Overview and Scrutiny Committee 20 September 2011
Affordable Housing Programme
1.0
Introduction
The Council has a long history of working with Housing Associations with
respect to the provision of new affordable housing schemes to meet identified
housing need across the district. Most recently the Council’s forward
programme of such developments is reflected in the North Norfolk Local
Investment Plan (NNLIP) agreed with the Homes and Communities Agency
(HCA) in December 2010 which provides details of affordable housing
schemes which could be provided across the district in the period to 2015,
subject to the availability of funding and securing the necessary planning
consents.
Schemes included in the NNLIP range from scheme proposals at the earliest
stage of development to schemes with full planning permission which are
awaiting funding. These schemes represent the Council’s “affordable housing
pipeline”. The NNLIP also clearly identified those schemes which could be
delivered within the 2011/15 period which are priorities for funding. The
NNLIP will be used to inform the HCA’s consideration of the offers made to
the 2011/15 National Affordable Housing Programme as well as decisions as
to which schemes the Council funds. The NNLIP was presented to Cabinet in
October 2010. The NNLIP will be regularly updated to remove the schemes
which have been funded and which are under development as well as to add
new schemes.
2.0
Delivery of Affordable Housing Schemes
Affordable housing is provided at sub market rents (this now includes social
and affordable rents) or as low cost home ownership products such as shared
ownership. Housing Associations are able to borrow against the rental
income (and in the case of shared ownership this reflects the capital value of
the share sold) that will be generated by the property. Subsidy is required to
bridge the gap between the amount the Housing Association can afford to
borrow based on rental income and the actual cost of providing the new
affordable housing. The two types of subsidy for affordable housing are:
• Public Subsidy
• Private Subsidy
2.1 Public funded Subsidy
There are two sources of public subsidy for affordable housing schemes in the
district:
• The Homes and Community Agency (HCA) (formerly the Housing
Corporation)
• North Norfolk District Council
Historically the HCA has been the main source of grant funding, but North
Norfolk District Council also has a long history of providing joint funding for
schemes with the HCA or solely funding affordable housing schemes through
the provision of subsidy in the form of capital grant. A key part of the enabling
role has also been the provision of free land (most of which has now been
developed) for affordable housing schemes. Providing free land has reduced
the overall subsidy needed to provide the affordable housing.
Overview and Scrutiny Committee 20 September 2011
The Council has historically had a budget (called the Enabling Budget) of
£400,000 per annum to support the provision of affordable housing. The
approach to spending the Enabling Budget has been to commit funding to
priority schemes but also to request that the individual Housing Association
which will provide the scheme submits a funding request to the HCA. This
approach has been very successful in financing the affordable housing
programme over the past five years and has meant that the annual Enabling
Budget has not had to be spent on funding the priority schemes it was
committed to. This has enabled the funding in the Enabling Budget to roll
forward into future years and the schemes to which the funding has been
committed to have changed as schemes were funded by the HCA and new
priority schemes were identified.
The funds available in the Enabling Budget were also increased by
£1,000,000 which was ring fenced from the receipt from the Large Scale
Voluntary Transfer of the Council’s stock to Victory Housing Trust specifically
for affordable housing provision. Overall this has resulted in an Enabling
Budget of £3,905,477 for 2011/12 of which all but £802,177 is formally
committed to the provision of 7 schemes which will provide 54 affordable
homes. £500,000 of the uncommitted funding is provisionally allocated to a
scheme to provide 8 dwellings at Felmingham but this has not yet been
formally agreed.
The Enabling Budget was historically self funding (with funding for the budget
coming from housing capital receipts from Right to Buy receipts and more
recently the VAT shelter arrangement with Victory Housing Trust); however,
the funding from these sources is now practically exhausted. From April
2012 there is no committed funding for the Enabling Budget and continuing to
fund the Enabling Budget is likely to require funding from the Council’s wider
capital budget.
During the period 2005 to 2010 a further source of funding for the provision of
affordable dwellings was a ring fenced pot of money raised from reducing the
discount applied to Second Homes. This resulted in over £1 million being
spent on the provision of affordable housing in North Norfolk. From 2010
onwards, Norfolk County Council no longer provided this pot of money for
affordable housing. The second home monies were a supplement to the
Enabling Budget and combined with the success in obtaining HCA funding for
priority affordable housing schemes meant the Enabling Budget was not
spent.
