ADDITIONAL ADVICE ON AFFORDABLE HOUSING POLICY for the South East

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					  ADDITIONAL ADVICE ON
AFFORDABLE HOUSING POLICY




                for the
 South East England Regional Assembly




            February 2006



            Three Dragons
                                                            Affordable Housing Policy




Research Team
Lin Cousins, Kathleen Dunmore and Jane Smith of Three Dragons
Andrew Clarke of Roger Tym and Partners
Nick Reed of Strategic Solutions
Bob Line of B. Line Housing Information


Steering Group
Alison Bailey        South East England Regional Assembly
Graham Ashworth      New Forest District Council
Richard Bate         Green Balance
Chris Kenneford      Buckinghamshire Country Council
Peter Shadbolt       Surrey County Council
Gerry Wyld           Slough Borough Council




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                                 CONTENTS


                                                                    Page


1          Introduction                                             3


2          Authorities facing Particularly Acute Problems           5


3          Policy Review                                            19


4          Delivery and Access to Public Funding                    22


5          Issues Emerging from the Research                        32


6          Conclusions and Recommendations                          40


7          Schedule of Recommendations                              47


Annexes
1         Stakeholder Discussion Agenda                             53
2         Case Study Discussion Agenda                              55
3         Workshop Discussion Agenda                                58
4         Affordability Model                                       59
5         Policy Review                                             63




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1      INTRODUCTION

      Purpose of study
1.1    The study was commissioned by the South East England Regional Assembly
       which asked for advice on:
      "… whether, and if so how, the South East Plan should provide further guidance on
      the provision of affordable housing in those parts of the region with particularly
      acute problems of access to such housing."
1.2    This flows from Policy H4 of the Draft South East Plan which explained that the
       Assembly would be undertaking further analysis and discussion to, "… consider
       the case for a policy relating specifically to the provision of affordable housing in
       defined hotspots." Policy H4 already sets an overall regional target for affordable
       housing of 35% (25% social-rented and 10% 'other forms of affordable housing' -
       'intermediate housing').
1.3    There were six aims for the study which were, in summary, to:
      •   Consider additional measures which could help increase the provision of
          affordable housing in areas which are affected by particularly acute problems
          of access to such housing;
      •   Consider whether additional spatial planning policies are needed;
      •   Consider whether additional policy guidance on these issues is required in the
          South East Plan or whether this is more appropriately a matter for LDDs;
      •   Consider how areas where affordability problems are most acute could be
          identified;
      •   Consider the appropriate mechanism(s) for identifying these areas and keeping
          them under review; and,
      •   Prepare robust advice that can be used to inform Section D3 of the South East
          Plan.
       We added a seventh objective, namely to:
      •   Consider whether there are additional mechanisms required to deliver the
          necessary affordable housing which would be outside of but complementary to
          the spatial strategy – these could represent recommendations for the Regional
          Housing Strategy or other instruments.

      Research undertaken
1.4    The research undertaken for the study has been a mix of statistical analysis and
       qualitative research. There have been six main strands of research:
      •   Analysis of a range of indicators which could be used to define areas which are
          affected by particularly acute problems of access to affordable housing;
      •   A review of policies and practice from other regions which face similar
          problems of affordability to those found in the South East;
      •   A review of the delivery of affordable housing and the relationship between this
          and the pattern of Housing Corporation funding;
      •   (Telephone) Interviews with key regional stakeholders - the Home Builders
          Federation, the National Housing Federation (South East region), the Housing
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          Corporation, the Government Office for the South East (in their role on the
          Regional Housing Board), the Planning Officers Society, the Chartered Institute
          of Housing, Defra and the Countryside Agency. The discussion agenda used
          to guide these interviews is shown at Annex 1
      •   Three local authority case studies which included face to face meetings with
          planning and housing officers from the authority as well as selected follow up
          phone discussions with affordable housing providers and developers active in
          the area. The discussion agenda used to guide these interviews is shown at
          Annex 2
      •   Two invited workshops with attendees drawn from housing and planning
          representatives of local authorities, rural housing enablers and developers. A
          number of housing associations were invited but no representatives were able
          to attend. A total of 20 people attended the workshops, with 15 local
          authorities represented. The workshops were themed so that one workshop
          focused on issues faced outside the main urban areas and the other had an
          urban focus. The discussion agenda used to guide the workshops is shown at
          Annex 3.
1.5    In total 18 local authorities were consulted during our research. This represents
       over a quarter of the 67 district/unitary authorities in the region. This is not put
       forward as a statistically robust sample of the region's authorities but demonstrates
       that we have collected views from a very wide range of authorities.
1.6    The authorities consulted were not necessarily thought to be facing the most
       acute need for affordable housing but were selected because (from early analysis
       of the indicators available) they were likely to be authorities facing a high level of
       demand for affordable housing and/or were seen be effective deliverers of
       affordable housing.




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2         AUTHORITIES FACING PARTICULARLY ACUTE PROBLEMS

          Review of indicators
2.1       We have reviewed a variety of indicators as the basis for an approach to
          identifying authorities facing particularly acute problems which could be used for
          developing more tailored policy solutions.
2.2       Others have already provided analysis of affordability and housing pressure,
          perhaps the best known is the work by Steve Wilcox on affordability and demand
          (“Can work, can’t afford” ) whilst ODPM has its own proposed Affordable Housing
          Index (also used by the RHB for allocating funding to local authorities, and for
          categorising local authority areas into broad areas for investment in new affordable
          housing). The ODPM index combines 4 indicators:
          1.       Homeless households in temporary accommodation (35%)
          •    Average of numbers at 31 March over the latest 3 years.
          2.       Overcrowded and sharing households
          •    A composite measure combining data on overcrowded, concealed and sharing
               households.
          3.       Housing affordability
          •    Numbers of households in the region in local authority areas where the ratio of
               lower quartile house prices to earnings/income is highest.
          4.       Affordable housing in Growth Areas
          •    Estimated increases in provision of affordable housing as a result of
               establishment of Growth Areas.
2.3       ODPM recognises that this index is a tool for making allocations, and may not fully
          capture reality, “The affordability ratio reflects the relationship between house
          prices and incomes but doesn't indicate anything about the numbers of
          households unable to access home ownership” 1
2.4       There is therefore an important distinction to be made here between, 1 analysis
          and understanding of the evidence base; and 2, using the data and evidence to
          make policy. Policy benefits by being based on data and evidence, but data and
          evidence alone cannot make policy, which must include elements of judgment,
          prioritisation and trade offs – and this is a key element of what the ODPM index
          sets out to do .
2.5       There are also technical difficulties in applying the ODPM index at lower
          geographical levels. Indicator 4 – affordable housing in growth areas – is an
          anticipated future factor selectively applied in particular parts of the region, and so
          not relevant for the current analysis. For the affordability measure, "The
          proposed measure is, therefore, obtained by summing the numbers of households
          in each region in local authorities where the affordability ratio for 2003 is 8 or
          more"”2. This either/or, cut off point approach means that at more detailed level,
          for example at local authority level, some areas simply have nothing included for
          this indicator.


1
    Housing Investment in the Regions - Technical Note Para 18
2
    Housing Investment in the Regions - Technical Note Para 18
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2.6        Bearing these problems in mind, the data for the ODPM index has been derived or
           reproduced at a local authority level where possible. This may not be an exact
           replica of the ODPM approach (we have had to use available data) but we believe
           our analysis mirrors the ODPM approach very closely. We show the first three
           elements of the index for each local authority in the region in the table below.
           Local authorities which are in the top quartile of authorities3 in the region are
           shaded in grey.




3
    That is, the top 17 authorities in the region
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Table 2.1:      Derived Components of the ODPM affordable housing index

                                            Temporary     Rate per       Overcrowded     Overcrowding
                            Affordability accom 3 yr      1000/temp      and sharing     & shared
                            Index           average       accom          households      rate/1000
     Chiltern                         11.3            125          0.34%             468           1.3%
     Chichester                       11.1             69          0.14%             803           1.7%
     Elmbridge                        11.0            150          0.28%             960           1.8%
     Tandridge                        10.4            104          0.32%             585           1.8%
     South Buckinghamshire            10.3            303          1.15%             356           1.3%
     Runnymede                        10.2             45          0.14%             743           2.3%
     Epsom and Ewell                  10.0            150          0.52%             548           1.9%
     Windsor and Maidenhead             9.9            50          0.09%            1111           1.9%
     Mole Valley                        9.8            22          0.06%             706           2.1%
     Winchester                         9.7            50          0.11%             701           1.6%
     Oxford                             9.7          1010          1.89%            2292           4.3%
     Waverley                           9.7           109          0.22%             840           1.7%
     Sevenoaks                          9.6           104          0.22%             680           1.5%
     Hart                               9.4            69          0.20%             471           1.4%
     New Forest                         9.4           432          0.56%            1100           1.4%
     South Oxfordshire                  9.3           125          0.23%             790           1.4%
     Mid Sussex                         9.2            75          0.14%             801           1.4%
     East Hampshire                     9.2           156          0.34%             723           1.6%
     Guildford                          9.1           174          0.32%            1255           2.3%
     Wealden                            9.1           215          0.35%             800           1.3%
     Tunbridge Wells                    8.9            97          0.22%            1072           2.4%
     Horsham                            8.8            80          0.15%             860           1.6%
     Vale of White Horse                8.7           262          0.55%             712           1.5%
     Rother                             8.7            85          0.20%             644           1.5%
     Arun                               8.6           132          0.20%            1284           1.9%
     Fareham                            8.6           117          0.26%             529           1.2%
     Eastleigh                          8.6            49          0.10%             780           1.5%
     West Oxfordshire                   8.6            29          0.07%             557           1.3%
     Surrey Heath                       8.5            60          0.18%             487           1.5%
     West Berkshire                     8.5           183          0.30%            1070           1.8%
     Wokingham                          8.4            82          0.14%             793           1.4%
     Reigate and Banstead               8.4           407          0.77%            1110           2.1%
     Test Valley                        8.2           147          0.31%             555           1.2%
     Woking                             8.2            86          0.23%             939           2.5%
     Canterbury                         8.2           361          0.62%            1406           2.4%
     Wycombe                            8.1           203          0.31%            1566           2.4%
     Brighton and Hove                  8.1            63          0.05%            5460           4.5%
     Worthing                           8.0           190          0.41%            1219           2.6%
     Maidstone                          7.9           297          0.49%            1088           1.8%
     Aylesbury Vale                     7.7           145          0.22%            1320           2.0%
     Adur                               7.7           235          0.88%             513           1.9%
     Tonbridge and Malling              7.7           334          0.74%             613           1.3%
     Cherwell                           7.6           221          0.40%            1005           1.8%
     Spelthorne                         7.6            99          0.25%             952           2.4%
     Lewes                              7.4            73          0.17%             796           1.9%
     Reading                            7.4           407          0.66%            2351           3.8%
     Ashford                            7.2           131          0.29%             755           1.6%
     Basingstoke and Deane              7.2           145          0.23%            1067           1.7%
     Eastbourne                         7.2           295          0.66%            1377           3.1%
     Bracknell Forest                   7.2           193          0.44%             971           2.2%
     Gravesham                          7.1            39          0.10%             866           2.2%
     Isle of Wight                      7.0           363          0.57%            1132           1.8%
     Dartford                           7.0           274          0.73%             837           2.2%
     Slough                             6.7           303          0.65%            2699           5.8%
     Rushmoor                           6.7            81          0.24%             960           2.8%
     Crawley                            6.7           324          0.81%            1122           2.8%
     Shepway                            6.5           112          0.24%             994           2.1%
     Havant                             6.5           392          0.78%            1135           2.2%
     Thanet                             6.3            99          0.16%            1322           2.2%
     Milton Keynes                      6.3          1458          1.60%            2349           2.6%
     Southampton                        6.3           213          0.22%            3532           3.7%
     Portsmouth                         6.2            59          0.07%            2394           2.9%
     Swale                              6.1           189          0.34%            1094           1.9%
     Gosport                            6.0           257          0.74%             612           1.8%
     Medway                             5.6           297          0.28%            2357           2.2%
     Dover                              5.4           108          0.22%             852           1.8%
     Hastings                           5.2           188          0.46%            1089           2.7%
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2.7    Looking at the separate indicators which make up the ODPM index, it is apparent
       that there is not a group of authorities which 'score highly' across all three
       indicators.
2.8    Some authorities appear in the top quartile for more than one index and one
       authority (Oxford) appears in all three.
2.9    The pattern which does emerge from the table may have important consequences
       for the region. Whilst affordability problems are focused in the "more rural" parts of
       the region (particularly in the southern and western quadrant around London)
       problems which indicate housing stress are more likely to be found in the main
       urban areas of the region.
2.10   Only three authorities (South Bucks, Oxford and New Forest) which are in the top
       quartile for the affordability index are also in the top quartile for the temporary
       accommodation and/or overcrowding/sharing indices.
2.11   On the other hand, 13 of the 17 authorities in the lowest quartile for the
       affordability index (i.e. the most "affordable" parts of the region) are in the top
       quartile for the temporary accommodation and/or overcrowding/sharing indices.
2.12   Five authorities (Canterbury, Reading, Eastbourne, Slough and Milton Keynes) are
       in the highest quartile for both the temporary accommodation and the
       overcrowding/sharing indices.
2.13   We have also considered the scale of apparent demand indicated by local
       authority housing registers. This indicator can be criticised for a number of reasons
       - differences in the way authorities manage their housing register, different
       eligibility rules for joining the register, the ability of households to join more than
       one register and the effect of different letting policies on accommodating
       households on the register. The length of registers is also likely to reflect
       households’ perception of the value of joining a register (households may not ask
       to join a register if they believe there is little likelihood of them securing an
       affordable home in the area). Despite these limitations the housing register
       provides a crude indicator of expressed demand for affordable housing at the local
       level.
2.14   To show this, we have developed a housing register index which shows the
       percentage difference between the number of households on an authority’s
       housing register (per 1,000 households) with the average for the South East
       (which is 51.3). In the following table we show the index for all those authorities
       which have a higher rate of households on their register than the average for the
       region.




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Table 2.2:       Housing Register Index

                                   Housing
                                   register
                                   index
       Portsmouth UA                    121.8%
       Eastleigh                         84.3%
       Rushmoor                          80.3%
       Southampton UA                    73.6%
       Vale of White Horse               58.3%
       Medway Towns UA                   57.3%
       Oxford                            50.3%
       Basingstoke and Deane             50.3%
       Spelthorne                        45.4%
       Eastbourne                        42.9%
       Dartford                          42.8%
       Swale                             31.6%
       Brighton and Hove UA              27.6%
       West Oxfordshire                  26.6%
       Bracknell Forest UA               26.3%
       Ashford                           25.3%
       Rother                            22.0%
       Adur                              16.8%
       Reading UA                        15.4%
       Thanet                            14.4%
       Crawley                            8.6%
       Gravesham                          6.2%
       Slough UA                          5.5%
       Fareham                            5.2%
       Gosport                            3.7%


2.15    Again, we see that it is the region's main urban centres which are heavily
        represented in the table, whilst areas with apparently 'worse' affordability issues
        are less likely to score highly on the housing register index.

