Working it out. (Image: methodology via Shutterstock.com)
The Bureau is conducting a major investigation into Britain’s housing crisis.
The first phase, published in May, focused on the human and financial cost of rising levels of homelessness. It found that councils in the UK’s biggest cities spent almost £2bn on temporary accommodation, including B&Bs, in the past four years. It also revealed the extent to which London councils are re-housing vulnerable families outside their own borough boundaries, sometimes to boroughs on the outskirts of the capital or even beyond.
Related story: Scale of UK housing crisis revealed
The second phase of work focuses on one of the root causes of the housing crisis: the shortage of affordable homes in the UK. The Bureau’s housing team – Nick Mathiason, Will Fitzgibbon, Victoria Hollingsworth, Jude McArdle and George Turner – aimed to track the levels of low cost housing being built and how this falls short of local requirements. To assess this three datasets were compiled:
• The number of affordable homes planned as part of the biggest housing developments in 12 of the UK’s largest cities. The total numbers of affordable homes planned are measured against their local authority’s targets for this type of housing.
• The number of affordable homes built in one of Europe’s largest housing developments: the Vauxhall, Nine Elms and Battersea Opportunity Area in central London, where plans for 16,000 new homes are at an advanced stage.
• The number of affordable homes scrapped from property developments after appeals against legal obligations to provide such housing.
There is a pressing need for cheaper accommodation in Britain. Figures released by the government earlier this month showed that the number of households made homeless in England in the financial year to March 2013 has reached 53,540 – a 6% average increase on the previous year. In London there has been a 16% increase.
And yet the number of affordable homes built in the UK is falling. Figures from the Homes and Communities Agency, the government’s national housing body and regulator, show that the number of affordable house building starts in the financial year to 2013 fell 33% to 36,206 – lower than when the coalition came to power.
The government cut grants enabling housing associations to buy land and build affordable homes by 63% in October 2010. Bosses of these organisations have admitted they will be building fewer homes in the future as a result, placing a greater onus on affordable homes built by private developers.
Over half the UK’s affordable homes are now built as part of private sector housing developments. The companies behind such schemes negotiate the number of affordable homes they must build with local planning authorities as part of so-called ‘planning gain’ provisions under Section 106 of the Town and Country Planning Act (1990).
Developers also contribute towards infrastructure, for example building new roads, roundabouts, medical facilities or swimming pools. Sometimes developers agree to pay local authorities cash rather than building the new affordable homes or infrastructure.
In the context of pressing housing need, the Bureau’s investigation established:
• The number of affordable homes generated by the largest housing developments in 12 major cities.
• Whether those developments meet the relevant city’s affordable home targets.
Identifying the 12 cities
The cities the Bureau examined are: London, Birmingham, Leeds, Glasgow, Sheffield, Bradford, Liverpool, Edinburgh, Manchester, Bristol, Cardiff and Leicester. These were taken as the UK’s largest cities based on the Office for National Statistics local authority population list.
Identifying the cities’ largest housing developments
1) We asked the Greater London Authority and the UK’s 11 other biggest cities for the largest housing developments that have detailed planning consent. We specifically asked for:
• The number of housing units that received detailed consent.
• The number of affordable housing units with detailed consent.
• A breakdown of the different tenures available in the development – for example, social rent, affordable rent, or intermediate ownership.
• The planning application number.
2) Every city except London provided most of this information. Leeds, Leicester, Manchester and Cardiff were the only cities to provide a detailed breakdown of affordable tenure (social rent, affordable rent and intermediate ownership) for each development.
3) The press office of the Greater London Authority did not provide any information. The capital’s biggest housing developments were assessed using details provided by Estates Gazette, the UK’s leading property industry magazine.
4) The lists provided by city councils were checked with private-sector planning and real estate consultancies based in each major city.
Checking and verifying the numbers of affordable units
1) Where possible every development’s planning application was checked using the relevant local authority’s online planning portal. Affordable housing provision was often only outlined in subsequent section 106 agreements and these were used when available. In many cases, the planning documents did not state the number of affordable units.
2) The housing team contacted every scheme’s developer or its adviser to corroborate the information received from the council.
3) In many cases, the information received from planning applications, developers or their representative differed from the information received from the local authority. In these instances, the information received from the developer or its adviser took precedence, on the basis that developers are likely to have a more detailed view of the project in question. Details in our database will be amended if better or more compelling information is provided.
4) In many cases housing projects are developed in phases. Phases that have received detailed planning consent may be part of a bigger project, which has a broader outline consent. Early phases of a project will often include a smaller proportion of affordable homes than subsequent phases, as developers try to recoup as much capital as possible early on to cover construction costs. To get an accurate picture of a full scheme’s affordable provision, it is important to refer to the outline consent. In many instances, our final affordable provision number and percentage reflects a scheme’s outline status. Where this is the case, it is noted in the data.
