Local Planning Guidance Note No.28 - Affordable Housing

This guidance note amplifies, in a clear and concise format, development plan (specifically Policies H7 and H8 of the Wrexham UDP) and local housing policies designed to provide affordable housing. The note will form a material consideration in the determination of all relevant planning applications.

Introduction

Increasingly in the County Borough local people have genuine difficulties in securing affordable housing. The problems associated with affordability are caused by a combination of a significant decline in the supply of council and other affordable rented housing through the Right to Buy provision, escalating house prices and the inward migration of commuters and retired people. These pressures raise property values beyond the reach of many local people, and are particularly acute for those below average earnings or not earning at all. In addition there is a sustained need for housing to meet special needs, for example people with physical disability and sensory impairment, mental health problems, learning disabilities, larger families and people requiring supported housing.

Definition

Affordable housing is defined as both subsidised and discounted market rate housing in perpetuity, for people whose income does not enable them to buy or rent property suitable for their needs in the open market.

Development Plan Policy

Any developer contribution will be based on the following considerations:

• where there is a lack of affordable housing to meet local needs the Council will negotiate with developers to provide a quota of affordable housing in new developments of 25 or more homes. It will not be acceptable to deliberately sub-divide or phase the total development in an attempt to avoid this threshold.
• in rural areas, in exceptional circumstances where affordable housing needs cannot be met within settlement limits, up to 5 affordable homes can be accommodated on the edge of settlements providing the site forms a logical extension to settlement pattern and the proposed development reflects the surrounding townscape and landscape. Such sites are not intended for individual self-build homes or for cross-subsidy schemes where dwellings sold at full market value subsidise the price of affordable housing elsewhere.

Affordable Housing Provision

The Council will require nomination rights to all delivered affordable housing units initially and in the future.

Quota

Where required, the number of affordable homes required will, in the absence of significant development constraints, be 25% of the total capacity of qualifying sites. The impact upon the economics of a development will be taken into account when determining the amount of affordable housing to be provided on any given site. However, it will only be in exceptional circumstances where viability is genuinely threatened as a result of unforeseen costs. Associated costs should be taken into account as part of any negotiations on land acquisition; therefore abnormal costs will be reflected in the land price paid.

Design and Management

All new affordable housing must:

• be visually integrated into, and distributed within the residential scheme.
• incorporate low maintenance and energy efficiency measures and be constructed to a specification compatible with current building regulations and, where relevant to internal space standards.
• be subject to a legal agreement made under Section 106 of the Town and Country Planning Act 1990 to ensure affordability in perpetuity.

Type and Delivery Arrangements

In order to ensure that affordable housing remains affordable in perpetuity and that occupancy is controlled the Council's preference, in accordance with Welsh Assembly Government advice, is to deliver affordable housing through regulated registered social landlords or other housing organisation. All new build affordable housing must be provided on-site in accordance with one or more of the following arrangements:

• on-site affordable housing for rent provided by the developer and transferred at a discount to a registered social landlord approved by the Council. The maximum sales values will be set at the Welsh Assembly Government's Acceptable Cost Guidance levels minus the associated level of social housing grant that would have been available. The developer's financial contribution will equal the social housing grant.
• on-site shared ownership. This may appeal to households who can afford a small mortgage but who are not able to afford to buy a property outright. Shared ownership costs will vary according to the market value, interest rates and the percentage of equity sold. On-site shared ownership housing for rent provided by the developer will be transferred to a registered social landlord approved by the Council. Schemes similar to "Homebuy" may be acceptable if affordability of the units can be preserved in perpetuity.
• on-site discounted market rate housing. The standard, size and type of such housing must satisfy identified needs and accord with local planning and housing policies. The Council may withdraw permitted development rights as a means of retaining the affordability of properties. Discounted market rate housing must be affordable in perpetuity. As such, the Council will require landowners and developers to enter into covenants which will also bind future owners to ensure that affordability is maintained. In order to make such housing to buy affordable their price will be established with reference to income levels for households unable to buy in the County Borough. Values for discounted market rate housing to buy will be restricted to a maximum of three times average household income. Values for discounted market rate housing for rent will equal the rent charged by a regulated organisation on a similar sized property in the locality.

Only in exceptional circumstances, where the on-site provision of affordable housing is not appropriate or an alternative off-site solution is preferable, can new build housing and/or refurbishment of existing vacant housing to rent or buy within the local community be provided off-site. The affordable housing must be provided within the immediate vicinity of, and at the same time or prior to the completion of, the facilitating residential development.

Affordable Housing: The Local Context

Some key economic indicators set the context for affordability:

• house prices in the County Borough rose by 42.4% between 2002-04, almost double the rate of average house price inflation in England and Wales. Between December 2003 and December 2004 house prices rose by 17.3%. Land Registry information, as at December 2004, indicates that the average dwelling price in the County Borough was £141,024, which was higher than the Welsh average (£136, 400).
• in the quarter October to December 2004 detached houses sold at an average of £189,870; semi-detached houses sold at an average of £124,560 and terraced houses, more usually associated with first time buyers, sold at an average of £102,730 up 40.8% on the previous twelve months. The average price of a flat/maisonette was £75,435.
• Land Registry and NOMIS (New Earnings Survey Residence Based Statistics) data at 2003 showed an average earnings to house price ratio of 5.40. With the continued local rise in average house prices this ratio has increased further to 5.55.
• there are also huge variations in wealth across the County Borough. Four wards are within the top ten percent most deprived in Wales, six within the top twenty percent most deprived in Wales, while six wards lie within the ten percent least deprived in Wales.