2.2 Private Subsidy
Affordable housing provided on market sites as a requirement of planning
policy are generally known as Section 106 Agreement dwellings as the
Section 106 Agreement is the mechanism through which the affordable
dwellings are delivered and protected.
The Council’s policy position since 2000 has been that Section 106
Agreement dwellings are to be provided without any public subsidy. The HCA
Overview and Scrutiny Committee 20 September 2011
will also not provide public subsidy for Section 106 Agreements unless it
offers additionality (i.e. more dwellings or more rented dwellings than would
otherwise be provided). In effect this means that the developer provides the
subsidy for the affordable housing as the amount the Housing Association can
afford to borrow to pay for the affordable dwellings remains limited by the rent
they can charge. In the vast majority of cases, the developer will choose to
build the affordable dwellings to the required standard and sell them to a
Housing Association at a price which the Housing Association can afford
without requiring any subsidy.
As the North Norfolk Local Plan adopted in 1998 had no residential land
allocations because of high numbers of historic housing approvals, the ability
to secure affordable homes as part of market schemes in the District over the
period 1998 to 2008 was extremely limited. In addition the trigger for requiring
affordable housing under the Local Plan was high which when combined with
a lack of allocated sites meant that any affordable housing could only be
delivered on windfall sites of which there were very few which exceeded the
affordable housing trigger size.
Recognising the low level of affordable housing provision provided historically
in North Norfolk through market developments and anticipated reductions in
public subsidy for affordable homes, the Council through development of its
Local Development Framework Core Strategy reduced the trigger for requiring
affordable housing and increased the percentage of affordable dwellings
which would be required on future market developments on eligible sites to
45% in Principal and Secondary Settlements and 50% in Service Villages and
Coastal Service Villages, subject to viability. When a site which triggers the
affordable housing requirement is submitted as a planning application, the
Council, will if advised by the developer that it is not viable to provide the
required amount of affordable housing consider the amount of affordable
housing which the scheme is viable to provide.
The LDF Core Strategy adopted in 2008 proposed allocating sites through a
Site Allocations Development Plan Document which would deliver increased
numbers of affordable housing units through market developments, this later
document was adopted in February 2011. Over time the changes introduced
through these 2 documents will substantially increase the amount of
affordable housing provided through this mechanism. The timescale by which
affordable housing on market sites is delivered is dependent on when the
development starts, which is controlled by the developer and therefore not in
the gift of the District Council to influence. Phasing arrangements secured as
part of the planning approval process will however ensure that affordable
housing units provided through market developments will be provided
throughout the development and the last affordable dwelling will be provided
prior to the sale or occupation of the last market housing on a site.
3.0
Delivery of Affordable Housing
3.1
2011/12 Affordable Housing Programme
Overview and Scrutiny Committee 20 September 2011
The 2011/12 affordable housing programme contains 7 schemes with
planning permission and funding which are currently on site. Overall these
schemes will provide 65 new homes by 31 March 2012. Details of these
schemes are shown at Appendix A.
3.2
2012/13 Affordable Housing Programme
The 2012/13 affordable housing programme contains 4 schemes with funding
which are either on site as they have planning permission or will start on site
shortly. Overall these schemes will provide 47 new homes between 1 April
2012 and 31 March 2013. Details of these schemes are shown at Appendix
XB. All schemes scheduled for completion in 2012/13 are funded by North
Norfolk District Council. Following recent confirmation of HCA funding for an
affordable housing programme over the period 2011 – 2015, it is likely that
more affordable dwellings may be provided in the district during 2012/13
funded by the HCA, however the details of such schemes are not known at
this time.
4.0
Commentary on the affordable housing pipeline
The affordable housing pipeline only contains publicly funded 100% affordable
housing schemes due to the lack of certainty as to the timescale for delivery
of affordable housing on market sites as this is dictated by the developer. The
number of affordable housing schemes in the pipeline therefore exceeds the
funding available from the Council or the level of funding likely to come from
the HCA over the next 4 years.
A scheme in the pipeline can only be delivered once it has secured both
planning permission and grant funding.