5) In a very few cases, developers did not confirm any details. In these cases we used information provided by the local authority or taken from planning documents. Any additional information provided after publication will be reflected in the data.
6) The study focused on developments that are most likely to form part of the cities’ housing landscapes in the short to medium term. Consequently, we focussed on developments with full (or detailed) planning permission, or at least a development with an element of detailed permission within a broader scheme.
1) Many of the developments that councils consider to be among their biggest schemes are regeneration or estate renewal projects involving the refurbishing of existing housing stock. We generally excluded these from our study because they were often replacing homes that already existed and the number of additional new homes was often low.
2) Where there was a significant amount of new homes in regenerations or estate renewals, these schemes were included in the study. For instance, the Earl’s Court development in London is proposing to demolish an existing council estate of 761 units as part of a wider scheme to build 7,583 units which has outline consent. We have included two affordable figures in our database:
• The total amount of affordable homes, including replacement homes, the development will generate.
• The total amount of affordable homes, excluding replacement homes, the development will generate. This second figure is our preferred measure.
Identifying cities’ affordable housing targets
1) It is a recommendation of the National Planning Policy Framework that planning authorities outline their policies on providing affordable homes. The framework states: ‘Local planning authorities should set out their policy on local standards in the Local Plan, including requirements for affordable housing.’
2) Most cities publish affordable housing targets (AHTs), which set out in broad terms the amount of affordable housing the city expects to see included in each development that is larger than a certain number of homes.
3) AHTs are not legally binding, and are subject to assessments of a scheme’s economic viability. The NPPF states that councils should not make planning conditions – such as requirements for affordable housing – so onerous that schemes do not ‘provide competitive returns’ to land owners and developers.
4) We judged all developments against their city’s AHT. Some cities vary their AHT depending on how close a scheme is to the city centre. Typically, AHTs are lower closer to the city centre and increase in the outer fringes. The relevant AHT measure was used to assess each development.
5) Where a scheme did not meet a city’s AHT we sent our assessment to developers and their representatives for confirmation.
Vauxhall Nine Elms Battersea Opportunity Area (VNEB OA) is a 195-hectare semi-industrial zone immediately to the south of the river Thames. London’s mayor, Boris Johnson, has proposed that 16,000 new homes be built there in one of Europe’s biggest housing developments.
London is suffering from an acute shortage of affordable properties, particularly in central London, and building more homes is widely accepted as vital to addressing the capital’s housing crisis.
In his VNEB Opportunity Area Planning Policy Framework (VNEB OA), Johnson describes the district as ‘the largest remaining development opportunity within the “Central Activities Zone” (CAZ) and is vitally important in terms of strengthening London’s CAZ and World City status’.
Critics of the scheme suggest the current plans miss an opportunity to deliver significant numbers of affordable homes. As one of the biggest development opportunities in the capital the Bureau wanted to test this criticism by establishing how much affordable housing is likely to be built there.
Methodology for identifying sites in Vauxhall Nine Elms Battersea
1) We used the VNEB OA Planning Policy Framework, adopted in March 2012, to define the site.
2) We also used an interactive map provided by the Nine Elms Vauxhall Partnership. This partnership was created in 2010 and brings together the boroughs of Wandsworth and Lambeth, the area’s main developers and landowners, the Mayor of London, Transport for London and the Greater London Authority. A list from Lambeth Council of sites in the VNEB OA was also used.
3) Lambeth and Wandsworth councils directed our researchers to the above information.
Checking and verifying the developments
1) We examined each development’s planning application to identify any affordable housing disclosure.
2) When schemes disclosed figures showing how many affordable units were included, researchers contacted the scheme’s developer to double-check the figures listed, though not all would confirm the figures.
3) The local authority was asked to confirm figures on a couple of specific schemes where researchers had questions.
4) Where there was no affordable housing quota, the developer was contacted.
Identifying Lambeth and Wandsworth affordable housing targets
1) We used Lambeth and Wandsworth’s Local Development Frameworks to identify their AHTs.
2) We noted planning guidance given to Wandsworth and Lambeth in the Mayor of London’s VNEB OA Planning Policy Framework.
3) Using these documents, we assessed whether schemes complied with the local affordable housing target guidance.
In the aftermath of the economic crisis, large numbers of construction projects stalled. Developers became concerned that their legal commitments to build social housing, which is often conditional on them receiving a planning consent from local authorities, was affecting the economic viability of some of their projects.
Housing professionals suggested to the Bureau that developers are increasingly renegotiating their Section 106 affordable housing commitments. We were also told that the passing of the new Growth and Infrastructure Act, which received Royal Assent in April, will also see increasing numbers of renegotiated Section 106 agreements under section 5 of the legislation.
