Following our recent ‘Developers: Bright new horizons‘ blog, considering the new world for developers following the passing of the Growth and Infrastructure Act 2013, we now discuss the impact this will have on affordable housing.
The provision of affordable housing
There are sites all over the country with planning permission for new residential development but where no start has been made on site.
Many of these sites have to provide affordable housing in the new development. The housing has to be sold at a low price to ensure that it is affordable.
This means that the sale proceeds from selling the affordable housing can impact adversely on the scheme as a whole and can make the scheme economically unviable. And if the scheme is economically unviable, then no new houses will be built on that site.
What is a Planning Agreement for affordable housing?
- Also known as a section 106 agreement.
- It will have been entered into with the developer/land owner and the council.
- It sets out how many affordable houses are to be provided on the site, and when, their sale price, and details of how they are to be sold.
- It will usually restrict the developer from selling all the market houses on the site before all the affordable housing has been provided.
Support for more new houses
The Government wants more new housing to be built and wants to encourage house building.
Changes introduced by the Government:
- The Government has changed the law by introducing new provisions in the Growth and Infrastructure Act 2013.
- These came into force on 25 April.
- The new provisions are in force for just three years, until 30 April 2016.
- They are, therefore, known as sunset clauses.
Take note – The new provisions
- Where affordable housing has to be provided on the site in an existing section 106 agreement signed with the council, then an application can be made to the council to review the planning agreement.
- The developer can apply to the Council to have the original obligation either modified or discharged.
- The developer has to show that the affordable housing requirement means that the development is not economically viable.
- The developer should support the application with relevant viability evidence.
- If the council does not agree with the developer’s revised proposals for affordable housing, or does not determine the application, the developer has a right of appeal to the Secretary of State.
For further information
The Government has published guidance on these new provisions. This guidance will have to be applied by both the developer and the council in assessing the effect on the site’s viability in providing the affordable housing.
The Growth and Infrastructure Act 2013 – http://www.legislation.gov.uk/ukpga/2013/27/contents/enacted