5.0
Commentary on affordable housing schemes
Historically affordable housing schemes have been provided on “in boundary”
schemes in towns and villages across the district. Many of these schemes
were developed on free land provided by the Council. These in boundary
schemes meet general need, where the household with the highest housing
need for a property is housed. Overtime, the Council’s commitment to the
provision of free land has seen the Council’s land bank significantly
diminished. The last affordable housing scheme developed on an “in
boundary” site which was owned completely by the Council was at Sadlers
Way, North Walsham. In 2010/11, the Council provided part of the land for a
scheme of 16 new homes at Ketts Road, North Walsham.
Recently, the Council has moved towards providing Exception Housing
Schemes in rural areas, these schemes meet local housing need and
households with a local connection through residence, employment or family
are prioritised for all homes provided on an Exception Housing Scheme over
households who may have a higher housing need but do not have a local
connection. Local is defined as the parish in which a scheme is located or
the adjoining civil parishes. The Council aims to ensure that all parishes
across the district are served by an Exception Housing Scheme either in the
parish or an adjoining parish. To date the Council has provided 16 Exception
Housing Schemes with a further 6 either on site or due to start on site shortly.
Overview and Scrutiny Committee 20 September 2011
Whilst there has been a move towards provision of affordable housing through
Exception Housing Schemes in recent times, the Council seeks to ensure that
affordable housing is provided across the district to meet both general and
local need.
Between 1 April 2006 and 31 March 2011, 321 additional affordable homes
were provided on 43 schemes, of which 13 were Exception Housing
Schemes. Between 1 April 2011 and 31 March 2013 it is expected that a
further 110 additional affordable homes will be provided on 11 schemes, of
which 7 are Exception Housing Schemes.
6.0
Delivery Issues
Affordable housing schemes have long lead in times as Housing Association
partners will only submit proposals for planning approval when they have
reached the final design stage. Once a scheme has planning permission it
can only start on site if it has the necessary subsidy in place, although having
planning permission has historically made schemes more attractive for HCA
funding because of certainty of delivery within a specified timeframe.
The time taken to deliver an Exception Housing Schemes is generally longer
than the time needed for a general need scheme, this is because of the
consultation with the Parish Council and community which is an integral part
of the delivery of such schemes and it can take up to 5 years to deliver an
Exception Housing Scheme. The Corpusty Exception Housing Scheme is an
example of a slightly faster delivery of a scheme. The need for the scheme
was identified in May 2006 following the completion of a local Housing Needs
Survey. Following site identification and a community consultation event to
discuss the design of the proposed scheme in August 2007 a planning
application was submitted in October 2007. Planning permission was granted
allowing the scheme to start on site in March 2008 and the dwellings were
completed in March 2009.
The delivery of a 100% affordable housing scheme can be delayed at any
stage in the development of a scheme, for example:
• During the design stage – this could be because following a
consultation event on an Exception Housing Scheme it is identified that
design changes are needed to improve the scheme or because of a
change in requirements such as highway requirements.
• During the planning stage – a planning application can be deferred for
more information or for design or layout changes.
• During the land purchase stage – for land purchased from private
owners, the purchase only takes place when planning permission is
secured and this can on occasion delay schemes.
• During the pre-commencement stage which delays a start on site – this
can be because tender prices need to be negotiated, or a revision to a
planning application has to be made for example where drainage
issues which could not have been predicted (i.e. change in regulations)
mean a revision to the planning application has to be submitted and
agreed. On one occasion a start on site was delayed due to concerns
Overview and Scrutiny Committee 20 September 2011
•
that the site could be subject to a village green application requiring the
site to be fenced and left for a significant period before a start on the
scheme could be made.
During the build period – for example due to inclement weather.
The Housing Services Team works closely with Housing Association partners
to ensure that affordable housing schemes are completed in a timely manner
and will endeavour to identify solutions to problems which are delaying the
delivery of affordable housing schemes.
7.0
Conclusion
Between 1 April 2006 and 31 March 2011, 321 additional affordable homes
were provided across North Norfolk. Between 1 April 2011 to 31 March 2013
it is expected that a further 110 additional affordable homes will be provided.
The delivery of 100% affordable housing schemes is dependent on securing
both subsidy and planning permission. Public subsidy is provided by the
HCA and the Council, and both sources of funding are limited. The Council
has no committed new funding for the provision of affordable housing after
2011/12. Affordable housing provided with private subsidy funding through
Section 106 Agreements will become a more important source of affordable
housing over time following the adoption of the Core Strategy and Site
Specific Development Plan Documents.