify the costs before you buy a site, enabling you to negotiate with the vendor accordingly.

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  • Antony Atkins

    The figures quoted for Three Rivers District Council are simply extraordinary: £187,500 for a 150m2 property is more than most self-builder’s build cost! The only way to make most projects viable will be to deduct the Affordable Homes tax and CIL from the land value, which is what developers do when buying new sites, but I fully expect owners of small sites simply to refuse to sell now.

  • Paul Green

    As the owner of a small building plot (which isn’t for sale) I wouldn’t sell for less to compensate for the CIL scheme. Without land you can’t build. Why not ask for the materials suppliers to drop their prices or the labour force to drop theirs? This is the councils way of disincentivising the self-builder and trying to kick start association development from small developers. I think that plots like mine that have already gained PP will go up in value and land owners, unless desperate, will hang on to their plots until they can return a better amount whilst self-builders will only be able to build with the final property in negative equity on completion. Dark times ahead unless you’re "insert national house builder name here"!

  • Antony Atkins

    Paul, I can’t see small developers ever getting involved in work for housing associations: it’s not financially viable. Whenever I’ve tried to do such work, or asked how much I would get per "affordable" house if by some miracle I did find a site with more than five plots, I’ve been quoted an amount that barely covers the build cost, never mind the cost of the land, the finance costs or any payment at all to cover the development costs,a salary for me or even a profit. It is incredible that a council seriously expects a builder to give away two of his five plots to a housing association, so that all the non-construction costs fall on the remaining three plots for private sale, and I’m expected to pay S106/CIL on top of that! The economics are simply impossible.

    As a small developer as well as occasional self-builder, I feel my chances of finding viable sites are just getting worse and worse. My local council has adopted a Core Strategy which seeks to kill off small sites in favour of four large developments controlled by national housebuilders, until at least 2026: they are doing this by reducing the threshold for affordable homes to five properties, by creating a presumption in their design guide against tandem development (new building lines via access roads in back gardens), and by increasing S106 to £25,000 per house on average, so 4-bed houses will be significantly more than this. Their target is just 80 "windfall" new-builds per year across the entire borough, to be shared between every small and medium-sized developer operating in the area, competing with self-builders; housing associations and the parishes will also have to fight for the scraps if they have ambitions for rural exception sites or new properties under the Community Right to Build (some chance – there’s no money).

    Bascially, localism is being used to stitch up housebuilding between the large national housebuilders, councils and their client housing associations. Self-builders and small builders have little or no chance; as a developer, I will be lucky to remain in business, let alone grow, because site allocations to meet the five-year land supply for the next 14 years have already been decided in 2012. The only work available for most local builders and their support trades and suppliers will be maintenance work and extensions; the national housebuilders buy nationally and bring in most of their labour from elsewhere.

  • Paul Green

    Tony, I totally agree but in my area the CIL is only in effect for properties over 100 sqm and as most affordable home are 75-80 sqm what message are we be given? I see that building affordable home will be building for landlords as they’ll be the only ones being able to get a mortgage in that market and to be honest, by the time we have to meet the new regs for sustainable homes, new build properties won’t be ‘affordable’ anymore or they’ll be 50-60 sqm at best to compensate for all the costs. Everyone will then look back at current housing stock, which there isn’t enough of, which will drive the price up meaning that previous affordable houses will then become less affordable and the whole chicken and egg starts again. I think the first thing that councils should do is stop the ‘right to buy’ and retain some council properties.

  • Tae Yang

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