We wanted to establish the number of affordable homes lost through the renegotiation of Section 106 agreements over the past five years. We hope this information will act as a benchmark as new legislation is predicted to see further revisions to historic agreements.
1) This study sought to establish how many affordable homes had been lost or gained through modifications to original Section 106 agreements on the largest developments – those of over 50 units – in every local authority across England and Wales.
2) We submitted Freedom of Information (FoI) requests to all local authorities in England, Scotland and Wales asking for revisions to Section 106 agreements over 50 units. By isolating large developments we cut down the amount of work for local authorities and so had a better chance of getting responses. This has been borne out by a strong response rate to our questions.
3) We asked the same of Scottish local authorities, where Section 75 of the Town and Planning Act (Scotland) 1997 broadly reproduces Section 106. In November 2011, Section 75B of the 2006 Act was introduced to allow land owners to vary a Section 75 Agreement or planning obligation by appealing directly Scottish ministers if planning authorities are unwilling to do so.
4) We asked local authorities three questions:
• How many Section 106 agreements are currently in renegotiation?
• How many Section 106 agreements have been renegotiated in each year since 2007?
• How many affordable units were agreed under the original Section 106 agreement?
5) The phrasing of the request meant many of the responses related to renegotiations that were not affordable housing. This has been reflected in the figures so that the numbers of renegotiated agreements refer uniquely to affordable housing changes.
6) Limiting responses to developments of over 50 dwellings is likely to significantly underestimate the number of affordable homes lost. Where local authorities provided information on smaller developments, that information has been included. This was the case in Lewisham, Medway and Southampton.
7) This study only examined the impact of renegotiations to Section 106 requirements for affordable housing. It did not look at renegotiations of other Section 106 obligations, such as schools, roundabouts or other facilities.
8) The study found that over 2,300 affordable homes have been lost since 2007 through renegotiations to Section 106 agreements. However, as some local authorities’ responses reveal, there are other ways developers can reduce the obligation to build affordable homes, as noted below in (4).
9) The responses to this study reflect a snapshot in time of each local authority based on the date of the official response, most of which date from April 2013. Figures may have since changed as Section 106 renegotiations are approved, modified or rejected.
Section 106 Freedom of Information request responses
1) Some local authorities refused to respond to the Bureau’s FoI requests on the grounds that they do not compile Section 106 agreements separately, so providing the information would require a manual search of all planning applications. They judged that this would exceed the timeframe and cost limit set by the Freedom of Information Act. This was the case in Lincoln, Kettering, Wealden, Cherwell, South Lakeland, Northwest Leicestershire, Camarthenshire, Ceredigion, Gwynedd, Angus, Dundee City and East Lothian.
2) Other local authorities did not respond to the FoI request on the grounds that the information is already ‘publicly available and accessible to the applicant’, through a search on the local authority’s online planning database. This was the case in Glasgow. While this is technically true, a manual search online will not always produce a complete list of negotiations.
3) Some councils directed us to their online planning portal for a search under terms including ‘affordable’ and ‘discharge/modification of legal obligation’. In some of these cases, we included smaller developments in the database where affordable housing was lost or gained.
4) Rather than renegotiating Section 106 obligations, developers sometimes submit new planning applications for the project. This may include a reduction in the affordable housing provided. But because councils view these as a new application, with a new case number, some local authorities excluded these from their responses to us.
5) 148 local authorities said they had no Section 106 renegotiations.
Interpretations and observations
1) In some cases, the responses we received included renegotiations that are not yet concluded. In these cases, we have included the proposed gain or loss to affordable housing in order to reflect the potential consequences of Section 106 renegotiations. Local authorities may choose to reject the request for modification. At least 484 affordable units are currently under renegotiation, with developers seeking their removal.
2) In some cases, the requested modifications relate to the tenure of the homes, rather than a change in the overall number of affordable homes. In a considerable number of cases, homes originally destined to be available for social rent (a low rent) were changed to affordable rent (a concept introduced in 2011 that defines ‘affordable rent’ as 80% of the rent that would be achieved on the open market) – a more expensive tenure – or intermediate ownership.
3) Other local authorities reduced affordable housing dwellings in exchange for an increased financial contribution from developers. Where possible, this has been noted. For example, South Buckingham District Council gained over £2m in financial contributions in exchange for the loss of 35 affordable homes. Where a local authority has explicitly stated the existence of a commuted sum , its existence has been noted. But this did not form part of the Freedom of Information request and consequently has not been collected comprehensively.
4) Some local authorities have adopted new affordable housing policies over recent years, which reduce the affordable housing target on residential developments. On occasion, this accounts for a loss of affordable homes as developers who had previously agreed to a higher level of affordable housing renegotiated to meet the new policy.
The Bureau’s housing team: Nick Mathiason, Will Fitzgibbon, Victoria Hollingsworth, Jude McArdle and George Turner.