Agenda item

Report of the Corporate Director of Regeneration and Economic Development – Housing Development and Delivery Manager, Regeneration and Economic Development.

The Chairman introduced the Special Housing Projects Manager, Regeneration and Economic Development, David Siddle and Senior Housing Development and Delivery Officer, Angela Stephenson who were in attendance to speak to Members in relation to the Affordable Homes Policy (for copy see file of minutes).

The Special Housing Projects Manager informed Members that there existed a pool of 50,000 affordable homes, and they were required as the market itself would not provide them.  It was noted that a definition of “affordable housing” was: “Affordable housing includes social rented and intermediate housing, provided to specific eligible households whose needs are not met by the market”.  It was noted that the prices for affordable housing would be set below market prices or rents and it was explained that the “subsidy” was locked into the product.  The Special Housing Projects Manager added that the subsidy was in perpetuity and attached to the property, and should the property be sold, the subsidy would be recycled.  It was added that only in exceptional circumstances could the subsidy be taken out from the property. 

Members noted that affordable housing was offered to “eligible households” and in County Durham this would be via the choice based lettings scheme, Durham Key Options (DKO), offering a fair opportunity for people to access decent accommodation.  The Committee were informed that the delivery of new housing focussed on offering “affordable rent” accommodation, whilst the existing pool mostly comprised of “social rent” properties.  It was explained that “affordable rent” properties were developed by Registered Providers (RPs) (or house builders acting on behalf of RP’s) and then rented at what is deemed to be an affordable rent, 80% of the market rent for that area.  It was noted that, there is relatively little difference between social and affordable rent levels in our area, though there are a considerable differences in the South East of the country.  Councillors noted that social rent was calculated based on a government formula which ensures rental levels are kept low.  The Special Housing Projects Manager noted that discounted sales were also in perpetuity, with the discount being in the region of 30% and there were schemes of shared ownership as another option, with owners and RPs splitting the ownership.

Councillors noted that there were several additional schemes marketed to first time buyers, including home buy initiatives (‘Help to Buy’) as promoted by this Government, though these were designed to stimulate the housing market as well as aiming to provide affordable housing for sale.

Members were reminded that there had been some development of new affordable Council homes in the Wear Valley and Durham City areas, however in general it was not Local Authorities that were leading on building and therefore it was Partners that would be delivering, with the Local Authority role being an enabling one through having the requisite policies in place, articulated by the Local Plan.  It was added that the evidence behind polices included information from the Strategic Housing Market Assessment (SHMA) and waiting lists.  It was explained that funding was primarily from the Homes and Communities Agency (HCA) with the 2015-18 programme recently announced and therefore County Durham Housing Association would be encouraged to bid for funding from the new programme.  The Special Housing Projects Manager reminded Members that there were Section 106 (s106) Agreements that could, be part of planning approvals.  Councillors were informed that the majority of additional funding was through Housing Association borrowing.  The Special Housing Projects Manager concluded by noting that the County Durham Plan (CDP) was heading towards the adoption stage and clear commitment regarding affordable housing for County Durham was set out within the Plan.

The Chairman thanked the Special Housing Projects Manager and asked Members for their questions.

Councillors asked questions in relation to: whether planning policy was rigorous enough in respect of s106 Agreements; a breakdown of types, numbers and geographical distribution of affordable housing; how the percentages for affordable housing provision were calculated; how the “recycling” of subsidy worked in practice; how the number of houses delivered compared to the need identified; where the 700 homes mentioned within paragraph 14 of the report would be delivered; any pressure on Developers in respect of Community Infrastructure Levy (CIL) and Sustainable Urban Drainage Systems (SUDS) and whether this had any effect on Developers being able to negotiate out of s106 agreements; the resource implications balanced against releasing land at below market rate; where “surplus” sites being marketed below market rate were located within the County; where the 200 units mentioned within paragraph 13 were within the County; how long any discount on properties lasted; and what the percentage affordable housing provision was for the North of the County. 

The Special Housing Projects Manager noted that he could not speak on behalf of colleagues from planning, however, there was policy in place as regards percentages of affordable properties for developments and that this was the starting point for any negotiations between developers and the Authority.  It was added that there could be cases where evidence could be provided demonstrating that development may not be viable if there is a certain level of affordable provision.  The Special Housing Projects Manager noted that figures could be obtained breaking down affordable properties for rent and so on in the 5 key geographical areas across the County.  It was added that there was a balance of need versus viability and that not all affordable housing was delivered by negotiations within a planning application.  It was explained that there were strategic schemes which would have a high percentage, or in some cases 100%, affordable housing. 

The Committee noted that should a property having been purchased at an “affordable” discounted rate was then sold, the HCA would expect any grant element to be repaid, though sales of discounted properties was rare.  It was added that Housing Associations had a Recycled Capital Grant Fund, though likely to be relatively small due to the lack of properties being sold.  It was noted that there was an understanding that any money paid into RCGF from a Local Authority area would be recycled back into that Local Authority area.  

The Special Housing Projects Manager explained that the 700 houses referred to in paragraph 14 were those to be delivered overall by the 2011-15 HCA programme and it was added that the annual shortfall in provision was as set out at paragraph 4, 674 units.  It was noted that developers may face increased pressure in respect of CIL and SUDS, however, it was noted that any negotiations as regards s106 would be evidence based and that recent changes in the housing market had seen an increase in volume house builders’ profits.  The Committee noted that there were a small number of sites offered at a competitive rate for affordable housing, for both rent and ownership and that if evidence is presented that the end use is beneficial, the discounted rate could be justified.  It was noted that those small sites were being discussed at meetings next week and further to this information could be brought forward.  The Special Housing Projects Manager explained that the 200 units referred to in paragraph 13 were not extra provision, and were part of the HCA programme and that the figures and geographical split could be obtained for Members’ information.

The Committee were informed that the discounts applied to properties were in perpetuity with any properties being sold having the discount noted as part of the title deeds for any future sale to also be at the discounted rate.  In the case of shared ownership it is possible for homeowners to “staircase” up to pay off the subsidy and therefore be able to sell the property at 100% value in the future.  The Special Housing Projects Manager noted that the starting point for negotiations regarding affordable provision in the North area of the County was 15%. 

Resolved:

(i)              That the report be noted.

(ii)             That an update in relation to Affordable Housing delivery be given at a future meeting of the Committee.