        Relationships between the indicators
2.16    We have explored the issue of the relationship between indicators further through
        the use of a statistical technique which measures their mathematical correlation.
        Where the correlation gives a coefficient of 1, it means that two variables move
        completely together and where the correlation coefficient is minus1, the variables
        move completely inversely. Figures in between these values show less or no
        relationship. A coefficient of 0 means there is no relationship between the
        variables.4
2.17    The relationships we have analysed are set out in the following questions:
        •    Whether local authorities with a higher affordability ratio have bigger waiting
             lists and more households in temporary accommodation;




4
 It needs to be noted that any correlation could be due to changes in one variable causing shifts in
another, or it may be due to variables changing together – perhaps influenced by something else,
or possibly just randomly.
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       •     Whether local authorities with more stock have more relets and a higher rate of
             relets;
       •     Whether areas with more relets have lower numbers in temporary
             accommodation;
       •     Whether more relets generally means more or less households on the housing
             register.
2.18   These comparisons produce correlation coefficients which demonstrate how the
       indicators change together. The results of these comparisons are shown in the
       table below.
Table 2.3:      Relationships between selected indicators


                                                                  Correlation
    Variables compared                                            coefficient
    Affordability Index v other indicators
    Affordability: housing register waiting list (rate per
    1000)                                                                    0.146
    Affordability: Temporary accommodation rate                              0.106
    affordability: relet rate                                               - 0.015
    Affordability: affordable stock (rate per 1000)                         - 0.067
    Total stock v other indicators
    Total social stock: total social relets                                  0.913
    Total stock: relet rate                                                  0.136
    Stock/Relets v other indicators
    Relets: households in temporary accommodation
              (number)                                                       0.505
    Relets: temporary accommodation (rate per 1000)                          0.291
    Social relets: housing register                                          0.738
    Social relets: housing register (rate per 1000)                          0.384
    Social stock: housing register                                           0.778
    Social stock: housing register (rate per 1000)                           0.410


2.19   On this basis it can be seen that the strongest relationship is between stock totals
       and the number of relets. This suggests that the number of relets is more or less
       dictated by the stock totals.
2.20   The map of relet rates for social housing below shows that in general these are
       higher in the larger urban areas such as Portsmouth, Southampton, Reading and
       Oxford, but there are also some higher relet rates in less urbanised local authority
       areas.




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Map 2.1:        Turnover rate by local authority 2003/4




2.21   Of the other indicators, only social stock and social relets compared to housing
       registers show any hint of a correlation, at around 0.75. This suggests that people
       are more likely to join a local authority housing register if there is more social
       housing stock within an area and associated high levels of relets available.
2.22   For the other variables, relet rates, numbers in temporary accommodation, and
       affordability, there appears to be little correlation. What is very clear from the
       analysis is that, across the region, there is very little relationship between
       affordability and the number of households on the housing register or in temporary
       accommodation or to the amount of affordable stock available through relets.
2.23   This finding can be interpreted in different ways. One hypothesis would be that
       affordability problems are not being tackled where they arise. Households, in
       need of affordable housing in areas with a high affordability index, gradually drift to
       areas where more affordable housing is available so that it is the latter which have
       to 'mop up' the region's need for affordable housing.
2.24   Factors which increase pressure on demand for social housing are only partly
       related to a simple analysis of affordability - households which gain access to (or
       demonstrate acute need for) social housing are typically faced with a range of
       problems of which affordability is only one. Conversely households whose main
       problem is affordability have a limited chance of gaining access to social housing.
2.25   A third hypothesis is that the private rented sector mops up more of the need for
       affordable housing than we have allowed for and many places which apparently
       face affordability issues have an adequate private rented sector to deal with the
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       demand in the local area. We do not have up to date figures on the private rented
       sector and it may be appropriate for the Assembly or the Regional Housing Board
       to consider how this information could be obtained.

       Modelling at settlement level
       Development of a local level model
2.26   Our analysis of indicators has looked at differences at local authority level. Local
       authorities cover relatively large areas which are not homogeneous in housing
       terms, but can have a wide variety of settlements and housing circumstances
       within them. This means that there will often be quite different situations in
       different parts of the same local authority area.
2.27   To attempt to address this, we developed a model which examines affordability at
       settlement level and which:
       •   Uses more detailed data, at a finer spatial level;
       •   Uses more relevant data, on housing costs and incomes;
       •   Attempts to capture the actual processes by which affordability and access to
           housing is determined.
2.28   The model uses information from various official sources, which are linked
       together in GIS to give a geographically detailed profile. The model initially aims to
       provide relative affordability, demand and needs estimates. The results are not
       intended to provide an accurate picture of demand at the local level but to show
       the relative demand for affordable housing. The model is a prototype which could
       be further refined and developed but, as it stands, provides a useful additional
       approach for analysis of key policy issues. A detailed description of the
       methodology is shown in Annex 4.
       Initial outputs of the model
2.29   Some of the GIS maps produced by the model are reproduced below. However
       there remain a number of detailed technical and data discrepancies which will
       require work over a longer time scale to resolve. Input and ‘reality testing’ against
       local knowledge would be required to calibrate the model and determine if and
       where it and is not applicable.




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       Map 2.2:      Demand by urban areas




2.30   This map shows total demand, so mainly reflects settlement size. The next map
       shows demand per 1,000 households.




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Map 2.3:        Affordable housing demand per 1,000 households




2.31   The above map shows that demand for affordable homes varies across the region.
       Settlements with the highest level of need are not concentrated in any one area
       (although there is a slight concentration in the southern and western quadrants
       around London). Within an individual authority, the level of need for affordable
       housing can vary between settlements, suggesting that, at the local authority level,
       policy makers may need to take a flexible approach to delivery - possibly seeking
       more affordable housing in some parts of their area than in others.
2.32   We have also mapped the demand for affordable housing in smaller settlements
       (i.e. under 3,000 dwellings and including settlements with as few as 100
       dwellings). The following map demonstrates that the demand for affordable
       housing in smaller (more rural) settlements is spread right across the region. A
       strategy which required local authorities in some parts of the region to adopt a
       more rigorous approach to the delivery of 'rural' affordable housing would not
       match up to the region's widespread need for more affordable housing in its
       smaller settlements.




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Map 2.4         Affordable housing demand per 1,000 households in settlements
                under 3,000 dwellings




         Development of local authority level information
2.33     For policy making purposes, the level of detail provided by the model would have
         advantages if aggregated to local authority level and it should also take better
         account of existing affordable housing stock.
2.34     The maps below show provisional information at local authority level, as total
         needs and as a percentage of households5. The maps are put forward for
         illustrative purposes and to demonstrate that the model is capable of providing a
         local authority picture which, with further development, could provide very useful
         information at the local and (sub) regional levels.
2.35     The model, as it stands, provides useful information at the strategic level on
         general trends in the need for affordable housing. With further development,
         and sensitivity testing the model could provide a more refined tool for
         analysis of the need for affordable housing at settlement and local authority
         level and we recommend to the Assembly that the value of further work to
         develop the model is actively considered.

5
    Household Reference Persons from Table CAS46


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Maps 2.5a and b:   Local authority information derived from the affordability model




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2.36   The provisional outputs from the model, to a large extent, simply reflect the size
       and population density of different authorities, generally showing a higher need for
       affordable housing in the larger urban settlements. The second map, which show
       a derived need per thousand households, indicates generally higher levels of need
       in authorities to the west of London but also picks out a number of urban
       authorities along the south coast. Further development of the model would assist
       in refining the picture and providing an explanation for the patterns of need it
       shows.

       Summary
       •   We have reviewed a wide range of indicators and focussed on those which are
           used in ODPM's Affordable Housing Index (affordability, households in
           temporary accommodation and overcrowding/sharing);
       •   Only one authority (Oxford) appears in the top quartile for all three indicators;
       •   Generally, whilst affordability problems are focussed in the "more rural" parts of
           the region, the characteristics which indicate housing stress are more likely to
           be found in the main urban areas. The latter are also the areas which tend to
           have the greatest proportion of households on their housing registers;


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      •   There is little statistical relationship between indicators of affordability and
          numbers in temporary accommodation and relet rates;
      •   We have put forward a number of hypotheses to explain the patterns we have
          identified. It seems possible that households in need of affordable housing
          have a tendency to 'migrate' to the main urban areas. This finding was
          mirrored by qualitative comments from the local authorities we consulted;
      •   We have developed a prototype model of affordability which looks at relative
          levels of demand for affordable housing at the settlement level. The model
          suggests that demand for affordable housing varies between settlements within
          the same authority and that demand for affordable housing in smaller
          settlements (rural areas) is widespread across the region;
      •   The model has been further developed to provide a picture of the need for
          affordable housing at local authority level;
      •   The model, as it stands, provides useful information at the strategic level on
          general trends in the need for affordable housing. With further development
          and sensitivity testing the model could provide a more refined tool for analysis
          of the need for affordable housing at settlement and local authority level and
          we recommend to the Assembly that the value of further work to develop the
          model is actively considered;
      •   More information is required on the role of the private rented sector in meeting
          affordable housing need and we recommend that the Assembly (and the
          Regional Housing Board) take steps to understand this sector better.




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3         POLICY REVIEW

         National policy context
3.1       Since Part One of the draft South East Plan was published in July 2005, the
          Government has made a number of important announcements which will (directly
          or indirectly) affect the way affordable housing is delivered through the planning
          system. These include the publication of guides to housing market assessments
          and housing land availability assessment (“Housing Market Assessments, draft
          practice guide” and “Housing Land Availability Assessments; Identifying
          Appropriate Land for Housing Development, draft practice guide”), and the
          consultation draft of Planning Policy Statement 3 (PPS3) - Housing.6
3.2       Draft PPS3 proposes that regional spatial strategies should set out the region's
          approach to meeting affordable housing need, including the affordable housing
          target for the region and for each sub-regional housing market area7. Local
          planning authorities should take this into account in determining their overall target
          for affordable housing provision of different types.
3.3       Draft PPS3 does not specifically address if and how an RSS should deal with
          areas of particularly acute need for affordable housing at the local authority level
          but neither does it preclude such an approach. However, draft PPS3 proposes
          such an approach at the sub-regional level and this may offer the region a different
          direction in dealing with its affordable housing issues rather than a policy based on
          local authority areas.
3.4       The other elements of draft PPS3 of potential importance to this study are (a) an
          indicative national minimum site-size threshold of 15 dwellings but allowing local
          authorities to set different thresholds where this can be justified8; and (b) that local
          authorities should actively manage the risks to delivery if the assumed level of
          finance available for affordable housing is not forthcoming9.
3.5       By reducing site-size thresholds, more sites can be required to deliver affordable
          housing. The impact of reduced thresholds will vary from authority to authority and
          will depend on the profile of sites likely to come forward over the plan period. In
          some areas, a lower threshold will have a significant impact, in other places it may
          make little difference.
3.6       Managing affordable housing delivery is not an issue only for areas with
          particularly acute problems. Wherever public funding is scarce and its availability
          uncertain, authorities need to have a clear and flexible approach which is well
          understood by developers.

         Review of other policy approaches
3.7       We reviewed spatial and housing strategies in the other English regions which are
          likely to be facing similar affordability issues to those found in the South East.
          The regions covered were London (including the London West and London South-
          West sub-regional areas), the South West and the East of England, as well as the
          Regional Housing Strategy for the South East.

6
    Published by ODPM in December 2005
7
    Draft PPS3 para 5
8
    Draft PPS3 para 26
9
    Draft PPS3 para 27
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3.8    We have paid particular attention to:
       •   The rationale offered for affordable housing development;
       •   Problems with affordable housing development;
       •   Solutions to problems, with particular regard to planning and funding.
       Annex 5 sets out the comparative policy review in full. In this chapter we highlight
       the main points emerging from the review.
3.9    All the strategies we reviewed highlighted the need for more affordable housing as
       a key issue in their region. However, none of the strategies have identified
       particular areas where the need for affordable housing is more problematic than in
       other parts of their region. Consequently, the strategies do not have area specific
       policies for affordable housing. However, in London and the East of England there
       are emerging strategies for the individual sub-regions which begin to put forward
       approaches and policies particularly relevant to their circumstances.
3.10   Across the regions there are common concerns about problems faced and a
       number of actions are put forward to overcome these problems. These actions are
       a mix of policy approaches and implementation mechanisms and can be
       summarised as:
       •   Requiring a wider range of sites to deliver affordable housing - through the
           introduction of policies either to reduce site-size thresholds and/or asking
           commercial developments also to provide affordable housing;
       •   Using planning policy to encourage the provision of sites solely for affordable
           housing (e.g. on former employment sites);
       •   Making better use of the existing stock through, for example, targeting empty
           homes and making use of Temporary Management Orders;
       •   Better alignment of the RSS and the RHS to ensure that public spending
           reflects spatial strategy objectives;
       •   Exploiting a wider range of sources of funding including public sector funding
           (local authority and other public agencies such as county councils, health
           authorities), PFI and institutional investment;
       •   Better partnership working with house builders and affordable housing
           providers with a more pro-active approach to pre-application discussions;
       •   Better partnership working between authorities at the sub-regional level and
           which work towards alignment of their policies and approach to implementation
           (e.g. in use of S106 agreements);
       •   Dissemination of good practice;
       •   Encouragement of private/voluntary sector initiatives e.g. community land
           trusts.

       Summary
       •   The recently published consultation draft of PPS3: Housing proposes that
           regional spatial strategies set out the region's approach to meeting affordable
           housing needs, including the affordable housing target for the region and for
           each sub-regional housing market area;
       •  Draft PPS3 neither encourages nor specifically precludes RSS policies relating
          specifically to the provision of affordable housing in defined hotspots. However
          draft PPS3 proposes that RSS consider different policy approaches at the level
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          of sub-regional housing markets and this could be of assistance in the South
          East;
      •   Site size thresholds have an impact on the number of sites on which affordable
          housing can be sought which vary in importance depending on the profile of
          sites coming forward for development. Draft PPS3 proposes that thresholds
          are, as now, a matter for local authorities and provides for greater flexibility to
          introduce lower thresholds;
      •   Other regions in the south of the country share a common concern to increase
          delivery of affordable housing but we found no example of a region which sets
          out a different policy for areas facing particularly acute pressures;
      •   Other RSS and RHS in the south of the country propose a range of measures
          to increase the supply of affordable housing including increasing the supply of
          land for affordable housing, making more effective use of the planning system,
          improved partnership working at all levels and maximising all available (private
          and public) funding sources. The latter policy echoes draft PPS3 which looks
          to local authorities to manage the risks to delivery of affordable housing where
          (public) funding is uncertain.




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4      DELIVERY AND ACCESS TO PUBLIC FUNDING

      Context
4.1    The provision of affordable housing requires subsidy. Land alone has generally
       not been expected to provide a range of affordable housing (although free land will
       often support the provision of intermediate housing and cross subsidy from market
       housing can facilitate the provision of social rented housing). The primary source
       of subsidy for new build affordable housing at present is the Regional Housing Pot,
       flowing through the Housing Corporation’s investment programme. Until recently
       local authorities also had access to Local Authority Social Housing Grant (LASHG)
       which gave those which had this resource the ability to retain some discretion over
       which schemes were funded in their area. Consultees expressed concerns that:
       •   There is insufficient funding from the Housing Corporation for the region;
       •   The Housing Corporation does not distribute its funding in accordance with the
           region’s needs;
       •   The Housing Corporation does not operate in a way which allows its
           investment to be made available when needed;
       •   The Housing Corporation’s resources are not used as efficiently as they could
           be.
4.2    How much investment the Housing Corporation is able to make in the region is
       predetermined by the Government through decisions taken directly by ministers.
       As such, this is not an issue which can be addressed practicably by the RSS. In
       contrast, how the Housing Corporation uses these resources should be a matter
       which is capable of considerable influence by the spatial strategy for the region.
4.3    Given that there is no scope directly to increase the Housing Corporation’s
       resources, the challenge is to facilitate the production of more housing from these
       resources, and to help direct where it is produced.

