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Affordable Housing

5. Delivering Affordable Housing

On site provision via an RSL

5.1   Although there are a number of ways of delivering affordable housing, the Housing Needs Study supports the view that provision of Housing for rent through an RSL is the best way to address the needs of the majority of those unable to buy on the open market. Furthermore it is important that the benefits arising from affordable housing provision continues to be available to subsequent purchasers. The recommended way to ensure this is through provision of affordable dwellings on site with the involvement of Registered Social Landlords. (RSL).
     
5.2   There are a number of RSLs operating within the city who may be suitable partners in any development a list of these are attached at Appendix E.  The Housing Department with the Housing Corporation have established a Plymouth Housing Partnership for Plymouth with all RSLs who manage and develop within the City. This partnership provides a framework for RSLs to operate in more formally structured area or programme based partnerships. Developers are therefore urged to discuss potential partnership arrangements with the Housing Department at the earliest opportunity.
     
5.3   In all cases the RSL should be involved at the earliest stages of discussion, in order to ensure that the development is providing the type and size of accommodation which is required. Discussions with the developer the RSL and the City Council will determine the best form of tenure to best meet the local housing needs In addition any RSL as a partner in the development will be required to be party to any subsequent planning agreement.
     
5.4   Where affordable housing is provided on site, as is the preference, this should comprise a mixture of house types and sizes, and be similar in design and materials to the development of which it forms part. The affordable units should not be placed on the least desirable part of the site, but distributed in agreement with the LPA, and the RSL partner.
     
5.5   Shared equity and shared ownership schemes are normally but not necessarily always delivered in partnership with RSLs. Shared equity schemes involve the RSL retaining a share of the property, whilst shared ownership enables an occupier to part rent part buy until they can afford to buy it outright. Property to at least the value of that which would be provided using the TCI method will be expected to be made available.
     
5.6   In order to help to simplify negotiations, and to speed the planning application process, developers are encouraged to contact the City Council with RSL partners, prior to the submission of a planning application.

On Site provision by developer

Low Cost Market Housing

5.7   Whilst this will help a number of households onto the housing ladder its value in meeting the over riding affordable housing need is limited, as it is still likely to require a relatively high income level. At present it is possible to secure a mortgage of 3.5 times the income level. This represents a significant percentage of the household income. At the moment with low interest rates this may be within the spending limits of a household, however if interest rates rise then this could represent an unacceptable financial burden. In the long term it is considered to more sensible to allow for a mortgage based on three times income level. Affordable housing for sale will therefore be taken as that which is available at no more than three times mortgage available on an income of £18200 (i.e. £54,600 at April 2002). This represents the incomes level of approximately 49% of the full time wage earners in Plymouth based on latest available figures. Even at this level it would mean that a significant proportion of the working population would be unable to enter the housing market, especially new / first time buyers. It is important that the affordable dwellings in the case of low cost housing for sale are representative of the development as a whole if it is to deliver balanced communities and provide a range of housing for those in need. It will not be acceptable therefore for a developer just to offer small cheaper units, in the form of flats, or small houses by way of provision of low cost homes.
     
5.8   In cases that do not include an RSL the developer will be required to impose covenants on discounted property to ensure that in the event of the first occupier selling the property, the benefits of the low cost provision are passed on to subsequent occupiers.

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Affordable Private Rented Accommodation

5.9   Affordable private rented accommodation is an acceptable alternative to housing for purchase. Affordable rented accommodation should not exceed 20% of net average income levels. At the time of preparing this guidance this would be approximately £50 per week. (see Appendix F)
     
5.10   The future use of rented accommodation will need to be controlled via legal agreement to ensure that the premises stay as affordable accommodation, and are within affordable limits. If the properties are later sold for owner occupation the sale price should be set at affordable levels.

Off site provision

5.11   Whilst the Government state that the presumption should be for on site provision, there may be instances where the developer and the Authority agree that it may be preferable to make provision off site.  An example of such a case would be where there is already a predominance of a particular type tenure and an alternative is desirable in the interests of balanced communities. This could be either through provision of land or buildings elsewhere in the city, or as a financial contribution (commuted sum).
     
5.12   The value of the off site contribution should be no less than the value of the development if it were to be provided on site. It may also be appropriate to require a slightly higher contribution in such cases to account for the potential increase in property for sale, and increased sales value that is likely to arise as a result of not having affordable development on site. In addition there may be a cost to the LPA in finding alternative sites or houses.
     
5.13   Commuted payments should normally be made in full prior to the occupation of 50% the development to which it relates.
     
5.14   The method of calculation in the case of off site contributions or in valuing on site affordable contributions will be based on the Housing Corporation Total Cost Indicators. (TCI), and grant rates. The developer will be expected to make a financial contribution equal to 55% TCI appropriate to the type and number of dwellings proposed. An example of how such a contribution would work together with the latest information on TCI, and rates are attached at Appendix F.
     
5.15   The amount of contribution or of affordable housing will normally be in line with the above guidelines, however allowances may need to be made depending upon the cost of developing the site, and the amount of other infrastructure or community requirements. The local authority will therefore be prepared to negotiate on the level of its requirements if three are justifiable reasons for doing so which might prejudice the development.
     
5.16   The City Council realise that the 69% target or 5620 dwellings for the provision of affordable housing, as suggested by the Housing Needs Study is ambitious. The modified First Deposit Local Plan, Policy 34 identifies target of 2130 affordable dwellings to be provided within the plan period. It is accepted that even this is an ambitious target, particularly as the majority of local plan residential allocations are on previously developed sites which are likely to have high development costs. The Adopted plan has a 25 dwelling threshold, but has a target  of 25 % affordable dwellings. As the deposit plan is in the early stages of its adoption process, and Policy 34 is the subject of a number of representations, the adopted plans targets will be used until the policies of the deposit plan have been more thoroughly tested.

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