Map 1: Local Sub-areas

Housing Subareas Caia Park North East North West Rural East Rural West South West West Wrexham

In addition, from April 2004 to December 2004, 695 households were presented to the Council as homeless. Of these, 153 were unintentionally homeless and in priority need and therefore to whom the Council owes a duty.

Table 1: Ability of Households to Buy

Source: H M Land Registry; CACI Ltd.2003

Affordable Housing: Local Need

The pattern and type of expressed demand for rented Council accommodation within the County Borough is outlined below:

Table 2: Demand For Rented Council Accommodation

Source: Wrexham County Borough Council Waiting List (as at 31 December 2004)

* 30 points awarded to homelessness or health/social care needs

Heads of Terms - Section 106 Agreements

These heads of terms are indicative only. Additional/different obligations may be required depending on the circumstances.

1 On-site new build housing for rent for transfer to a RSL

• Registered social landlord and developer must be a party to the agreement
• Obligation on developer to construct and complete stated number of affordable units in specified location on site
• Restriction on occupation of percentage of general housing before affordable units completed and transferred to registered social landlord
• Occupancy controls and local allocations criteria
• Nomination rights in favour of the Council on initial and future lettings

2 On-site shared ownership housing

Heads of Terms as per 1 above plus:

• Details of equity share
• Controls on sale price of freehold share and rent of leasehold share
• Controls on level of service charge
• Arrangements for re-sale including the calculation of re-sale price, costs and allocation criteria
• Nomination rights in favour of the Council on initial and future sales

3 On-site provision of discounted market rate housing

• Obligation on developer to construct and complete stated number of affordable units in specified location on site
• Restriction on occupancy of percentage of general housing until affordable units completed
• Controls on initial and subsequent sale prices/rental values of units
• Nomination rights in favour of the Council on initial and future sales/ lettings
• Occupancy criteria
• Arrangements to bind future owners (covenant scheme)
• Arrangements for re-sale/re-letting including calculation of re-sale price/ rental value and allocations criteria

4 Off-site provision of affordable housing

• Obligation on developer to construct/refurbish/renovate stated number of affordable units in specified location off site
• Registered social landlord and developer must be a party to the agreement if units are for rent/shared ownership
• Restriction on occupancy of percentage of general housing on the development site until off-site affordable units completed and, where appropriate, transferred to registered social landlord
• Nomination rights in favour of the Council on initial and future sales/lettings
• Occupancy controls and local allocations criteria
• Arrangements to bind future owners (covenant scheme) where units are to buy/rent
• Arrangements for re-sale/re-letting including calculation of re-sale price/rental value

Process Guide

Step 1:
Planning application for development triggers development planning and supplementary planning guidance policies

Step 2:
Planning Department, in consultation with Housing Department, considers the need for affordable housing units, in quantity and type, locally. Effective and early partnership between developer, RSL, and the Council is critical

Step 3:
Planning Department considers the options with developer

Step 4:
One or more options may be appropriate

Option 1:
On site new build housing for rent for transfer to a RSL.
Developer and RSL to agree details of scheme for Section 106 agreement.

Option 2:
On site shared ownership housing.
Developer and RSL to agree details of scheme for Section 106 agreement.

Option 3:
On site provision of discounted market rate housing.
Developer and Council to agree details of scheme for Section 106 agreement.

Option 4:
Off site provision of new build housing and/or refurbishment of off-site existing vacant housing to rent or buy within the local community.
Developer identifies suitable alternative local site and agrees details of scheme for Section 106 agreement.

Step 5:
Consideration of proposals by the Council's Planning Committee.

Step 6:
The developer and RSL to exchange contracts on the affordable housing transfer prior to, or simultaneous with, the completion of the Section 106 agreement. Legal agreement is drawn up and signed by all relevant parties and Council issues decision on planning applications.

Useful Contacts

a) List of Registered Social Landlords Currently Operating Locally

Clwyd Alyn Housing Association
Unit 14
St. Asaph Business Park
Glascoed Road
St. Asaph
Denbighshire LL17 0JL

Cymdeithas Tai Clwyd
54 Stryd Y Dyffryn
Denbigh
Denbighshire LL16 3 BH

Cymdeithas Tai Hafan
7 Queen Street
Carmarthen
Carmarthenshire SA31 1JR

First Choice Housing Association
19 Stanwell Road
Penarth
Vale of Glamorgan CF64 2 EZ

Wales & West Housing Association
3 Alexandra Gate
Ffordd Pengam
Tremorfa
Cardiff CF24 2 UD

b) Council Contacts

Housing Issues:

David Tonks
tel: 01978 315508
Deborah Molony:
tel: 01978 315511

Legal Issues:

Debbie Pennington
tel: 01978 292234

Planning Issues:

Duty Officer
tel: 01978 292017

For further information, please contact:

Chief Planning Officer,
Lambpit Street, Wrexham, LL11 1AR
Telephone: (01978) 292019.
Fax: (01978) 292502

Email: planning@wrexham.gov.uk

Adopted April 2005

LPG Note 28 -Affordable Housing

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