      The volume of new affordable housing that can be produced through
      funding from the Housing Corporation
4.4    The RSS requires the provision of at least 10,000 affordable homes per year on
       average throughout the plan period (35% of 28,900).
4.5    The Housing Corporation’s 2004-06 programme is expected to deliver some 8,000
       additional affordable homes each year. However, the 2006-08 programme has
       received a significant increase in funding which means that it can currently be
       planned on the basis of producing around 10,000 affordable homes each year. In
       its response to the Barker Report, the Government’s general messages can be
       seen to give comfort about levels of future funding at least being maintained
       through the next Comprehensive Spending Review.
4.6    Superficially, this apparent balance between need and supply could lead to an
       opportunity for complacency. This would be inappropriate, since there are several
       crucial qualifications to the apparent balance:
       •   Promising though the current Government’s commitment to public funding for
           affordable housing undoubtedly is, it would be imprudent to assume it could
           cover the whole of the RSS time horizon for 10-15 years;
       •   The output from the Housing Corporation programme is achieved through a
           substantial share of the investment going into shared ownership and other
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            forms of intermediate tenure, which are substantially cheaper in terms of grant
            requirements;
        •   A substantial part of the Housing Corporation investment, particularly for key
            worker housing, consists of grants for the purchase of existing properties under
            the Homebuy programme10;
        •   Housing Corporation investment has been supplemented through public
            subsidy from other sources – e.g. an additional 6.7% for 2004-06;
        •   Similarly, Housing Corporation investment has been “stretched” to produce
            greater output at lower average grant cost through the use of planning gain to
            subsidise the cost of land and property to RSLs.
        The practical and policy implications of these factors can be considered
        individually.
        Longer-term Perspective
4.7     Although the RHS seeks to provide direction beyond the forthcoming investment
        period of 2006-08, it clearly concentrates on this period and the strategic priorities
        being set for funding allocations for these two years. Care must therefore be
        taken in any interpretation of how the two strategies can actually be harmonised in
        what they have to say about affordable housing supply over the duration of the
        RSS.
4.8     Further caution is required when considering how the scale of housing need is
        likely to change over the period governed by the RSS. The assessment of
        housing need underpinning the RSS is based on projections by Cambridge Centre
        for Housing and Planning Research in its report “Housing Need in the South East”.
        These projections suggest that the rate of growth in need is likely to be
        significantly greater than the average in the period up to 2011 and lower in the
        subsequent years. There is also an estimate of a backlog of some 30,000
        households in the region currently with unsatisfied housing need. If this should be
        addressed in the same early years of the strategy period, at the same time as
        above-average need from new households, the affordable housing that can be
        produced through public investment directed by the RHS, in the coming few years,
        would appear to fall well short of what will be required.
        Tenure Split
4.9     The RSS policy is for some 71% of affordable housing provision to be for social
        rent, with the remainder being for various forms of intermediate tenure (25% and
        10%, respectively, of all housing supply). In contrast, the Regional Housing
        Strategy (RHS) proposes that 65% of funding from the regional housing pot for
        2006 onwards should be for social rented housing.
4.10    Unfortunately – from the RSS point of view - social rented housing requires
        significantly higher grant costs per dwelling compared with intermediate tenure
        housing. This grant-cost differential thus translates into a considerably lower
        proportion of affordable housing output in the social rented category than the
        proportion of funding being used. Using the cost relativities in the Housing
        Corporation’s 2004-06 investment programme, the 65% of funding for social rent
        in the RHS policy is likely to result in only some 48% of output in this category - i.e.
        much lower than the RSS’s 71% target.

10
   Despite the push for Homebuy grants to be targeting new properties built specifically for this
purpose, the Housing Corporation must still reckon with around 1,200 (12%) of the annual output
from its 2006-08 investment falling within this category.
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4.11    This share of 48% is actually higher than the social rented output of 40% arising
        from Housing Corporation investment in the 2004-06 programme, in which 56% of
        the costs went into this category (see table below). Taking an alternative
        perspective, were the output from Housing Corporation investment for 2004-06 to
        have been changed to the 25:10 ratio required by the RSS, the average unit cost
        of homes in the 2004-06 programme would have risen by 23%, and the overall
        volume of output would consequently have fallen by a similar amount to only about
        6,500 homes per annum – well short of the 10,000 target.
4.12    Similarly, the anticipated volume of output from the Housing Corporation’s 2006-08
        investment would, if producing 71% of social rented housing in line with the RSS,
        be less than 9,000 – i.e. despite the increase in resources being made available to
        the region, still less than the 10,000 currently anticipated from targeting 65% of
        expenditure on this category.
Table 4.1:      Tenure Split of Housing Corporation’s 2004-06 Investment
                Programme
 Tenure type        Programme share %          Unit Cost £ 000     Programme using RSS
                                                                       tenure shares

                   By unit      By cost                          By unit           By cost
                                £ 000                                              £ 000
Social rent        39.5         56.0           £55.58            71.4              £55.58
Keyworker          43.8         32.9           £29.46            28.6              £27.90
Other              16.6         10.1           £23.78
intermediate
Total              100          100            £38.85                              £47.66


4.13    Various policy issues arise from this brief analysis:
        •    How is the discrepancy between RSS and RHS to be reconciled in terms of
             types of affordable housing to be produced?
        •    If the RSS’s policy split between social rented and intermediate tenure is to
             prevail, how is the subsidy requirement of the shortfall in volume produced by
             the Housing Corporation to be made up?

        New affordable housing produced in the existing stock
4.14    If, as anticipated, a significant proportion (12%) of the new affordable homes
        produced by Housing Corporation investment consists of purchases of existing
        properties, these will not be represented in the affordable output from new
        developments. While this means that key worker and other needs can be
        accommodated outside the affordable provision on new sites, it does also
        represent a volume of Housing Corporation investment which is not available for
        funding the latter.
4.15    Policy issues arising from this are:
        •    Does the creation of new affordable housing within the existing stock throw into
             question the proportion of affordable housing required from new developments
             – i.e. the quota policy?
        •    If there will be less Housing Corporation funding available for subsidising
             affordable housing in new developments, how is this to be made up?
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       Other public subsidy
4.16   The volume of output from Housing Corporation investment in recent years has
       been achieved partly through the input of significant amounts of subsidy from other
       public sources. With the demise of LASHG, this has now reduced almost
       exclusively to the input of public land at subsidised cost. However, public land is a
       declining asset, and therefore it is probable that the capacity in the region to
       provide “other public subsidy” to support Housing Corporation-funded housing
       might actually decline.

       Planning Gain and location of Housing Corporation funded schemes
4.17   Although this cannot be quantified, it is well known that substantial subsidy has
       been secured through Section 106 agreements to supplement Housing
       Corporation funding of affordable housing to help keep the average grant
       requirements per home to a minimum. Planning and delivering the Housing
       Corporation’s investment programme for 2006-08 and beyond will depend upon at
       least maintaining similar levels of input from planning gain. However, if the volume
       of affordable housing in the region is to be increased further in the future, beyond
       any funding increase that can be assumed, this will potentially require even
       greater volumes of subsidy from this source to supplement Housing Corporation
       investment.
4.18   There is consequently a policy challenge:
       Can a policy framework be created that will help ensure that planning gain can be
       utilised to subsidise affordable housing in a manner which complements any
       shortfall in the specific or general availability of funding from the Housing
       Corporation?
4.19   There is anecdotal evidence to suggest that Housing Corporation funding is
       increasingly going to large strategic sites (MDAs and SDAs). This makes sense in
       terms of providing continuity of programme but compounds delivery problems for
       those districts who rely on smaller sites.

       The geographical distribution of affordable housing supply produced
       by Housing Corporation investment
4.20   The targeting of Housing Corporation investment has traditionally followed some
       form of assessment of relative housing need. As such, it is a process that might
       be expected to provide some comparability with the RSS interest in addressing
       affordability hotspots.
4.21   For many years Housing Corporation investment targeting related to the Housing
       Needs Indicator (HNI), a statistical measure of relative need among local authority
       areas based essentially on historical data, some up to 10 years old. As such, this
       indicator was not very dynamic, but, more pertinently, it took no account of
       planned or anticipated changes in housing supply and demand. In the context of
       this study, the continued use of such a formula would have meant that any policies
       in the RSS would have little practical effect directly on the distribution of Housing
       Corporation investment.
4.22   In the 2005 RHS, a statistical formula has been used to influence geographical
       distribution of Housing Corporation investment, but not to target this on individual
       local authority areas as was the case under the HNI. A formula has been used to
       categorise local authorities outside of the Government’s designated Growth Areas,
       allowing a broad distribution of funding between three types of investment area.


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       Table 4.2:       Distribution of Housing Corporation Investment
           Type of investment area       Share of Housing               No. of LA areas
                                         Corporation investment
           Growth Areas                                 20%                         7
           High Priority Investment                     50%                        31
           Areas
           Priority Investment Areas                    30%                        29
                                                        100%                       67


4.23   Within these three broad areas, the RHS provides no geographical targeting,
       although it does foresee the emergence of sub-regional working to facilitate this. If
       the RSS (or indeed RHS) is to influence targeting on a finer scale as a means to
       address affordability issues, it is important to recognise that the actual distribution
       of Housing Corporation investment within a targeting framework depends entirely
       on decisions regarding individual housing schemes. Since it is incumbent on the
       Housing Corporation to pursue the best value for money in selecting schemes for
       investment, factors which will influence decisions include:
       •     How much SHG is needed as gap-funding to make schemes viable after
             exploiting opportunities for cross-subsidy and subsidy from planning gain;
       •     Strategic allocations of housing growth within formal plans, and
       •     Opportunities arising through development control outside the formal planning
             system.
4.24   All of these factors relate to areas in which the RSS operates, and therefore they
       present clear opportunities to consider ways in which policies in the RSS might
       positively influence the pattern and nature of investment by the Housing
       Corporation so as to increase the provision of affordable housing where it is most
       needed. Arising from this,
       •     Can and should the RSS include policies which, indirectly through the RHS,
             seek to direct where and how the Housing Corporation utilises its scarce
             resources across the region?
       •     Should there be policies in the RSS which directly influence the location of
             affordable housing in a manner which directly informs and influences the
             Housing Corporation’s investment decisions?
       •     Can the RSS include policies which impose expectations on local authorities
             so as to enhance the clarity regarding the type of affordable housing required?
       •     Will the RSS’s policies on the use of planning gain provide a framework
             through which the Housing Corporation can engage constructively in the
             planning process to increase the supply of affordable housing?

       Uncertainty of grant from the Housing Corporation
4.25   It is a matter of fact that the Housing Corporation – due to its Governmental
       funding regime – cannot provide 100% commitment of funding for the start of new
       schemes beyond the end of its next 2-year programme horizon. For example, no
       absolute commitment can be given now for schemes starting after March 2008,
       although clearly the actual provision of investment for such schemes may continue
       for 2+ years beyond this to coincide with their completion.

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4.26   It is also the case that, once the bidding for the Housing Corporation’s investment
       programme has been closed – i.e. from November 2005 on in the case of the
       2006-08 programme – newly emerging potential schemes cannot be considered
       for inclusion in the programme that will be announced.
4.27   Frequent reference has been made during consultation to the problems that this
       process causes local planning authorities which find that, in the overwhelming
       majority of cases, they are conducting negotiations on S106 sites at a point that is
       too early or too late to obtain certainty of funding from the Housing Corporation for
       any element of affordable housing in the scheme. As a consequence, agreements
       deal with this uncertainty typically through “cascade processes”, which, in seeking
       to protect the financial viability of the scheme, actually increase the uncertainty of
       delivery of the amount and/or volume of affordable housing by introducing yet a
       further process.
4.28   At the same time – and somewhat ironically – the Housing Corporation is
       struggling with other consequences of its cyclical funding regime, namely the
       uncertainty of its ability to deliver on time all the schemes included in its
       investment programme. This uncertainty can be seen as a direct parallel of the
       local authorities’: by artificially imposing a 2-year cycle on the continuous
       development process, decision making occurs at a point in time which is not at the
       most effective time for the majority of schemes, which are hence subject to
       slippage, failure and change.
4.29   As a consequence, the Housing Corporation is seeking to become much more
       proactive to influence the process which precedes schemes emerging as bids for
       investment funding. In other words, the Housing Corporation is seeking to engage
       in supply-chain management, to ensure that it can populate its investment
       programme – through bid rounds and otherwise – with the right kind of schemes,
       in the right locations, and deliverable at costs that are maximising the value for
       money being achieved. This is an attempt to increase the certainty of delivery of
       its own programme, and the Housing Corporation knows that this can only be
       achieved by providing comparable certainty in provision of grant for the schemes
       concerned.
4.30   Given the importance of S106 sites in the region’s development pipeline, an
       obvious implication is that the Housing Corporation is keenly interested in ensuring
       that it is able to inform and engage in those aspects of S106 negotiations which
       pertain to what amount of grant funding could be applied to achieve what kind of
       added value. If this is to result in tougher negotiations which can produce greater
       volumes of affordable housing through higher quotas and/or the greater use of
       planning gain as subsidy, the Housing Corporation knows equally that this can be
       achieved only through its commitment of funding to the scheme in question.
4.31   Given the problems created for local authorities by uncertainty, it is important for
       the Housing Corporation to recognise that it is equally important for local
       authorities to be informed when funding cannot be made available for a particular
       development, as when the Housing Corporation does intend to invest. Through an
       open and honest dialogue, both parties have the ability to provide a much sounder
       basis for purposeful negotiations on provisions for affordable housing in S106
       negotiations.
4.32   Where commitment of Housing Corporation can be achieved, and the Housing
       Corporation plans its future programme with the resulting scheme as part of its
       supply chain, the local authority concerned should be able to feel confident that
       the Housing Corporation is equally as dependent on the success of the scheme as
       this success depends on the Housing Corporation’s provision funding. In other
       words, even without legally-binding certainty of Housing Corporation funding, local
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       authorities which work jointly with the Housing Corporation in this way can bind the
       funder into a partnership which provides sufficient certainty for robust negotiation
       with developers.
4.33   As a baseline target, it would appear prudent to seek from the Housing
       Corporation an “indicator” of funding availability for particular development sites
       which directly parallels the inclusion of these sites in the 5-year supply of land for
       residential development required by proposed Government planning policy. In this
       way, the overall supply of housing in any local authority area could be directly
       translated into an equivalent aspiration regarding affordable housing supply. In
       turn, this should provide an enhanced framework through which all parties could
       work within an environment of reduced uncertainty, which can be reflected in
       associated S106 agreements (ironed out through the negotiation process).
4.34   In reality, a degree of uncertainty will always remain, and all regional and local
       strategies will have to take this into account. It has become increasingly common
       practice to deal with uncertainty through a 'cascade arrangement' in a S106
       agreement - this sets out both what can be achieved with £X of subsidy and the
       alternative arrangements if the subsidy is less than expected. However, it is
       strongly recommended that an alternative approach be considered. In this, a
       baseline position is set out of what affordable housing is required without subsidy;
       the associated alternative arrangements then reflect what provision could be
       achieved if different levels of public funding become available. This approach
       could be called a 'reverse cascade'. It has the advantage of making clear the
       additional value (in terms of delivery of affordable housing) that is directly
       attributable to the public investment being made, and for this reason fits neatly into
       the “gap-funding” approach being developed to guide Housing Corporation
       investment. The onus to secure the public funding would almost invariably lie with
       the local authority (and possibly the relevant RSL), but this approach would clearly
       support a participatory approach involving all parties in determining the final shape
       of a scheme.
4.35   Another key area of uncertainty relates to windfall sites. Across the region, sites
       will be brought forward unexpectedly, presenting opportunities for additional
       affordable housing which had not been taken into account in the management of
       the existing pipeline of schemes being prepared for development. Despite
       knowing windfall sites will occur, their timing and location cannot be predicted, and
       this demands some flexibility from the policy framework for public funding.
       Specifically, it will need to accommodate reasonable expectations of funding that
       arise to ensure affordable housing provision in strategically significant
       opportunities. Two key factors will determine whether this can be achieved.
       Firstly, the Housing Corporation - possibly working with other funders - will need to
       maintain reserves or use other programme management tools to ensure that
       funding streams can be “bent” to accommodate the opportunistic requirements.
       Secondly, the planning system must be operated in such a way that intelligence
       about emerging windfall sites is made available to the potential funders at the
       earliest possible opportunity.

       Additional policy guidance suggested for the RSS
4.36   Policy H4 refers to LDDs containing “policies to deliver a substantial increase in
       the amount of affordable housing in the region”. It is essential that the RSS allows
       no scope for local planning authorities believing that this requirement is satisfied
       merely by delivering land on which affordable housing can be constructed. The
       delivery of affordable housing requires not only land but also the subsidy which is
       applied to make it affordable. (See the definition in the RSS).

