6.11

Comment

Representation ID: 9486

Received: 29/07/2022

Respondent: Luton & Bedfordshire Green Party

Expecting viability assessments to be paid by applicants increases barriers to access to affordable housing for those least able to afford it and most in need.

Object

Representation ID: 9580

Received: 29/07/2022

Respondent: BPHA

Legally compliant? Not specified

Sound? No

Duty to co-operate? Not specified

As drafted bpha do not consider that Policy DM1(S) Affordable Housing and it’s supporting text is sound.

bpha are concerned that the approach taken in Policy DM1 will significantly reduce the availability of shared ownership homes within Bedford Borough. It is acknowledged the Government are requiring that developers need to provide 25% of affordable homes delivered through section 106 planning obligations as First Homes. bpha along with a number of Registered Providers raised concerns when the government consulted on the proposals that were subsequently introduced.

The implementation of the proposed policy DM1(S) will end the availability of s106 shared ownership homes in Bedford Borough. bpha and other Registered Providers have a track record of acquiring such homes through the s106 process. Therefore we are looking for policy support to continue to deliver shared ownership units through other means and safeguard affordable rented properties during viability discussions.

Benefits of Shared Ownership

Shared ownership has been very successful in providing an affordable route into home ownership for many people. It offers an established model widely accepted by mortgage lenders and the funders of social housing providers. It provides flexible access to different shares of equity purchased to enable a flexible response to local housing market factors. It is also an effective mechanism for receipts to be recycled back into the delivery of new homes.

Looking at recent Hometrack data for sites within 3.6 miles of Bedford town centre there have 229 homes started within the last 6 months at an average price of £355K. Therefore the entry level equity at c£177,500 is high compared to shared ownership, we have concerns the long term affordability of First Homes as a affordable housing product will be exacerbated should interest rates continue to rise. Shared ownership as a product is more flexible to changes in the economy due to the flexibility on the level of equity purchased.

Viability concerns

There is a concern that the introducing the delivery of First Homes at a 50% discount rather than shared ownership homes will have a negative impact on the viability of residential schemes that will reduce the amount of affordable rented homes being delivered in Bedford Borough.

Currently when making an offer for s106 units Registered Providers cross subsidise their offer for the s106 affordable rented homes through the shared ownership units. The ability to do this will disappear. A First Homes at a 50% discount will make policy compliant residential schemes significantly less viable than if they included shared ownership homes.

The plan is looking to deliver improved design, residential space standards, biodiversity and address climate change through improved build quality, all of which are supported but do have an impact on scheme cost. There is significant concern that the policy change to First Homes at a 50% discount will significantly affect scheme viability and that subsequently the amount of affordable rented units will be reduced through negotiation.

Future delivery of Shared Ownership

The supporting text to the policy states “Shared ownership may however come forward in other contexts” it is not considered that this gives sufficient policy support to enable shared ownership homes to be delivered. Policy DM1(S) and the supporting text should be clear that when a site is being delivered exclusively for 100% affordable units that the First Homes requirement will not apply.

It is considered that such a change would be in accordance with para 65 of the NPPF this states that the “affordable home ownership” requirement will not apply on sites that are exclusively for affordable housing. The exemptions are set out below:

a) provides solely for Build to Rent homes;
b) provides specialist accommodation for a group of people with specific needs
(such as purpose-built accommodation for the elderly or students);
c) is proposed to be developed by people who wish to build or commission their
own homes; or
d) is exclusively for affordable housing, an entry-level exception site or a rural
exception site.

bpha along with other Registered Providers have a track record of delivery of acquiring sites with outline planning permission on the open market and delivering these as 100% affordable home schemes through a mix of shared ownership and affordable rented homes. Registered Providers (RPs) will need the ability to deliver such schemes without the inclusion of First Homes through the variation of s106 agreements. The reason for this is the inclusion of First Homes at a 50% discount will significantly damage the financial viability of 100% affordable home schemes. This is due to the fact that we have the ability to apply new grant funding and Recycled Capital Grant Funding towards shared ownership units to enable RPs to compete on the open market for sites. This is not the case with First Homes.

RPs competitiveness on the open market in Bedford Borough will be significantly harmed by the proposed policy DM1(S) as drafted this will will reduce both affordable rented and shared ownership housing delivery across the Borough this can be mitigated through the suggested policy changes.