Growth and Delivery Event Workshop 5 – Future Proofing Affordable Housing

Purpose of Workshop  To define ‘future proofing’ in relation to affordable housing secured through the planning system  To explain why ‘future proofing’ is relevant  To outline the options for achieving flexibility  To discuss the relative strengths and weaknesses of each option

Background  Ark was commissioned to carry out a study on behalf of the West of England authorities  The Study is at an important stage where interim findings need to be debated  Outputs from the workshop will influence the conclusions and recommendations in the Ark report

Objectives of the Authorities  Maximise affordable contributions  Ensure viability on longer term schemes is not fixed at the ‘bottom’ of the market  Provide a robust framework for reviewing contributions  Identify other innovative approaches to unlock stalled schemes through collaborative working

Policy and Appeal Case Context  Abolition of RSS tier of development plans may affect some authorities’ policy targets, especially if dated and reliant on supplementary documents and SHMA but without the scrutiny applied to a Core Strategy policy  ‘Open Source Planning’ likely return to a Local Plan less risk of change in policy by Inspector limitations to appeal grounds some rationalisation of guidance more scope for local variance emphasis on simplicity and reduced cost

Policy and Appeal Case Context (contd)  Likely to be new statutory guidance on planning obligations with refinement of the 5/05 tests  CIL to be retained – will it become compulsory?  Introduction of a CIL scheme will apply ever greater strain to affordable housing obligations where viability problems arise  Appeal cases – Clay Farm and Glebe Farm, Cambridge Lydney ‘B’, Forest of Dean

Good Practice Guidance  HCA – Investment and Planning Obligations – Responding to the Downturn  Atlas Guide Topic Papers  T Developing a Strategy for Addressing Stalled Schemes  T Financial Appraisal and Viability in the Planning Process  T Reviewing Section 106 Agreements  T Contingent Deferred Obligations

Options AFIXED CONTRIBUTION [A2Fixed with deferred contribution] BOPEN BOOK REVIEW [B2Open book with overage agreement] CAUTOMATED REVIEW (CLAWBACK) [C2Automated with escalator provision]

Option A1 : Fixed Contribution STRENGTHS  Balances provision across the scheme  Easy to define external subsidy  Clear cut obligations where sites sold on by land promoters WEAKNESSES  Heavily reliant on quality of initial negotiations  One party could suffer dependant on changes in market conditions  Re-plans or value engineering only benefit developer Fixes the contribution of affordable housing at a level below policy but above what is viable currently.

Option A2 : Fixed but Deferred Contribution STRENGTHS  Helps promote delivery in short term  Possible to reach compliant levels eventually WEAKNESSES  Imbalance in distribution of affordable housing As A1 but contribution steps up to agreed levels over time.

Option B1 : Open Book Review STRENGTHS  Transparency  Partnership approach  Responsive to market conditions  Can reduce intensity of initial ‘haggling’ WEAKNESSES  Most developers will resist open book approach  For LPA could result in affordable % going down  Review is time consuming and provokes argument  Is there sufficient incentives for developer? Open book review of relevant data at appropriate intervals to determine affordable housing provision by phase.

Option B2 : Open Book Review and Overage STRENGTHS  More incentives for developer to optimise outturns and co-operate WEAKNESSES  Does not maximise affordable housing provision  Usually links to an agreed minimum and contribution

Option C1 : Automated Review - ‘Clawback’ STRENGTHS  Simplified review  Reliance on verifiable data  Lower costs than open book review WEAKNESSES  Difficult to agree formula  Indices may not relate to scheme characteristics  Tends to ingore impact of infrastructure and abnormals Bases review on movements in agreed indices. Clawback is usually overage based.

Option C2 : Automated Review - ‘Escalator’ STRENGTHS  Improves clarity on what will be provided assuming certain changes  Simplifies review process even further WEAKNESSES  Even more complexity in initial negotiations As for Clawback but with additional affordable contribution stepped dependent on changes in indices.

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