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       AFFORDABLE HOUSING DEFINITION
       Affordable housing is defined as that provided with a subsidy to enable the
       asking price or rent to be substantially lower than the prevailing market
       prices or rents in the locality and which is subject to mechanisms that will
       ensure that the housing remains affordable for those who cannot afford
       market housing. The subsidy is provided from the public sector, usually
       through a local authority or registered social landlord, or from the private
       sector through planning obligations. This definition covers housing for
       social rent, shared ownership, low cost home ownership and sub-market
       rent.
4.37   In order to address the need to deliver more affordable housing in the region, the
       LDDs needs to provide policies to guide the use of planning obligations in a
       manner which complements the use of public subsidy. As a consequence, it is
       suggested that the RSS includes further policy details with regard to LDDs which
       place an onus on the local authority to address matters of subsidy as well as land
       availability. This approach will make it imperative that there is an effective level of
       co-operation and co-ordination between planning and housing departments in
       local authorities. Where this is not already the case, the mechanisms put in place
       to implement the RSS will need to include an onus on local authorities to generate
       the necessary leadership to carry through the required changes in approach.
       LDDs will provide comprehensive policy and guidance to ensure the delivery
       of affordable housing on land planned for this purpose:
       •   When quotas for affordable housing on any site are to be fixed, there is a
           commitment to establish and ensure in advance the requisite provision of
           subsidy from public sources or via planning obligations;
       •   Clarification of the role of affordable housing as a potential recipient of subsidy
           from planning obligations, reflecting the commitment to deliver a particular
           volume of affordable housing within the area, but also ensuring a balance
           where there are competing uses for this form of subsidy;
       •   A framework for making acceptable adjustments to the type and tenure of
           affordable housing within a particular scheme, reflecting local need and
           housing market assessments, and the opportunity for cross-subsidy or other
           measures to reduce the overall subsidy requirements;
       •   Where funding remains uncertain, S106 agreements should include “reverse
           cascade” arrangements which set out what type and level of affordable housing
           will be provided with different levels of subsidy over and above a no-subsidy
           baseline;
       •   A model for S106 agreements for affordable housing which assumes levels of
           subsidy agreed with funders and specifically avoids any opportunity for
           signatories to undermine these through competition based on land or property
           price or any other element to which commitment of funding had been tied.
4.38   This policy framework must be accompanied by a practical approach to creating
       effective working relationships on the ground. It will require negotiation and liaison
       with the respective stakeholders in any potential housing scheme to ensure both
       the practical delivery of the affordable housing and the financial viability of the
       housing development as a whole.
4.39   In establishing this approach, there will need to be an acceptance by planning
       authorities that public sources of subsidy will normally be available only on the
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       basis of gap-funding, where insufficient subsidy can be generated from planning
       gain or cross-subsidy within a given scheme. In turn, this brings an obligation on
       the local planning authority to engage continuously with the Housing Corporation
       and other potential public funders to inform any assumptions about, or approach
       to, the issue of subsidy. Crucially, this intelligence would be needed before
       entering into any negotiations with developers in which such funding assumptions
       would be a factor.
4.40   When the RSS includes a distribution of new housing by district within the region
       in Policy H1, it is to be expected that this will reflect capacity and opportunity for
       residential development rather than housing need, or even demand. It is
       consequently probable that quite unrealistic target quotas would result if all
       individual local authorities had to meet their respective need for affordable housing
       from entirely within the housing growth of their own district. This will place a
       premium on cross-boundary co-operation within groups of local authorities as a
       means to even out the relative pressure on new housing developments of different
       scales in meeting “local” need: by addressing the need in "market areas" defined
       across boundaries. The Regional Housing Board – or its future replacement –
       could have a key role here in facilitating the creation and development of these
       arrangements. Equally, if an imbalance between housing need and strategic
       allocations of growth necessitated this, the Board might even find itself assisting in
       balancing arrangements between separate groups of authorities.
4.41   Another policy therefore emerges for inclusion in H4:
       Where strategic allocations of new housing development in Policy H1 are
       restricted in particular districts because of their limited potential for housing
       development, the LDDs in these and neighbouring local authorities will need
       to be closely co-ordinated to reflect a joint approach to meeting their
       aggregate need for affordable housing.             Cross-boundary nomination
       arrangements will need to be put in place to ensure the continuing and
       appropriate accessibility to affordable housing on larger sites for those in
       need in adjacent areas with lower levels of new provision.

       Summary
       •   There appears to be widespread acceptance that the planning system has
           generally concentrated too much on policies to facilitate affordable housing
           provision, and given too little attention to how its delivery is to be secured. The
           new RSS presents an opportunity to redress this through a requirement that
           LDDs establish policies geared to securing deliver;
       •   The investment programme of the Housing Corporation - the main source of
           public subsidy - is currently geared to producing the 10,000 new affordable
           homes required in the RSS. However, in line with the Regional Housing
           Strategy (RHS), these will include significantly fewer homes for social rent than
           required in the RSS. This indicates a clear need for the two strategies to be
           reconciled. It also means that, for more social rented homes to be produced in
           line with the RSS, with their greater need for subsidy, a significant source of
           additional funding will be needed;
       •   The use of planning gain for subsidising affordable housing is both the most
           readily available funding source and also one which lies directly within the remit
           of the planning system. Strategic policy guidance is proposed for the RSS to
           help ensure that LDDs and the associated development control processes take
           full account of the need to ensure delivery of affordable housing. Specifically,
           this requires S106 agreements to link provision of land for affordable housing

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          directly with the requisite subsidy provided through planning obligations and
          the availability of public subsidy;
      •   Where funding remains uncertain, S106 agreements should include cascade
          arrangements which set out what type and level of affordable housing will be
          provided with different levels of subsidy. This could be expressed as a
          "reverse cascade" which identifies a baseline of provision without subsidy and
          the additional 'value' in terms of the amount, tenure and type of affordable
          housing provided if subsidy becomes available;
      •   Present uncertainties regarding the availability of subsidy from the Housing
          Corporation can be addressed through early engagement of the funding body
          by local authorities in consideration of potential sites for affordable housing.
          Early commitment of all parties works in favour of their mutual interest in
          reducing uncertainty and managing the supply-chain of new housing
          developments. The RSS can encourage this through policy advice for LDDs
          and through its inter-linkage with the evolving RHS;
      •   Where RSS allocations of housing development among local authorities imply
          that the affordable housing element needs to provide for need in more than one
          authority area, this would appear to necessitate the involvement of all
          interested LAs in some form of cross-boundary co-operation, at least in the
          joint consideration of affordable housing on the larger development sites.




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5      ISSUES EMERGING FROM THE RESEARCH

      Evidence Base
5.1    This section of the report draws on the findings of our qualitative research (the
       three local authority case studies, the two workshops and our stakeholder
       interviews) and sets this in the context of our policy review and analysis of the
       available indicators.
5.2    A number of clear themes have emerged. Some of the themes relate to policy
       development at the local level and others to the way policy is implemented. It is
       the latter which stakeholders focused on, effectively saying that better delivery of
       affordable housing needs better means to do so (a local authority 'toolbox' of
       actions).
5.3    An important theme has been the emergence of sub-regions or housing market
       areas. We are increasingly aware of the growing importance of these in regional
       and local planning (and the consultation version of PPS3 proposes that they are
       given extra significance). Local authority stakeholder feedback highlighted the
       importance of developing cross-boundary approaches to issues of affordable
       housing need and supply. This is not always straightforward, particularly where
       one local authority is being asked to meet another’s housing need, or where an
       authority falls within several different housing markets. However there is ample
       evidence of local authorities coming together on a formal or informal basis to
       address common housing problems.

      Idenitfying those parts of the region with particularly acute problems
5.4    A central element of our task has been to consider if there is a clearly identifiable
       group of authorities for whom a specific approach in the South East Plan would be
       warranted.
5.5    The earlier analysis of the indicators showed that there is neither a single
       indicator nor a particular bundle of indicators which give a clear answer to this
       question. For all the indicators (singly or in combination) show a graduation of
       problems faced - increased difficulties are a matter of degree and not kind.
5.6    We also found that there is a difference in the kinds of problems faced by different
       types of authorities - with the region's main urban centres having to deal with
       symptoms of housing stress (over-occupation and sharing and homelessness
       issues) whilst the highest affordability scores were generally found in less urban
       authorities - particularly in the southern and western quadrant around London.
5.7    There is also evidence (supported by the qualitative views of our consultees) that
       there is a 'drift' of affordable housing need towards the region's urban centres.
       This will be a gradual process, often indirect as households move in and out of
       different housing situations (e.g. sharing with friends, using the private rented
       sector etc) and very difficult to measure. Nevertheless it seems to be a real
       phenomenon which needs to be recognised. Whilst this may remove symptoms
       of housing stress from more rural areas it contributes to social polarisation and
       weakens the local economic base. It also raises questions about the long-term
       sustainability of communities affected.
5.8    Our analysis has also highlighted that issues of affordability vary within authority
       areas at the settlement level. Importantly, high levels of demand for affordable
       housing in smaller (rural) settlements are evident across the region and are not
       concentrated in any particular area.
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5.9        The views of our consultees mirror the statistics. They argued that affordability is
           an issue faced across the region. The gap between earnings and house prices is
           wider in some parts of the region than others but even in those places where the
           gap is relatively small affordability is still a serious problem for local people.
5.10       Consultees preferred measures of affordability to other indicators (e.g. housing
           registers, levels of homelessness). They argued that affordability is the one
           measure which is not directly related to housing management policy and practice.
           However, relying on affordability indicators alone ignores issues of housing and
           social stress and, as we have seen already, areas with the most acute
           affordability problems tend not to be areas suffering from housing stress.
5.11       Authorities were also very concerned that any policy which sought to identify
           areas which faced particularly acute issues of affordability or housing need would
           necessarily imply that these problems would be less acute elsewhere. The
           smaller the group of authorities identified with particular problems, the larger the
           group seen to have lesser problems. In practical terms, and despite the overall
           regional target set out in the South East Plan, authorities said they would find it
           difficult to pursue a rigorous approach to policy development and implementation
           if they were not in the identified 'pressured' group of authorities.
5.12       In terms of delivery of affordable housing, feedback from stakeholders indicated
           that differential policies within the RSS would weaken the position of some local
           authorities whose needs, whilst not as great as those of “housing hotspots” still
           called for a vigorous planning policy response.
5.13       There are however arguments that a common approach to housing hotspots
           between the RSS and the RHS would provide greater clarity on the availability of
           public funding for affordable housing which in turn would assist delivery and
           enable local authorities to undertake better informed negotiation with developers,
           landowners and RSLs.

       Possible policy responses
5.14       The need for affordable housing in different locations manifests itself in different
           ways, reflecting the local situation. Two authorities with the same ratio of incomes
           to house prices could be faced with very different patterns of demand for
           affordable housing. Some local authorities see their needs best met by delivery of
           a relatively high proportion of intermediate housing whilst others need to achieve
           more social rented housing. In some authorities, there is a need for more
           affordable housing for single people whilst others require family housing.
5.15       There are real tensions and trade-offs between the aspiration to meet a high
           percentage affordable housing target and the wish to generate social rented
           family housing which requires much higher levels of subsidy. There may be
           scope for the Assembly to provide good practice guidance here but the clear
           message from stakeholders was that these types of decisions should be made at
           local authority (or housing market area/sub-regional) level.
5.16   However, the authorities recognise that there are effectively only two ways to
       increase the overall supply of new affordable housing (although there are other
       avenues available through changes to the existing stock):
       •     They can seek to increase the percentage of affordable housing on mixed
             tenure sites; and/or
       •     Increase the range of sites on which affordable housing is sought.
5.17   Increasing the amount of affordable housing on mixed tenure sites has its limits.
       There is the practical question of development economics (which we return to
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       later) and wider issues of achieving mixed and sustainable communities. There is
       no single figure we can put forward which is a 'natural ceiling' to the percentage of
       affordable housing consistent with delivering successful mixed communities. There
       are examples of emerging good practice around the region and it is clear that the
       right mix of housing types and tenures will need to reflect the balance of local
       needs.
5.18   Increasing the number of sites on which affordable housing is sought could be
       very important to some authorities which rely on a large number of smaller sites for
       their housing supply. We believe that more could be done at local authority level to
       exploit the full range of sites where affordable housing is sought. What is required
       is a more systematic approach to the analysis of sites likely to be available over a
       plan period and greater attention paid to the contribution small sites could make.
       There will be areas where small sites contribute little to the overall housing supply
       and here a low (or zero) site-size threshold would serve little purpose but other
       areas would benefit significantly from a low site-size threshold.
5.19   Consultees suggested that authorities should adopt a 'sliding scale' of affordable
       housing requirements - seeking a lower percentage of affordable housing or a
       financial contribution on smaller sites. There are administrative advantages to this
       approach which simplifies dealing with very small sites, but care needs to be taken
       that smaller sites are not receiving a disproportionately favourable deal compared
       with larger sites. This requires careful analysis of the economics of development.
       Whatever the threshold there will always be a “just under the threshold problem”
       and this is one argument for the widespread adoption of an approach which seeks
       an affordable housing contribution from all sites.

       Sub-regional working
5.20   Local authorities are wrestling with the concept of sub-regional working. At HMA
       level this is given very strong support in draft PPS3 and it is also highlighted as the
       way forward in the RHS. Available evidence suggests that in practice housing
       markets (for both affordable and market housing) do operate at sub-regional level,
       so it makes sense for local authorities to build on this approach and develop cross-
       boundary responses to assessing and meeting housing need.
5.21   Whilst there are examples of good practice within the region there are clear issues
       about:
       •   Distribution of housing allocations between urban and rural areas;
       •   Distribution of funding between large and small sites;
       •   The operation of choice based lettings.
5.22   Again it is realistic to expect individual HMAs to develop purpose built solutions,
       but it may be appropriate for the region to provide clear encouragement
       within the RSS to promote good practice in cross-boundary working, to
       provide guidance on factors to take into account and to apply sanctions to
       those HMAs which fail to develop policy responses to these issues.
       e.g. sub-regions which identify areas within the sub-region which have acute
       problems should review future supply of sites delivering affordable housing
       and come forward with spatial and housing policies which deliver across
       their sub-region.

       Implementation
5.23   Effective local authorities have clear policies, the right skill mix, effective corporate
       working, political commitment and consistent application of policy. They may
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       however be hampered by lack of clarity in government guidance, uncertainty about
       the availability of public subsidy and a lack of land due, for instance, to national
       and local designations.
       Government guidance
5.24   Stakeholders considered that draft PPS3 has been helpful in its approach to
       thresholds, financial viability and rural exceptions sites but has been less than
       clear on the role of local authorities in specifying the mix of market housing. There
       was no suggestion that the Assembly could use the RSS to provide greater clarity
       on affordable housing policy. There was however (in conjunction with the RHS)
       considerable scope for addressing the issue of availability of public subsidy.
       Access to public subsidy
5.25   Development economics is the critical issue here. The move by the Housing
       Corporation to a gap funding regime highlights the need for all parties to know how
       much (and what kind) of affordable housing can be delivered through land value
       alone. This is even more important if, as for many local authorities, potential land
       supply (particularly if lower thresholds are introduced) exceeds potential public
       funding. Authorities struggle to deal with this and to be confident that they are
       maximising potential. Simply asking for free land on which to provide a specified
       percentage of affordable housing does not provide an adequate solution, making it
       difficult to provide social rented housing and obviating any opportunity to pick up
       gains from cross subsidy.
5.26   The issue here is not that planning policy is unclear, but that local planning
       authorities may lack the means (and the confidence) to undertake appropriate
       negotiation with landowners and developers. These negotiations often take place
       without involving affordable housing funders and providers or providing early
       notice to the Housing Corporation of likely sites coming forward and this
       contributes to poorly worked up schemes which are unlikely to secure public
       funding.
5.27   The Assembly (working in conjunction with the Regional Housing Board
       through the RHS) could usefully provide guidance to local authorities on
       how to tackle these issues. This could be done through the provision of
       best practice guidance development of protocols/models for securing value
       for money in affordable housing provision and training sessions for local
       authorities in negotiation with landowners/developers.
5.28   S106 agreements also need to be clear about what will happen where a
       commitment of grant cannot be secured, or anticipated grant does not
       materialise. Here we support emerging good practice of a cascade approach
       which sets out options in terms of the type and tenure of affordable housing
       to be delivered with and without grant.
       Land supply
5.29   The introduction of lower and more flexible thresholds has gone some way to
       address issues of land supply, but concerns remain about increased dependence
       on affordable housing coming forward within market housing schemes which are
       subject to the fluctuations of the market. Many rural (and some urban) areas face
       issues about overall land supply and restrictions imposed by national and local
       designations. Local authorities working within the proposed national parks also
       face emerging issues relating to both the supply of land and how planning policy is
       administered. In some rural areas accurate identification of available land in
       sustainable locations remains a live issue relating to overall housing supply as
       much as to affordable housing provision. The Assembly will need to review them

