Rural Affordable Housing Exception Schemes

Henry MeiklejohnDevelopment Officer (Rural Affordable Housing)

Norfolk RCC27th April 2010

What’s the problem? 1

• At 1st April 2009, 1,793,140 households on Local Authority Housing Registers across England, excluding those seeking transfers (Dept for Communities & Local Government)

• 31,573 of those households on Norfolk’s waiting lists (DCLG)

• Norfolk household numbers increasing at around 30,000 every 5 years and expected to continue doing so (DCLG)

What’s the problem? 2

• Not housing crisis - people crisis • People who are homeless or living in

overcrowded, insecure, substandard and expensive housing with little or no hope of improving their conditions

• Families in dire poverty who can’t really afford housing costs and other essentials

• Children with no room to play or study• Adults with no privacy• Health problems due overcrowding, damp and

disrepair

What's the problem? 3

• Population growth and increasing numbers of households

• Decrease in house building• Increasing numbers of second and holiday

homes• Loss of former council homes through Right To

Buy and failure to replace

What’s the problem? 4

• Rural areas face added pressures due comparatively wealthy people moving in

• Relatively low incomes from rural employment• Average Norfolk rural house prices 9 or 10 times

average incomes from rural employment in many areas + hot spots

• Home ownership not option for many and lack of rental alternatives forces many to look elsewhere

What’s the problem? 5

• Elderly and vulnerable can’t rely on extended family for care and support

• Increasingly difficult for local schools, Post Offices, shops and other businesses to remain viable

• Customers and workers lost to other areas where housing more easily available

• Social networks break down and community cohesion suffers

• Relocating rural households increase housing pressure in areas moved to

So what’s to be done? • Needs step-change in house building• Various options available involving the public,

private and voluntary sectors• Rural Affordable Housing Exception Schemes

one option• Relatively modest contribution but help stem

decline of rural communities and contribute to regeneration and sustainability

• Helps reduce housing pressure in other areas caused by relocation of rural people

What is Affordable Housing? 1

• Definition from Planning Policy Statement 3 (PPS3)

• Housing for those whose needs not met by the open market, usually because can’t afford normal market rents or prices

• Comes in 2 basic varieties – social rented and “intermediate” housing

What is Affordable Housing? 2

• Social rented housing owned and managed by Councils and Housing Associations - affordable because rents pegged below market levels under government guidelines

• Intermediate housing covers range of options including Discounted Market Sales and Rentals and various other low cost home ownership products

• But main intermediate product is Shared-Ownership - basically part buying and part renting Housing Association properties. Minimum purchase share 25% to 50% and shares sold at full market price. On rural exception schemes, maximum purchase share limited to 80%. Rent on remaining share set at around 2.75% per annum of its market value. Considered affordable as allows foot on the property ownership ladder without having to buy a property outright

What is a rural exception scheme? 1

• Small Affordable Housing schemes built outside of and directly adjacent to Settlement Limit or Development Boundary

• Usually needs minimum 4 or 5 properties to make financially viable for a Housing Association to build and manage

• Most Local Authorities only allow around 15 units maximum on any one scheme.

What is a rural exception scheme? 2• Settlement Limit or Development Boundary marks

normal limit of where development is permitted (shown as a red line around settlements on planning maps)

What is a rural exception scheme? 3

• Schemes developed as exception to normal planning policy.• The site itself is generally known as a Rural Exception Site.

What is a rural exception scheme? 4

• Planning permission on Rural Exception Scheme normally subject to conditions designed to ensure the properties remain available and affordable to those with a connection to the Parish through eg. residence, employment or family.

• Conditions set under section 106 of the Town & Country Planning Act 1990 so known as section 106 agreements.

• Includes “local connection cascade” describing how the local connection criteria are to be applied when it comes to allocating the properties

• Conditions enforceable through the courts if necessary.• Different to Affordable Housing built inside the

development boundary, which is normally available to anyone on relevant Local Authority’s housing waiting list.

Who builds the houses?

• Usually delivered by Housing Associations although, theoretically, could be provided by private developers

• As condition of grant funding, Housing Associations subject to higher minimum standards than private developers in terms of space, design, build quality and energy efficiency

• Generally only Housing Associations can get planning permission to build on exception sites, whereas private developers tend to be restricted to building within the existing development boundary

• Local Authorities now being encouraged to develop Affordable Housing, subject to similar rules that apply to Housing Associations

How is the housing paid for? • HAs can use shared ownership sales income and can

borrow against future rental income. Further funding (or subsidy) is usually needed from various combinations of the following:

• Homes & Communities Agency (Govt agency that is the main provider of Affordable Housing subsidy) via competitive bidding for limited grant funding, subject to minimum design and build quality standards

• Council Tax income generated on empty homes and second homes

• Private developer contributions (ie. financial contributions towards off-site Affordable Housing provision, often referred to as “commuted sums”)

• Land being made available free or at below normal market value

• Most LAs also have a pot of money that can be used to subsidise Affordable Housing from Right To Buy sales

Who is eligible for the housing and how is it allocated?

• Eligible households are those with a housing need who have been accepted onto the relevant Local Authority’s Housing Register (or waiting list)

• Where Choice Based Lettings scheme in operation (most Norfolk LAs) need to bid for properties

• Priority given to households with local connections to parish or area concerned over households without such a connection – done as exception to normal Local Authority allocations policies

• Those with strongest connections given priority over those with weaker connections and those with no connection at all under a “local connection cascade”

Local Connection Cascade

District

Beyond Neighbouring Parishes

Neighbouring Parishes

Parish

Summary of essential points

• Exception Housing Schemes allowed as an exception to normal planning rules

• Housing let to local people as an exception to normal allocations policy

• Almost as if two separate planning and allocations systems exist – one for Affordable Housing built inside the development boundary and another for Affordable Housing built outside the development boundary

• If priority is Affordable Housing for local people then need to pursue Exception Scheme model

How are exception schemes delivered? 1

Policies and procedures vary from LA to LA but the following summary is fairly typical of steps involved:

1. Identify need – essential for planning permission

2. Identify Housing Association partner to develop the scheme – LAs usually do this

3. Identify suitable sites in planning terms4. Housing Association negotiates “in principle”

agreement to purchase the land once planning permission obtained

How are exception schemes delivered? 2

5. HA designs scheme in consultation with LA planning department and calculates build costs to allow them to identify how much subsidy is needed. HA also undertakes any necessary site investigations and surveys (eg. archeological and ecological)

6. Parish Council consulted on proposed design and layout and local public consultation event held giving local people opportunity to comment before formal planning application submitted

7. HA submits planning application. As part of decision making process, Parish Council consulted by Planning Department and invited to comment. Members of public can also comment directly to the Planning Department. Sometimes minor changes required and conditions usually imposed (eg. the s106 agreement) but ultimately the application is either approved or refused.

How are exception schemes delivered? 3

8. HA identifies obtains funding and acquires the land9. HA arranges building of the scheme10. Prior to completion, HA seeks nominations for the

homes from LA concerned. Nominations made from those on Housing Register in accordance with LA’s allocations policy and local connection cascade. Market valuation of shared ownership properties obtained around 3 months before completion so that price can be set for share to be sold and rent set on remainder

11. On completion, building contractor hands the homes over to the HA and the rental properties can then be let and the shared ownership properties sold

How are exception schemes delivered? 4

• Timescales vary considerably from area to area and scheme to scheme but typically can take anything for 3 to 5 years or even longer from initially identifying the need to people finally moving in.

• When eventually completed you end up with something like the examples shown on the next slide - good quality, energy efficient homes occupied by local people.