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       in this context whilst taking into account that they have knock-on effects on
       affordable housing supply.
5.30   Stakeholders interviewed did not suggest that either landowners or developers are
       holding back land which has been identified for development. There was a
       suggestion that there may be some small public sector sites, particularly in rural
       areas, which could go for affordable housing (i.e. as allocated exceptions sites) but
       which did not come forward because public sector landowners expect to receive a
       “best value” based on the value of the land for market housing. For larger sites
       (where identified) it may be appropriate to consider the CPO route, possibly in
       conjunction with English Partnerships which is already working to bring forward
       surplus public sector land to facilitate affordable housing provision.
       Windfalls
5.31       Emerging government policy strengthens the case for seeking affordable housing
           on sites that come forward quickly and unexpectedly. Individual sites may be
           small but collectively could substantially increase provision of affordable housing.
           This is of particular importance in locations where overall land supply is
           constrained and will have implications for securing funding which we discussed in
           the previous chapter. Local authorities may wish to develop specific policy
           mechanisms for processing small sites (including the use of financial
           contributions where appropriate) and the Assembly should consider
           providing guidance on best practice in this process.
       Major sites
5.32   An increasing proportion of all new development (and hence of affordable
       development) appears to be focussed on major sites (major development areas
       and strategic development areas). The growth areas provide a dramatic example
       of this but many other local authorities (and sub-regions) also have local “growth
       points” which will make a significant contribution to meeting affordable housing
       need.
5.33   Several local authorities referred to difficulties in bringing forward these major
       sites, reflecting the complexity of the sites, infrastructure issues, landowner
       expectations and lack of skills/resources within the local authorities concerned. In
       some cases EP/ATLAS is now performing a valuable function as “honest broker”
       with access to key regional decision makers. It may be that this is sufficient to
       enable development to take place, but it seems probable that there is also a
       role for the Assembly in:
       •     Facilitating exchange of best practice between local authorities;
       •     Working with the Regional Housing Board to help to establish common
             protocols with regard to Choice Based Lettings, nomination rights and
             working relationships within sub-regions;
       •     Working with the Government Office to ensure effective monitoring of
             housing provision on major sites by type and tenure.
       Rural affordable housing
5.34   Both the RSS and the RHS offer specific support for provision of rural affordable
       housing in sustainable locations
       “In rural areas, Local Development Documents will promote small scale
       affordable housing sites within or well-related to settlements, possibly
       including land which would not otherwise be released for development”
                                                              Policy H4 of the South East Plan

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5.35   The RHS allocates funding for 750 affordable homes in rural areas.
5.36   Government policy on affordable housing is being reviewed. Draft proposals
       strengthen the case for local authorities to adopt lower thresholds (where justified),
       clarify that a differential proportion of affordable housing can be sought where
       need is greater, provide support for allocated exceptions sites in villages and
       market towns and windfall exception sites in small rural communities and clarify
       that the brownfield test is genuinely sequential and does not rule out greenfield
       development where no other land is available.
5.37   Stakeholders interviewed recognised the acute shortage of affordable homes in
       rural areas throughout the South East and one of the main findings of our analysis
       of indicators has been the prevalence of affordability issues in rural areas across
       the region. This confirms the importance of making full use of planning policy to
       meet rural affordable housing need.
5.38   Various stakeholders suggested that the rural economy is growing and changing
       and makes an important contribution to meeting the South East Plan's economic
       objectives. Others referred to the need for a wider range of new build housing (not
       just affordable but also lower value market housing) to meet housing need/
       demand and deliver sustainable communities in rural areas.
5.39    All of our contributors stressed the importance of co-operation with parishes in
       assessing and meeting rural housing need. The NIMBY response is alive and
       flourishing in the South East and it is unlikely that the majority of parishes will
       support additional provision of affordable housing. It would however be
       unfortunate if the South East Plan did not provide the tools to maximise provision
       where this is welcomed. There are emerging examples of good practice and
       the region should work closely with exemplars of good practice in order to
       develop an effective and supportive policy framework.
5.40   Finally where supportive planning policies bring forward additional land for
       rural affordable housing, this will have implications for the RHS and public
       funding requirements. The Assembly should work with the Regional Housing
       Board to develop a coherent response to these issues.

       An ageing population/better use of existing stock
5.41   Discussion with stakeholders highlighted concerns relating to under-occupancy of
       both affordable and market housing due to the ageing of existing residents (not all
       of whom will be elderly but could include older households of working age). These
       problems are more acute in some areas than others, and are likely to be
       particularly significant in rural areas. Local authorities referred to the difficulty of
       providing suitable move on accommodation for older households who may not yet
       be ready for sheltered or extra care housing. Many of these households were
       unlikely to wish to live in smaller flatted units and it was questioned whether
       current housing mixes provided the right type of housing for them.
5.42   It may be appropriate for the Assembly to undertake research into the
       housing needs of older households and the extent to which provision of a
       wider range of housing options would reduce under occupancy and widen
       housing choice. This ties in with policies CC11 of the RSS11 “Supporting an
       Ageing population”, H6 which calls for local authorities to identify the needs of a
       wide range of households and Policy H7 which requires local authorities to




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       consider incentives to encourage smaller households occupying larger dwellings
       to move to smaller dwellings.

       Monitoring
5.43   Effective monitoring of affordable housing delivery is critical. We found a wide
       range of practice between individual local authorities. It seems to us that, as a
       minimum, the RSS should require local authorities to monitor for both total
       and affordable housing provision:
       •   Starts/completions/planning permissions (outline/detailed);
       •   Tenure;
       •   House type/size;
       •   Number of bedrooms/bed spaces.
5.44   This should include a consistent breakdown of affordable housing records by type
       which conforms at least to the targeting in RSS – i.e. social rented/ intermediate –
       and, if practicable, to more detailed targeting in the RHS and LDDs. Local
       authorities should also identify whether affordable housing schemes have been
       funded from the public purse or entirely through S106 contributions and should
       record financial contributions towards affordable housing provision.
5.45   There was evidence that pressure from ODPM via GOSE on local authorities
       regarding their short-term performance in delivering land available for residential
       development is compromising their position in negotiating deals on S106
       agreements from developers. The suggestion is that local authorities end up
       accepting inferior deals in order for the resulting planning permission to count
       against the short-term target. Conversely, if a longer-term perspective in the
       monitoring of local authority performance was applied, local authorities would be
       able to secure better deals producing more affordable housing on the sites in
       question.
5.46   It may be appropriate for the Assembly to discuss with GOSE/ODPM the
       possibility of developing specific CPA targets which would require local
       authorities to demonstrate that they have a process in place to deal with
       affordable housing issues, including monitoring of the delivery of affordable
       housing. This would be of assistance to those officers who report that members
       do not want to address affordable housing issues.
5.47   The Assembly should establish arrangements for monitoring the affordable
       housing policies contained in new LDDs. This will facilitate a review of local
       authority performance in implementing the RSS and, more significantly in this
       context, it will facilitate the continuous assessment of whether there is a
       consequent need for intervention to ensure that the overall regional target for
       affordable housing will be achieved when aggregating all the quotas for individual
       local authority areas.
5.48   Improved co-ordination between the RSS and the RHS is required as a
       matter of urgency. This should aim to harmonise the breakdown of planned
       new affordable housing provision within the RSS and RHS. The current
       inconsistency undermines the integrity of both and represents a real challenge in
       terms of local policies and practical delivery.

       Summary
       •   Consultation with stakeholders and local authorities indicates that a policy
           which identified areas with particularly acute need for affordable housing would
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          not be helpful. It could undermine efforts to deliver affordable housing in
          authorities not included under the policy and would not properly reflect the
          diverse range of affordable housing problems faced at the local level;
      •   The two main planning policy mechanisms which could increase the supply of
          affordable housing at the local level are to increase the percentage of
          affordable housing on mixed tenure sites; and/or to increase the range of sites
          on which affordable housing is sought. Increasing the amount of affordable
          housing on mixed tenure sites has its limits. There is the practical question of
          development economics and wider issues of achieving mixed and sustainable
          communities. Increasing the number of sites on which affordable housing is
          sought could be very important, especially for authorities which rely on a large
          number of smaller sites for their housing supply. We believe that more could
          be done at the local level to exploit the full range of sites where affordable
          housing is sought;
      •   Sub-regional and cross-boundary working is becoming increasingly important
          and the Assembly can play a role in sharing emerging good practice;
      •   A good understanding of development economics is very important in efforts to
          maximise the supply of affordable housing, with and without public subsidy.
          The Assembly can help by facilitating the sharing of good practice and may
          wish to consider the development of a region-wide model which can be used
          by local authorities, as is the case in London;
      •   A growing reliance on mixed tenure schemes for affordable housing provision
          means that the supply of land for affordable housing is increasingly linked to
          the overall pace of housing development;
      •   Where housing land supply largely depends on major sites, difficulties in
          bringing forward the sites can have a significant impact on the supply of
          affordable housing. The Assembly (alongside other agencies e.g. EP) could
          assist through, amongst other things, sharing of good practice and work with
          the Government Office;
      •   The shortage of affordable housing in rural areas is a region-wide concern and
          it is important that full use is made of the planning policy to address the issue.
          Supportive planning policies which bring forward additional rural affordable
          housing need to be backed by a coherent response between the Assembly and
          the RHB;
      •   An ageing population in the region has implications for the type and size of
          (affordable) housing provided and the extent to which the provision of a wider
          range of housing options would reduce under-occupancy and widen housing
          choice;
      •   Effective monitoring of the delivery of affordable housing is critical but practice
          varies across the region. Information about permissions granted, starts and
          completions (by size, type and tenure) should be regularly collected and
          include information about funding sources.




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6.     CONCLUSIONS AND RECOMMENDATIONS
6.1    We worked with seven study objectives, to:
      •   Consider additional measures which could help increase the provision of
          affordable housing in areas which are affected by particularly acute problems
          of access to such housing;
      •   Consider whether additional spatial planning policies are needed;
      •   Consider whether additional policy guidance on these issues is required in the
          South East Plan or whether this is more appropriately a matter for LDDs;
      •   Consider how areas where affordability problems are most acute could be
          identified;
      •   Consider the appropriate mechanism(s) for identifying these areas and keeping
          them under review;
      •   Prepare robust advice that can be used to inform Section D3 of the South East
          Plan;
      •   Consider whether there are additional mechanisms required to deliver the
          necessary affordable housing which would be outside of but complementary to
          the spatial strategy – these could represent recommendations for the Regional
          Housing Strategy or other instruments.

      Areas with acute problems
6.2    We start by consideration of how areas where affordability problems are most
       acute can be identified. We have analysed a range of indicators of both
       affordability and housing stress and have compared our analysis with that
       undertaken using methodologies derived by ODPM and used within the RHS.
       Our conclusion from analysis of key indicators is that, although individually they
       provide useful data and assist in the preparation of policy and development of sub-
       regions and HMAs, they are of limited value in identifying areas where housing
       problems are most acute. This is because affordability is not the only, or even the
       main indicator of housing need and different indicators of housing need provide
       radically different messages on areas where housing problems are most acute.
6.3    Feedback from stakeholders suggests that although they recognised the concept
       that affordability was worse in some areas than others, there are few if any areas
       where affordability issues did not arise. Local authorities in particular were not
       enthusiastic about policies in the RSS which prioritised affordable/housing need in
       some areas, feeling that this would weaken pressure to maximise affordable
       housing provision in those areas which were not identified as “hotspots”.
6.4    Stakeholders were also unable to identify planning policies which should apply in
       areas of affordability pressure which could not usefully be applied in other parts of
       the South East, subject to local circumstances and the ability to demonstrate that
       they were appropriate (e.g. lower thresholds can contribute to meeting affordable
       housing need where land supply is constrained or small sites typically come
       forward).
6.5    There was however widespread recognition that provision of affordable housing is
       complex and unsatisfactory and that there could be a role for the Assembly in
       developing a more effective approach to the provision of affordable housing
       throughout the region, through a range of mechanisms including policy guidance in

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       the RSS, promotion of good practice, further research, development of more
       effective monitoring systems and closer liaison with the RHS.
6.6    We have concluded that a policy which provided, "further guidance on the
       provision of affordable housing in those parts of the region with particularly
       acute problems of access to such housing," would not be helpful and we
       recommend that the Assembly does not pursue this as part of the RSS. Our
       main reasons for this conclusion are, first, it would not be practical (there is
       no indicator or set of indicators which would adequately define areas with
       particularly acute problems), second, it could be potentially misleading in
       that the region faces different sorts of problems in different areas and
       affordability per se is only one of a number of factors which influence the
       nature of the need for affordable housing at the local level and, third, such a
       policy may not be helpful for those authorities who were excluded from the
       definition but still face significant affordable housing issues.
6.7    As part of our review of indicators, we developed a prototype model to assess
       levels of need for affordable housing, based on the comparison of local incomes
       and property prices. The model has been useful in highlighting important region-
       wide issues. The model could be developed further to provide more targeted
       information and we recommend that the Assembly gives consideration to
       the further refinement of a model which could be used at both regional and
       local levels.

       Policy guidance in the RSS
6.8    We make a range of recommendations for the provision of policy guidance in the
       RSS. These centre on:
       •   Sub-regional working;
       •   Thresholds and targets;
       •   Financial viability and the role of public subsidy;
       •   Rural affordable housing;
       •   An ageing population;
       •   Monitoring.

       Sub-regional working
6.9    Sub-regional working on affordable housing provision emerges as a key issue for
       local authorities. This reflects both the operation of housing markets across
       authority boundaries as well the tendency for affordable housing provision to be
       focussed on major sites combined with the inability of some local authorities with
       restricted housing allocations and limited land supply to meet their own housing
       need.
6.10   The Regional Housing Strategy has established a clear direction towards a sub-
       regional basis for planning housing provision, and we found a range of emerging
       practice in the development of sub-regional working. We believe that there is an
       important role for the Assembly in promoting this pragmatic response to the
       challenges of delivering more affordable housing, and helping to ensure that local
       authorities within sub-regions take their common responsibilities seriously. We
       therefore propose that the RSS contains the following policy:
6.11   Where strategic allocations of new housing development in Policy H1 are
       restricted in particular districts because of their limited potential for housing
       development, the LDDs in these and neighbouring local authorities will need
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       to be closely co-ordinated to reflect a joint approach to meeting their
       aggregate need for affordable housing. Cross-boundary nomination
       arrangements will need to be put in place to ensure the continuing and
       appropriate accessibility to affordable housing on larger sites for those in
       need in adjacent areas with lower levels of new provision.

       Thresholds and targets
6.12   There are real tensions and trade-offs here between the aspiration to meet a high
       percentage affordable housing target and the wish to generate social rented family
       housing which requires much higher levels of subsidy. There may be scope for
       the Assembly to provide good practice guidance here but the clear message
       from stakeholders was that these types of decisions should be made at local
       authority (or HMA/sub-regional) level.
6.13   However, the authorities recognise that there are effectively only two ways to
       increase the overall supply of new affordable housing (although there are other
       avenues available through changes to the existing stock).
       •   They can seek to increase the percentage of affordable housing on mixed
           tenure sites; and/or
       •   Increase the range of sites on which affordable housing is sought.
6.14   Increasing the amount of affordable housing on mixed tenure sites has its limits.
       There is the practical question of development economics and wider issues of
       achieving mixed and sustainable communities. There is no single figure we can
       put forward which is a 'natural ceiling' to the percentage of affordable housing
       consistent with delivering successful mixed communities. But good planning does
       not mean, in our opinion, simply aspiring to ever higher amounts of affordable
       housing on individual sites. There are examples of emerging good practice
       around the region, but it is clear that the right mix of housing types and tenures will
       need to reflect the balance of local needs.
6.15   Increasing the number of sites on which affordable housing could be developed is
       very important in some districts which rely on a large number of smaller sites for
       their housing supply. We believe that more could be done at local authority level to
       exploit the full range of sites where affordable housing is sought. What is required
       is a more systematic approach to the analysis of sites likely to be available over a
       plan period and greater attention paid to the contribution small sites could make.
       There will be areas where small sites contribute little to the overall housing supply
       and here a low (or zero) site-size threshold would serve little purpose, but other
       areas would benefit significantly by a low site-size threshold. It may be
       appropriate for the Assembly to provide guidance to local authorities on how
       to derive appropriate targets and thresholds and to consider how this would
       relate to recent draft guidance on housing land availability assessment.

       Financial viability and the availability of public subsidy
6.16   There is considerable uncertainty among local authorities about how to set targets
       for affordable housing provision and how to make trade-offs between types and
       tenures of affordable housing. This is complicated by current uncertainty about
       the availability of public funding and by the recent adoption of an effective “gap
       funding” regime by the Housing Corporation, which puts a premium on
       understanding how much (and what kind) of affordable housing could be delivered
       without public subsidy.
6.17   There is a need for a protocol which clarifies relationships between the
       Corporation, local authorities, affordable housing providers, developers and
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       landowners. There is equally a need for planning authorities' attention to be
       refocused beyond simply the provision of land for affordable housing and on to the
       mechanisms through which this can be delivered. We therefore propose that the
       RSS should contain a policy imposing an expectation on local authorities in
       drawing up their LDDs:
       LDDs will provide comprehensive policy and guidance to ensure the delivery
       of affordable housing on land planned for this purpose:
       •   When quotas for affordable housing on any site are to be fixed, there is a
           commitment to establish and ensure in advance the requisite provision of
           subsidy from public sources or via planning obligations;
       •   Clarification of the role of affordable housing as a potential recipient of subsidy
           from planning obligations, reflecting the commitment to deliver a particular
           volume of affordable housing within the area, but also ensuring a balance
           where there are competing uses for this form of subsidy;
       •   A framework for making acceptable adjustments to the type and tenure of
           affordable housing within a particular scheme, reflecting local need and
           housing market assessments, and the opportunity for cross-subsidy or other
           measures to reduce the overall subsidy requirements;
       •   Where funding remains uncertain, S106 agreements should include “reverse
           cascade” arrangements which set out what type and level of affordable housing
           will be provided with different levels of subsidy over and above a no-subsidy
           baseline;
       •   A model for S106 agreements for affordable housing which assumes levels of
           subsidy agreed with funders and specifically avoids any opportunity for
           signatories to undermine these through competition based on land or property
           price or any other element to which commitment of funding had been tied.
6.18   This policy framework must be accompanied by a practical approach to creating
       effective working relationships on the ground.
6.19   It is our view that, given the expressed need for guidance in this area it may
       be appropriate for the Assembly to provide further practical guidance to
       local authorities on how to evaluate financial viability. Consideration should
       also be given to seminars/workshop sessions which encourage the sharing
       of good practice. This could include the development of a region-wide
       financial evaluation model, which can be available for use at the local level,
       such as that being used in London.

       Rural affordable housing
6.20   Stakeholders interviewed recognised the acute shortage of affordable homes in
       rural areas throughout the South East and one of the main findings of our analysis
       of indicators has been the prevalence of affordability issues in rural areas across
       the region. This confirms the importance of making full use of planning policy to
       meet rural affordable housing need.
6.21   Government policy on affordable housing is being reviewed. Draft proposals
       provides explicit support for lower thresholds (where justified), clarifies that a
       differential proportion of affordable housing can be sought where need is greater,
       provides support for allocated (and windfall) exceptions sites in villages and
       market towns and clarifies that the brownfield test is genuinely sequential and
       does not rule out greenfield development where no other land is available.


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6.22   There are emerging examples of good practice and the region should work
       closely with exemplars of good practice in order to develop an effective and
       supportive policy framework.
6.23   Finally if supportive planning policies bring forward additional land for rural
       affordable housing, this will have implications for the RHS and public
       funding requirements. The Assembly should work with the Regional
       Housing Board to develop a coherent response to these issues.

       Supporting an ageing population
6.24   Discussion with stakeholders highlighted concerns relating to the under-occupancy
       of existing housing - both affordable and market - due to the ageing of current
       residents (not all of whom will be elderly but could include older households of
       working age). These problems are more acute in some areas than others, and are
       likely to be particularly significant in rural areas. Local authorities referred to the
       difficulty of providing suitable move-on accommodation for older households who
       may not yet be ready for sheltered or extra care housing. Many of these
       households were unlikely to wish to live in smaller flatted units and it was
       questioned whether current housing mixes provided the right type of housing for
       them.
6.25   It may be appropriate for the Assembly to undertake research into the
       housing needs of older households and the extent to which provision of a
       wider range of housing options would reduce under occupancy and widen
       housing choice. This ties in with policies CC11 of the RSS, “Supporting an
       Ageing population”, H6 which calls for local authorities to identify the needs of a
       wide range of households and Policy H7 which requires local authorities to
       consider incentives to encourage smaller households occupying larger dwellings
       to move to smaller dwellings.

       Monitoring
6.26   Effective monitoring of affordable housing delivery is critical. We found a wide
       range of practice between individual local authorities with a lack of consistency
       over exactly which information about affordable housing is recorded (and which
       can be passed on to the Assembly for regional monitoring). It seems to us that, as
       a minimum, the RSS should require local authorities to monitor for both total
       and affordable housing provision:
       •   Starts/completions/planning permissions (outline/detailed);
       •   Tenure;
       •   House type/size;
       •   Number of bedrooms.
6.27   This should include a consistent breakdown of affordable housing provision by
       type which conforms at least to the targeting in RSS – i.e. social
       rented/intermediate – and, if practicable, to more detailed targeting in the RHS and
       LDDs. Local authorities should also identify whether affordable housing schemes
       have been funded from the public purse or entirely through S106 contributions and
       should record financial contributions towards affordable housing provision. The
       Assembly should provide guidance on how to do this through a Monitoring
       Task Group
6.28   The Assembly should also consider discussing with GOSE/ODPM the
       possibility of developing specific CPA targets which would require local

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       authorities to demonstrate that they have a process in place to deal with
       affordable housing issues.
6.29   The role of LDDs in the delivery of affordable housing will be crucial. As part of its
       monitoring of conformity with the RSS, the Assembly should establish
       arrangements for assessing whether LDDs are establishing affordable housing
       policies designed to ensure delivery in line with RSS targets and policies. In
       particular, the assessment will need to go beyond the numerical conformity of
       quotas and thresholds in ensuring that the policies pay sufficient attention to the
       operational challenges of managing the use of various forms of subsidy to facilitate
       delivery against targets.
6.30   This monitoring of LDDs will also facilitate a continuous assessment of whether
       the overall regional target for affordable housing will be achieved when
       aggregating all the delivery targets for individual LA areas, and hence a review of
       any action to be taken to get implementation back on course.

       Working with the RHS
6.31   Improved co-ordination between the RSS and the RHS is required as a matter of
       urgency, recognising that the RSS covers a much longer period than the RHS.
       We found different targets for affordable housing provision in terms of percentage
       and type of affordable housing and major issues about the availability of Housing
       Corporation funding as prioritised through the RHS. These are outlined in more
       detail in chapter 4 but, put simply, the RSS looks for 70% social rented housing to
       30% intermediate and aims for a total of 10,000 units pa, whilst the Housing
       Corporation is planning to produce this volume but with less than half the output as
       social rented in 2006-08 in accordance with RHS targets. A switch to the RSS
       proportions is likely to provide funding for no more than 9,000 units if meeting this
       tenure split of affordable housing.
6.32   Public funding is not the only source of subsidy for affordable housing (of whatever
       tenure), but it is important that the RSS and the RHS give out clear and consistent
       messages about how any shortfall is to be addressed.
6.33   It is also important to recognise that higher targets and lower thresholds could
       result in an increase in land coming forward for affordable housing above the
       10,000 units pa. This has further implications for funding and overall delivery of
       affordable and market housing. This is most sharply illustrated in relation to
       individual programmes such as the rural affordable housing programme but its
       implications for overall programme delivery could be significant.
6.34   Co-ordination between the RSS and the RES and the Regional Transport Strategy
       was also raised as an issue by stakeholders. This occurs primarily in relation to
       differing sub-regions and to poor linkages between rural transport networks and
       major transport hubs.

       Promoting good practice
6.35   Stakeholders recognised the need to promote good practice and establish
       networks among affordable housing providers and enablers. This currently works
       quite well at county level and around some specialisms (e.g. rural housing), but
       there is limited opportunity for local authorities within the region to learn from the
       experience of others outside their county or HMA.
6.36   There may be scope for the Assembly to undertake a promotional role in
       presenting seminars/workshops which showcase good practice and
       possibly in providing a pool of expertise at regional level (possibly together
       with the Regional Housing Board) in advising of matters such as
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       undertaking an HMA or developing approaches to assessing financial
       viability.




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7.     SCHEDULE OF RECOMMENDATIONS
In the following schedule we draw together the recommendations made through the
report. They are shown under the chapter in which they first appear. We also indicate the
possible way in which the recommendation could be taken forward.




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      TOPIC                                             RECOMMENDATION                                                         ACTION
Ch 2    AUTHORITIES FACING PARTICULARLY ACUTE PROBLEMS
Affordability     We have developed an affordability model which, as it stands, provides useful information at the      For consideration by the
model             strategic level on general trends in the need for affordable housing. With further development, the   Assembly, possibly in
                  model could provide a more refined tool for analysis of the need for affordable housing at            conjunction with the
                  settlement and local authority level and we recommend to the Assembly that the value of further       RHB, the Housing
                  work to develop the model is actively considered.                                                     Corporation and GOSE
Private rent      More information is required on the role of the private rented sector in meeting affordable housing   For consideration by the
                  need and we recommend that the Assembly (and the Regional Housing Board) take steps to                Assembly and RHB
                  understand this sector better.
Ch4     DELIVERY AND ACCESS TO PUBLIC FUNDING
Funding           LDDs will provide comprehensive policy and guidance to ensure the delivery of affordable              Assembly - new RSS
                  housing on land planned for this purpose:                                                             policy
                  • When quotas for affordable housing on any site are to be fixed, there is a commitment to
                    establish and ensure in advance the requisite provision of subsidy from public sources or via
                    planning obligations;
                  • Clarification of the role of affordable housing as a potential recipient of subsidy from planning
                    obligations, reflecting the commitment to deliver a particular volume of affordable housing
                    within the area, but also ensuring a balance where there are competing uses for this form of
                    subsidy;
                  • A framework for making acceptable adjustments to the type and tenure of affordable housing
                    within a particular scheme, reflecting local need and housing market assessments, and the
                    opportunity for cross-subsidy or other measures to reduce the overall subsidy requirements;
                  • Where funding remains uncertain, S106 agreements should include “reverse cascade”
                    arrangements which set out what type and level of affordable housing will be provided with
                    different levels of subsidy over and above a no-subsidy baseline;
                  • A model for S106 agreements for affordable housing which assumes levels of subsidy agreed
                    with funders and specifically avoids any opportunity for signatories to undermine these through
                    competition based on land or property price or any other element to which commitment of
                    funding had been tied.



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    TOPIC                                                 RECOMMENDATION                                                          ACTION
Cross-boundary     Where strategic allocations of new housing development in Policy H1 are restricted in particular Assembly - new RSS
working            districts because of their limited potential for housing development, the LDDs in these and policy
                   neighbouring local authorities will need to be closely co-ordinated to reflect a joint approach to
                   meeting their aggregate need for affordable housing. Cross-boundary nomination arrangements
                   will need to be put in place to ensure the continuing and appropriate accessibility to affordable
                   housing on larger sites for those in need in adjacent areas with lower levels of new provision.
Ch 5   ISSUES EMERGING FROM THE RESEARCH
Sub-regional       It may be appropriate for the region to provide clear encouragement within the RSS to promote           Assembly - Developed
working            good practice in cross-boundary working, to provide guidance on factors to take into account and        further, could be
                   to apply sanctions to those HMAs which fail to develop policy responses to these issues.                included in the
                                                                                                                           Implementation Plan
                   e.g. sub regions which identify areas within the sub-region which have acute problems should
                   review future supply of sites delivering affordable housing and come forward with spatial and
                   housing policies which deliver across their sub-region.
Access to public   The Assembly (working in conjunction with the Regional Housing Board through the RHS) could             Assembly - Developed
subsidy            usefully provide guidance to local authorities on how to tackle these issues. This could be done        further, could be
                   through the provision of best practice guidance development of protocols/models for securing            included in the
                   value for money in affordable housing provision and training sessions for local authorities in          Implementation Plan
                   negotiation with landowners/developers.
Land Supply -      In some rural areas accurate identification of available land in sustainable locations remains a live   Assembly - Developed
rural areas        issue relating to overall housing supply as much as to affordable housing provision. The                further, could be
                   Assembly will need to review them in this context whilst taking into account that they have knock-      included in the
                   on effects on affordable housing supply.                                                                Implementation Plan




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     TOPIC                                                RECOMMENDATION                                                         ACTION
Windfall sites      Local authorities may wish to develop specific policy mechanisms for processing small sites           Assembly - Developed
                    (including the use of financial contributions where appropriate) and the Assembly should consider     further, could be
                    providing guidance on best practice in this process.                                                  included in the
                                                                                                                          Implementation Plan
Major sites         Bringing forward major sites can be a problematic and lengthy process. There is a potential role      Assembly - Developed
                    for the Assembly in:                                                                                  further, could be
                                                                                                                          included in the
                    •    Facilitating exchange of best practice between local authorities;
                                                                                                                          Implementation Plan
                    •    Working with the Regional Housing Board to help to establish common protocols with regard
                         to Choice Based Lettings, nomination rights and working relationships within sub-regions;
                    • Working with the Government Office to ensure effective monitoring of housing provision on
                         major sites by type and tenure.
Rural affordable    There are emerging examples of good practice and the region should work closely with exemplars        Assembly - Developed
housing             of good practice in order to develop an effective and supportive policy framework.                    further, could be
                                                                                                                          included in the
                                                                                                                          Implementation Plan
                    Where supportive planning policies bring forward additional land for rural affordable housing, this   Assembly to work with
                    will have implications for the RHS and public funding requirements. The Assembly should work          the RHB and Housing
                    with the Regional Housing Board to develop a coherent response to these issues.                       Corporation with aim of
                                                                                                                          developing a relevant
                                                                                                                          protocol
An ageing           It may be appropriate for the Assembly to undertake research into the housing needs of older          Action by the Assembly
population/better   households and the extent to which provision of a wider range of housing options would reduce         through its research
use of existing     under occupancy and widen housing choice.                                                             programme
stock
Monitoring          The RSS should require local authorities to monitor for both total and affordable housing provision: Assembly - Developed
                                                                                                                         further, could be
                    •    Starts/completions/planning permissions (outline/detailed);
                                                                                                                         included in the
                    •    Tenure;                                                                                         Implementation Plan
                    •    House type/size;
                    •    Number of bedrooms/bed spaces.



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     TOPIC                                                 RECOMMENDATION                                                          ACTION
Monitoring cont.    It may be appropriate for the Assembly to discuss with GOSE/ODPM the possibility of developing      Assembly to discuss
                    specific CPA targets which would require local authorities to demonstrate that they have a process with GOSE and ODPM
                    in place to deal with affordable housing issues, including monitoring of the delivery of affordable
                    housing.
                    The Assembly should establish arrangements for monitoring the affordable housing policies               Assembly - Developed
                    contained in new LDDs.                                                                                  further, could be
                                                                                                                            included in the
                                                                                                                            Implementation Plan
Ch 6    CONCLUSIONS AND RECOMMENDATIONS
Areas with          We have concluded that a policy which provided, "further guidance on the provision of affordable        Direct policy
acute problems      housing in those parts of the region with particularly acute problems of access to such housing,"       recommendation
                    would not be helpful and we recommend that the Assembly does not pursue this as part of the
                    RSS.
Thresholds and      (On the setting of targets). There may be scope for the Assembly to provide good practice               Assembly - Developed
targets             guidance here but the clear message from stakeholders was that these types of decisions should          further, could be
                    be made at local authority (or HMA/sub-regional) level.                                                 included in the
                                                                                                                            Implementation Plan
                    It may be appropriate for the Assembly to provide guidance to local authorities on how to derive        Assembly - Developed
                    appropriate targets and thresholds and to consider how this would relate to recent draft guidance       further, could be
                    on housing land availability assessment.                                                                included in the
                                                                                                                            Implementation Plan
Financial           ….. it may be appropriate for the Assembly to provide further practical guidance to local authorities   Assembly - Developed
viability and the   on how to evaluate financial viability. Consideration should also be given to seminars/workshop         further, could be
role of public      sessions which encourage the sharing of good practice. This could include the development of a          included in the
subsidy             region-wide financial evaluation model, which can be available for use at the local level, such as      Implementation Plan
                    that being used in London.                                                                              and/or Assembly
                                                                                                                            research budget




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    TOPIC                                              RECOMMENDATION                                                       ACTION
Promoting good   There may be scope for the Assembly to undertake a promotional role in presenting                   Assembly could take
practice         seminars/workshops which showcase good practice and possibly in providing a pool of expertise       the lead, working with
                 at regional level (possibly together with the Regional Housing Board) in advising of matters such   others such as the
                 as undertaking an HMA or developing approaches to assessing financial viability.                    RHB, CiH and the
                                                                                                                     Planning Officers'
                                                                                                                     Society




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ANNEX 1 STAKEHOLDER DISCUSSION AGENDA
Policy Development
1        Do local authorities need to get better at wording policies or is it simply that the
         policy tools open to them are not strong enough?
2        What are the main obstacles within the planning process to the delivery of
         affordable housing?
3        What are the main obstacles outside the planning process to the delivery of
         affordable housing?
4        What are the main differences in this respect between urban and rural areas?
5        Are there specific planning policy tools (e.g. use of lower thresholds) which would
         improve delivery of affordable housing
IF YES
6        What are the factors preventing development/introduction of such policies?
7        What could be done at the level of the South East Plan to strengthen policies and
         practice at the local level?
Toolbox
8        How does policy translate into practice?
9        Do local authorities have the resources/technical expertise to deliver their
         affordable housing policies?
IF NOT
10       How could the Assembly help (provision of best practice guidance, practitioner
         teams local authorities could call on)?
11       Could Planning Delivery Grant help here?
12       Where land supply is tight what (if any) measures could be taken to bring forward
         land?
13       What could the Assembly do to expedite this?
14       Should it be working more closely with 3rd parties (e.g. EP)? If so how?
15       What can local authorities do to expedite land release? How can the Assembly
         assist them in this?
16       How is the local system operated to ensure the sufficient future supply of land
         coming forward? (and, by default, to do something about it if not), and
17       How is it operated to ensure that sufficient affordable housing is included in this?
18       What is the potential for use of CPO powers or the creation of Special Delivery
         Vehicles?
19       What are the main differences between urban and rural areas?
Harmonising RSS with other Regional Policies
20       In your view do housing policies in the RSS complement policies in other regional
         strategies?
21       Are you aware of conflict between Regional Policies which makes it more difficult
         to deliver affordable housing?

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Monitoring
(Of limited interest to most stakeholders but asked of those with particular expertise)
22     Do you think provision of affordable housing is adequately recorded and what
       should be done to overcome any shortcomings?
With prompts for:
How do you record total housing provision?
−      starts/completions/planning permissions (outline/detailed)
−      tenure
−      house type/size
−      number of bedrooms
How do you record affordable housing provision?
−      starts/completions/planning permissions (outline/detailed)
−      tenure
−      house type/size
−      number of bedrooms
−      How do you identify/monitor affordable housing which is provided without public
       subsidy?
To NHF and RSLs
What proportion of total affordable housing is:
−      On S106 sites?
−      Provided without public subsidy?
How do you anticipate this changing in future?
What are the main differences between urban and rural areas?




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ANNEX 2 CASE STUDY DISCUSSION AGENDA
Defining areas with particularly acute problems
1      Would you say your authority has 'particularly acute problems'?
IF YES - what evidence do you think shows this?
2      How do you think the RSS should define 'those parts of the region with particularly
       acute problems of access to such housing' - are there particular indicators/other
       data sources which you think should be used?


Policy Development
3      What is your plan policy on affordable housing? - covering thresholds, %
       affordable housing on mixed tenure sites (and balance between social-rented and
       intermediate housing), when commuted sums are accepted, exception sites in
       rural areas
4      Is policy under review and how is it likely to change?
5      (Where relevant) Do you have different planning policies for urban and rural parts
       of the district?
6      How much affordable housing is being provided
       - through the planning process?
       - in total (ie taking into account Homebuy, regeneration and other initiatives,
       including 100% affordable housing sites)?
7      Are you falling short of the amount of affordable housing you want to achieve? IF
       YES - Is this about social-rented or intermediate housing or both?
8      Do you think the pace of delivery of affordable housing is likely to pick up in the
       future (say over next 2-3 years)? - IF YES - why is that?
9      What are the main obstacles within the planning process to the delivery of
       affordable housing in your authority? Explore:
       - National guidance
       - Emerging RSS policies
       - PDD process
       - Current development plan policies
       - Other calls on development - other planning obligations
       - Implementation of development plan policies- e.g. understanding economics of
         development, delays in securing planning agreements, changing agenda of
         members.
       - Total supply of sites coming forward
10     What are the main obstacles outside the planning process to the delivery of
       affordable housing? Explore
       - Housing Corporation grant - availability and timing
       - Suitability of sites coming forward
       - Staff availability/skills

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11       What are the main differences in this respect between urban and rural areas?
12       Are there specific planning policy tools (e.g. use of lower thresholds) which would
         improve delivery of affordable housing?
IF YES
13       Are there any problems which would prevent development/introduction of such
         policies?
14       What could be done at the level of the South East Plan to strengthen policies and
         practice at the local level in areas facing particularly acute problems?
15       Would differentiated sub regional policies on affordable housing be of value in this
         authority area? IF YES In what way?


Toolbox
16       How are you structured in order to deliver affordable housing policy?
17       Do you have the resources/technical expertise to deliver your affordable housing
         policies?
IF NOT
         - What additional resources/technical expertise do you need?
         - Could the Assembly provide any help? (e.g provision of best practice guidance,
          practitioner teams local authorities could call on)
         - Could Planning Delivery Grant help here?
18       Are there any issues of land supply which are having a particular impact on
         affordable housing delivery? IF YES - What are they and who and what could be
         done to help unlock land supply?
19       Is there scope for working more closely with 3rd parties (e.g. EP) to increase the
         supply of land for affordable housing? If so how?
20       Is there potential for the use of CPO powers or the creation of Special Delivery
         Vehicles? IF so, In what circumstances?
21       What are the main differences between urban and rural parts of the district?


Harmonising RSS with other Regional Policies
22       In your view do housing policies in the RSS complement policies in other regional
         strategies? - IF NOT, what are the important differences?
23       Are you aware of conflict between regional policies which makes it more difficult to
         deliver affordable housing?


Monitoring
24       Do you think provision of affordable housing is adequately recorded and what
         should be done to overcome any shortcomings?
25       How do you record total housing provision?
         − starts/completions/planning permissions (outline/detailed)
         − tenure

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      − house type/size
      − number of bedrooms
26    How do you record affordable housing provision?
      − starts/completions/planning permissions (outline/detailed)
      − tenure
      − house type/size
      − number of bedrooms
27    How do you identify/monitor affordable housing which is provided without public
      subsidy?




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ANNEX 3 WORKSHOP DISCUSSION AGENDA
Session 1
What characterises areas in the South East which have particularly acute problems of
access to affordable housing
-      is this predominantly an urban or rural issue or is this distinction false?
-      is this about particular local authorities, housing market areas or settlements?
-      is this just a matter of degree or are areas with particularly acute problems
       different in kind?
-      which indicators would best describe areas with particularly acute problems


What are the particular issues in delivering affordable housing which these areas face?
Are they different from issues faced generally in the region?


Session 2
At the local authority level - what family of policies do you think are best at maximising
affordable housing - do some policies matter more than others?
What are the policy obstacles to additional provision (in urban areas and in rural areas)?
What changes to planning policy would help address these issues? Urban and rural-
focus on policy at the local level
How could the RSS help in strengthening the local policy framework?
Are there issues in implementing policy? - e.g. lack of skills, lack of knowledge, lack of
land, nature of sites coming forward, grant availability, need for better partnership working
What could be done to help address these issues? - good practice guidance, better
alignment RSS/RHS
What are the main lessons for
•     Local authorities
•     Developers
•     RSLs
•     Housing Corporation
•     EP
•     Landowners?




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ANNEX 4 AFFORDABILITY MODEL
The information used to build the model was:-
1.        Land Registry house price data at full postcode level for October 2003 to
          September 2004
2.        ASHE – Annual Survey of Hours and Earnings. The new official government
          source of data on earnings replacing the New earnings Survey
3.        A 2001 Census table – CAS 46 - , which links socio-economic classification for the
          Household Reference Person and tenure at Output Area12 level.
The data has been analysed for up to 742 ‘urban’ areas in the South East - which includes
settlements with less than 100 dwellings.
Conflicts between analysis at urban area and at local authority level became apparent, as
the Office for National Statistics ( ONS) urban areas sometimes cross local authority
boundaries, which causes technical problems in grossing the data back up to local
authority level, so it was also necessary to disaggregate the urban areas into their
constituent parts in different local authorities.
The steps in constructing the model were as follows:
Step One
Using a query in GIS an average flat /terrace was derived, as a proxy for entry level house
prices, within each urban area. (Lower quartiles values would be another option for entry
level prices, but this is more difficult in terms of data extraction).
Step Two
Socio-economic classifications from the Census (Table CAS 46) were linked to occupation
profiles used in ASHE (Annual Survey of Hours and Earnings).
Step Three
An earnings level was attributed to each CAS46 Socio economic category from the ASHE
data for the South East region by occupation, using the median level of earnings for
occupation groups which were considered to reasonably represent each socio-economic
group.
Step Four
Since ASHE gives individual earnings, not household incomes, a factor was also applied
for multiple earner households. A factor of 1.5 was used.
Step Five
An income: mortgage multiplier was applied to give a household mortgage capability; a
factor of 3.5 times income was used to give the amount the household could borrow
based on income alone.
Step 6
The borrowing capability was compared to the entry level price for each urban area.
However, because existing owners have equity, and because this has increased over
recent years – all owners were excluded from the estimates of those unable to buy. This
gives a number of households unable to afford to buy on income alone in each urban area



12
     Output Areas are the smallest building blocks for Census data
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A distinction can also be made using the socio-economic categories between those likely
to require social housing and those likely to require intermediate housing of various types.
This is inevitably an arbitrary distinction, for example taking socio economic groups below
lower supervisory and technical as requiring social housing, and socio economic groups
unable to afford above this as requiring intermediate housing.
The process is summarised in the following chart.




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Chart A4.1:     Model Flow Chart




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The model produces estimates of the need for affordable housing on the basis that
households cannot afford entry level house prices in their urban area, on the basis of their
income.
The model is based on an analysis of urban areas13, which covers around 81% of the total
in the region
The model takes account of the stock of affordable housing at regional level, but there are
discrepancies at more local levels due to mismatched data.
It is also likely that the results will be a considerable over-estimate. Much of the need is
made up of private renters who cannot afford entry level housing, but it is by no means the
case that all or even most of these want or ‘need’ to move to affordable housing. The
private rented sector is now effectively the intermediate housing market for many
households.
However even with its limitations, the model could begin to provide robust indicators of the
patterns and proportions of demand at local level, based on more fundamental
affordability factors.
The model would also benefit from being ‘calibrated’ by reference to other sources – for
example against housing needs assessments carried out on a consistent and comparable
basis for each local authority area.




13
     On the basis of table CAS46 from the Census
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ANNEX 5 POLICY REVIEW

The South East
South East Regional Housing Strategy
The main priority of the RHS is to increase the supply of affordable housing, but it does
not set its own target. It refers to the RSS having identified a need for 12,000 additional
affordable homes per annum, while in 2004/05 only 6,700 were built or acquired14, but the
draft RSS now targets a figure close to 10,000. So the RHS acknowledges a need for
significant investment in affordable housing, particularly in social rented accommodation.
The RHS identifies the main issue as being the reliance on the private sector to deliver
affordable housing. Since most new affordable housing is currently being built as part of
large open market developments, often an opportunistic rather than strategic approach to
the planning and delivery of affordable housing supply is being taken. Furthermore, given
the low private sector build rates, the RHS believes it is doubtful that all the affordable
housing need can be met through S106 contributions and grant funding at current levels15.
The strategy also considers the requirement for 25% social rented accommodation within
housing developments as an extremely challenging target, undeliverable without
additional funding.
To tackle these issues the RHS recommends:
•      Exploring the potential for delivering affordable housing as part of commercial
       developments, encouraging companies to provide for the needs of their workforce in
       mixed use developments.
•      Developing other funding sources, including: receipts from ‘right-to-buy’ purchases;
       private finance initiatives; institutional investment, and; collaborative
       employer/employee investment16. Such creative approaches are encouraged in order
       to supplement public investment and deliver grant-free affordable housing.
The strategy goes on to consider the uncertainty over the level and timing of subsidy to be
made available. The RHS states that to “reduce this uncertainty local authorities can set
out clear targets for the numbers of affordable units they expect to be delivered in future
years, to allow the need for grant to be assessed”17.
The RHS states a policy that funding will only be available for schemes that deliver a
density of at least 40 dwellings per hectare.18
The RHS also considers the availability of infrastructure and cross-boundary partnership
working to be crucial factors in successful delivery. Early investment in the former and
early establishment of the latter are regarded as potentially enabling greater affordable
housing supply.
The Regional Housing Board intends to generate proposals to fund a development
portfolio of brownfield sites, initially of publicly-owned land , 'to complement the work of
local authorities and partner organisations such as the Housing Corporation, English
Partnerships and SEEDA'. This initiative reflects the Board's view that the ''substantial

14
     P6 South East Regional Housing Strategy
15
     P48 SERHS
16
     P49 SERHS
17
     P60 SERHS
18
     P55 SERHS
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stock of publicly-owned brownfield land represents a major opportunity for the region.'19
However, there is an open question about its location with respect to where affordable
housing will be needed.
It is acknowledged that the implementation of the housing strategy will be partly
dependent on ensuring funding is aligned with key priorities. Therefore the strategy
requires a ‘significant change in the way resources are allocated, and in particular, a step
change in expenditure for the increase in social rented accommodation’ 20.
For 2006 to 2008 the Regional Housing Board intends to allocate funding as follows21:
•     New social rented housing – The increase in the South East Regional Housing Pot for
      2006-08 will be used to increase the provision of social rented accommodation. 59%
      of overall expenditure will be used for social rented homes which compares with a
      figure of 45% from 2004/06. Once the committed expenditure has been taken into
      account 65% of the new programme of funding allocations for affordable housing will
      be for social rented homes.
•     Key worker housing – This will be maintained at 2005-06 levels, which amounts to
      24% of overall expenditure and equates to 25% of the new programme of funding
      allocations for affordable housing.
•     Other forms of low-cost home ownership – To be aimed at a wider group of essential
      workers, with 9% of overall expenditure for these homes (compares to 10% in 2004-
      06) and 10% of the new programme of funding allocations for affordable housing.
•     Decent homes, social sector – 3% of the total budget is to be set aside to support
      local authorities to meet the social sector decent homes target (compares to 9% in
      2004-06).
•     Private sector renewal programme – 5% of the total budget per year is to be set aside
      for allocation between the local authorities in the region (compares to 1% in 2004-06)
      that have more than 2,000 unfit private sector dwellings or where the proportion of
      their unfit stock in the private sector is 7% or greater.
The housing strategy emphasizes that resources for affordable housing should be
allocated where the need is greatest. 20% of new affordable housing funding is to be
allocated in the growth areas, while the remaining 80% is to be split between two broad
categories of area identified through the affordability index adopted by the ODPM to
allocate funding to the regions22. The affordability index is derived from three weighted
measures: homeless households in temporary accommodation; overcrowding and sharing
households; and housing affordability.
Once sufficient funding has been top-sliced to fund 720 affordable homes in rural areas,
20% is to be allocated to growth areas, 50% to high priority investment areas and the
remaining 30% to priority investment areas23. The availability of land, provision through
section 106 and deliverability are identified as additional factors which will determine
where resources will be allocated.



19
     P59 SERHS
20
     P77 SERHS
21
     P79 SERHS
22
     P81 SERHS
23
  P82 SERHS, Figure 19 shows the funding classification of each Local Authority in the South
East.
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Having identified the importance of being able to match investment to “key priorities”, a
question must remain of whether the RHS has actually articulated these – particularly in
terms of geography – in such a way as to allow those responsible for investment properly
to target them.

London
The London Plan
Paragraph 3.31 of the London Plan sets out that rising house prices, an increase in the
quantity of purchasers and an insufficient supply of new housing into the market have
contributed to a shortage of affordable housing in the capital, forcing many to commute
long distances or to move away from London altogether.
The London Plan sets a strategic target that 50% of all additional housing should be
affordable24. The 50% is split 70% social and 30% intermediate housing.
To address the acknowledged lack of supply in affordable housing development, the plan
considers three planning solutions.
First the boroughs are recommended (in Policy 3A7) to set affordable housing targets for
their authority and then require development proposals to include a high proportion of
affordable housing. Second, low site size thresholds are expected to be used by the
boroughs to maximise the number of development proposals required to deliver affordable
housing25. Third, the Plan promotes a partnership approach, with local authorities
expected to work more closely with RSLs and house builders and to take a more pro-
active approach in pre-application discussions, public consultation and negotiations over
planning agreements26.
The London Housing Supplementary Planning Guidance
The SPG is in two parts, the first covering overall housing provision, and the second
affordable housing.
Part A of the SPG notes the need for additional affordable housing and particularly the
need for social rented accommodation. Policy 3A.12 asks local authorities to have UDP
policies which prevent the loss of housing, including affordable housing, without its
planned replacement at existing or higher densities27.
Part B of the SPG describes an unmet need for affordable housing provision for 112,200
households, with a further 22,400 new homes required each year to meet future growth28.
As in the London Plan, the SPG reviews the planning solutions to boost supply and which
include: high proportion of affordable housing in mixed tenure schemes, low site area
thresholds, and partnership working and collaboration.
However with regard to funding, the SPG does not identify the same funding concerns as
some other regions do; instead continuing to focus on s106 contributions and social
housing grants29 as a funding mechanism for additional affordable housing.



24
     P63 London Plan
25
     P66 LP
26
     P67 LP
27
     P19 The London Housing Supplementary Planning Guidance
28
     P38 LHSPG
29
     P53 LHSPG
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The London West sub-regional housing strategy
The West London Housing Strategy (WLHS) acknowledges that key workers in the sub-
region are already having difficulties finding affordable homes, with those on average
wages unable to afford averagely priced houses.
Dramatic houses price rises over the last ten years have had significant implications for
services trying to attract and retain key workers. The WLHS identifies the effect of this as
significantly undermining the delivery of public services in West London.
The WLHS identifies the most prominent problem in the supply of new affordable housing
as being the financial interest developers have in providing high cost rather than
affordable homes30.
The strategy offers a number of potential solutions, both strategic and practical:
•      The refurbishment of around 50,000 existing empty and dilapidated homes in the sub-
       region - as a means of delivering more affordable housing as well as the wider social
       benefits of bringing empty properties back into use31.
•      A number of councils have begun preparing key worker and intermediate housing
       strategies32 and have begun enabling the development of cross borough
       arrangements to support key services in the sub-region.
•      Setting out sub-region-wide aims by which the delivery of affordable housing can be
       improved. These include developing a regional RSL partnership, a West London
       Affordable Housing Officers Group, identifying regional strategic sites and monitoring
       the delivery of regional allocations33.
The London South-West sub-regional housing strategy
The London South West Housing Strategy states that the sub-region currently has a
shortfall in supply of 15,000 affordable homes per year34. As a result, South-West London
suffers from high homelessness, heavy reliance on temporary accommodation and
problems recruiting and retaining key workers, who cannot afford to live locally. Within the
sub-region, all seven boroughs have recorded a shortfall in their stock and supply of
affordable housing35.
The South West London Housing Strategy (SWLHS) recognises that “affordable housing
has a vital role to play in enabling a range of workers to live and work in the sub-region”36.
Planning policy varies across London with affordable housing quotas ranging from 25% to
50%. The SWLHS indicates a key mechanism to the improved delivery of affordable
housing, is further work to ensure good practice and consistency in S106 agreements and
quotas adopted37.
The strategy relies on two main mechanisms to address the affordable housing issues
identified.


30
     P13 West London Housing Strategy
31
     P15 WLHS
32
     P27 WLHS
33
     P46 WLHS
34
     P4 South West London Housing Strategy
35
     P13 SWLHS
36
     P15 SWLHS
37
     P20 SWLHS
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•      By encouraging the use of planning policy to maximize the provision of affordable
       housing and maximize planning gain.
•      The refurbishment and redevelopment of existing empty private sector homes38.

The East of England
East of England Draft Regional Spatial Strategy
Policy SS13 aims for a substantial expansion in housing provision compared to previous
levels of provision. Current affordable housing output averages no more than 3-3,500
units per year. This can be compared to a need for future households of 7,200 units of
social rented homes per year, which when the estimated need for intermediate tenures
and the backlog of social rented need are accounted for, rises to over 9,000 additional
units of affordable housing each year. It states that affordable housing should provide at
least 30% of overall provision in all local authority areas in the region, “though the
aspiration is to secure at least 40% where housing stress warrants higher provision”. 39
The rationale that the RSS offers to supporting housing growth concentrates on the social
aspects of housing need. It is worth noting that this is a somewhat different justification to
that offered by the East of England Development Agency (EEDA) which states that the
“the supply of homes, and affordable homes in particular, is a significant constraint on
economic growth and competitiveness.”40
There is a recognition that if affordable housing provision is to grow, changes need to be
made. Firstly, there needs to be an increase in the proportion of affordable housing
provided as part of market housing development via Section 106 and other planning
agreements; and secondly, there needs to be a step–change in Government financial
support for affordable housing provision.41
In terms of providing mechanisms to solve the affordable housing shortage and supply
problems, the RSS42 places a strong emphasis on local planning authorities monitoring
housing need in conjunction with regional bodies. According to Policy H2, local planning
authorities are specifically required in the preparation of their local development
documents to:
•      require provision of a range of dwelling types;
•      secure an adequate supply of affordable housing;
•      specify the proportion of housing which should be affordable;
•      secure this affordability for a prolonged period; and
•      secure sites for wholly affordable housing and specify affordable housing thresholds.
East of England Regional Housing Strategy
The RHS identifies that the principal tension in new affordable housing provision is the
lack of funding available for subsidy. Written after the RSS, it identifies a need for over
11,000 new affordable homes per year – i.e. more than in the South East – and the
difference to the RSS is principally in a greater number of intermediate market homes
which had been identified in an intervening study. Other factors identified include:

38
     P33 SWLHS
39
     p33 East of England Plan Draft revision to the RSS
40
     p50 EEDA RES
41
     p35 ibid
42
     Policy H2 East of England Plan Draft revision to the RSS
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uncertainty over public sources of funding, dependence on market housing to deliver
affordable housing through S106, and the opportunities to develop affordable housing
currently not being in line with planned provision.43
The RHS proposes measures to match the supply of affordable housing in the region to
need. These fall into four main categories:
•      reducing the production costs of new affordable housing;
•      reducing the average need for subsidy to make decent housing affordable;
•      creating more resources for subsidy to meet the need, and;
•      raising the quality of housing within a sustainable framework.


Beyond these measures the RHS identifies the need for local authorities to
•      work in partnership with house builders;
•      develop low affordable housing thresholds, and
•      target empty homes as potential opportunities for increased affordable housing
       provision.
A large number of individual measures are set out throughout the Strategy, but the most
significant ones in the context of this study are those relating to the planning system in
general, and the use of planning obligations in particular. A set of general policy
proposals is set out as follows:
Strategic policy: planning frameworks
•      The East of England Plan (RSS) will set targets for additional housing provision which
       will permit a balance between supply and need throughout the Region, and hence
       avoid exacerbating current affordability problems.
•      Local Development Documents must be prepared by local planning authorities with
       the same aim: ensuring the supply of sufficient land for development.
•      Both regional and local planning documents must establish clear expectations
       regarding the scale of the various types of affordable housing, related to current
       understanding of the relevant housing markets.
•      Local policies for the control of residential development must set out clear
       expectations regarding the use of section 106 agreements to secure affordable
       housing within sustainable communities. These must not only address the proportion
       of affordable housing in any housing scheme, but also both the mechanisms for
       producing it and the framework for using planning gain or other public subsidy. They
       should also address the consequences on the provision of private market housing.
•      The monitoring and review of regional and local plans must pay attention to the type
       of housing being produced e.g. volume and share of ‘affordable‘ housing when
       considering whether there need to be changes in strategy or policy.
More detailed guidance is provided for the handling of affordable housing in s106
negotiations.
Policy Framework: section 106 agreements

Affordable housing is typically one of a list of potential requirements under planning
obligations that need to be considered for any proposed development. These policies

43
     P19 East of England Regional Housing Strategy
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require housing to be considered alongside transport improvements, health and education
facilities, conservation and any other competing use for planning gain, not that housing
should be given precedence over them. This puts a premium on local policies and other
arrangements being in place to direct and manage the process for using section 106
agreements.

•   Planning authorities must establish policies and/or other mechanisms for setting
    targets for the volume or proportion of affordable housing on development sites to be
    covered by s106 agreements. These should support the achievement of regional
    targets set out in the East of England Plan. Planning authorities should also consider
    securing contributions to agreed masterplans or area wide strategies where
    appropriate.
•   Clearly, the use of planning gain for affordable housing must be balanced with the
    competing needs for it to be used to fund other infrastructure and amenities.
    However, the RHS requires that subsidy from the SRHP is provided for affordable
    housing only where it is demonstrably needed to supplement a reasonable use of
    planning gain.
•   Given the limited availability of other capital subsidy for affordable housing, local
    authorities need to recognise that there is generally no guarantee of subsidy for the
    affordable housing required other than what they can secure through a section 106
    agreement. In considering the balance of uses for planning gain, it is therefore
    advisable for local authorities to take as the starting point a need for all subsidy for
    affordable housing to come from planning gain. If this position needs to be modified
    as a consequence of their negotiations with developers, the prospect of a shortfall of
    subsidy from this source then sets the parameters for seeking capital subsidy from
    elsewhere to make up the gap.
•   Significant variations in land price, construction costs, housing needs and property
    sale prices across the Region and through time mean that there is no ‘one-size-fits-
    all‘ that would permit a simple policy for setting subsidy levels from planning gain.
•   What is a reasonable contribution to affordable housing will differ in each scheme,
    and a robust use of s106 policy will need an understanding of the way the housing
    market operates locally and of site economics.
•   No ‘standard‘ levels of grant funding should be assumed to apply to investment from
    the SRHP for any particular scheme, with or without the benefit of planning gain
    subsidy. By implication, this requires the use of planning gain through s106 to be
    established before the final decision on levels of public grant subsidy (not vice versa,
    as was often the case in the past). Since investment from the SRHP will normally be
    used in schemes which have been planned as part of the evolving pipeline, there is
    every opportunity to consider and negotiate the possible use of grant in any particular
    scheme well in advance of the final commitment of investment, and before the s106
    agreement is finalised. Except in the rare case where the mixes of tenures and
    building sizes and types is rigidly predetermined, adjustments can usually be made
    during the initial planning and design of a scheme to modify the overall amount of
    capital subsidy required due to the differential economics of different housing/tenure
    types. An ‘open-book‘ approach among the partners to a s106 agreement is likely to
    aid efforts to achieve the best balance among the competing demands on a scheme.
•   Local planning authorities should monitor the impact of s106 agreements on the
    production of new private market housing.
All of these proposals are actually covering areas which would otherwise have been
covered in the RSS; however, work in drafting and consulting on the latter had progressed
too far for these new policy initiatives practicably to be considered for inclusion in the final
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submission to the ODPM. The RHS was therefore used as a means to compensate for
this and maintain the momentum in developing strategic policy.
Beyond these measures the RHS puts considerable emphasis on the need for partnership
working in various forms. In particular, it sets out the agenda for the RHS provisions to be
worked through in more detail at the sub-regional level. For this purpose, it proposes the
continued use of the steering groups which had been set up for this purpose in recent
years to create and develop their sub-regional strategies. The sub-regions on which
these co-operative groups are based were originally designed to reflect a general view of
broad housing markets and constellations of common interest. Although they have stood
the test of time in this respect, the Government’s creation of the new Growth Areas has
cut across some of the sub-regions; this and other practical issues have called the pattern
of sub-regions into question, and they will probably experience review and some change
in the coming years.
The strategy also sets out priorities for public funding among various investment themes
to guide public spending over the next few years. No geographical priorities are set, but
the RHS generally requires public investment to be focussed on areas in which the private
sector is least able to provide subsidy for new affordable homes through planning
obligations.

The South West
South West Draft Regional Spatial Strategy
The draft RSS identifies a shortage of affordable housing in the region, which is attributed
to a historic shortfall in the supply of affordable housing. Between 1996 and 2004 around
4,000 affordable homes were delivered per annum; RPG10 had identified a need for
10,000 per annum44. The draft RSS also acknowledges the ‘right-to-buy’ scheme as a
significant contributing factor to the low stock of affordable housing in the region45.
The proportion of affordable housing sought in new developments is required to be at
least 30%, and higher where justifiable46. In essence the draft RSS identifies the main
problem in affordable housing development to be a lack of supply and insufficient delivery.
The delivery of affordable housing is recognised as a high priority and various planning
and funding related solutions are offered.
•     Whilst the RSS acknowledges the necessity to develop strategies to ensure sufficient
      funding is generated from S106 agreements, it also highlights that other ways of
      developing affordable housing without grant funding should be explored47.
•     The draft RSS goes onto to identify a need for Housing Corporation funding to assist
      in the delivery of affordable housing, to increase the supply of rented housing, and to
      develop more financially difficult sites.
Chapter 5 considers that innovative mechanisms will be required, if the affordable housing
targets are to be met. From a funding perspective chapter 6 comments on the introduction
of a ‘standard tariff payment’ to new development for community costs, infrastructure and
affordable housing provision. In order to accelerate the delivery of affordable housing, the




44
     P84 SWDRSS
45
     P83 SWDRSS
46
     P44 SWDRSS
47
     P75 SWDRSS
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RSS goes onto place an onus on local authorities to maintain up-to-date local needs
assessments48.
South West Draft Regional Housing Strategy
The Draft Regional Housing Strategy for the South West of England states that the
“shortage of affordable housing is an identified key housing issue to be tackled”49. The
rationale offered behind affordable housing development lies with the desire to create
sustainable communities. The RHS recognises that, in particular, intermediate housing
can play a key role in creating sustainable communities, enabling a wide range of
household types to buy into the neighbourhood50.
The draft RHS underlines three fundamental issues in housing: difficulties in accessing
the owner occupied market (particularly for first-time buyers); rising homelessness, and
the increasing use of temporary accommodation. Although the strategy does not
specifically highlight any problems with affordable housing development, it does
acknowledge a need to accelerate new housing delivery as well as increase affordable
housing provision51.
The RHS seeks to enhance the effectiveness of the planning system by
•      Producing guidance for local authorities on planning for delivering affordable homes;
•      Encouraging the use of Temporary Management Orders, to bring empty properties
       back into use for affordable homes52; and
•      Encouraging private sector initiatives including community land trusts and self build
       schemes53.
With regard to funding affordable homes, a number of potential sources are mentioned
beyond S106 contributions. These include obtaining funding from
•      Public sector organisations such as County Councils and Health Authorities, English
       Partnerships and Regional Development Agencies;
•      RTB and LSVT receipts; and
•      A range of other means including RSL reserves and capital borrowing, as well as
       prudential borrowing (following Local Government Act 2003, local authorities may
       borrow money for any purpose relevant to their functions, providing they can afford
       the payments)54.




48
     P89 SWDRSS
49
     P4 South-West Draft Regional Housing Strategy
50
     P42 SWDRHS
51
     P14 SWDRHS
52
     P23 SWDRHS
53
     P42 SWDRHS
54
     P22 SWDRHS
Three Dragons                                                                                  71
February 2006