Definition of Affordable Housing
The NPPF defines affordable housing as:
Affordable housing: housing for sale or rent, for those whose needs are not met by the market (including housing that provides a subsidised route to home ownership and/or is for essential local workers); and which complies with one or more of the following definitions:
a) Affordable housing for rent: meets all of the following conditions:
(a) the rent is set in accordance with the government’s rent policy for Social Rent or Affordable Rent, or is at least 20% below local market rents (including service charges where applicable);
(b) the landlord is a registered provider, except where it is included as part of a Build to Rent scheme (in which case the landlord need not be a registered provider);
Build to Rent is defined as ‘Purpose built housing that is typically 100% rented out. It can form part of a wider multi-tenure development comprising either flats or houses but should be on the same site and/or contiguous with the main development. Schemes will usually offer longer tenancy agreements of three years or more, and will typically be professionally managed stock in single ownership and management control’
(c) it includes provisions to remain at an affordable price for future eligible households, or for the subsidy to be recycled for alternative affordable housing provision.
For Build to Rent schemes affordable housing for rent is expected to be the normal form of affordable housing provision (and, in this context, is known as Affordable Private Rent).
b) Starter homes: is as specified in Sections 2 and 3 of the Housing and Planning Act 2016 and any secondary legislation made under these sections. The definition of a starter home should reflect the meaning set out in statute and any such secondary legislation at the time of plan-preparation or decision-making. Where secondary legislation has the effect of limiting a household’s eligibility to purchase a starter home to those with a particular maximum level of household income, those restrictions should be used.
c) Discounted market sales housing: is that sold at a discount of at least 20% below local market value. Eligibility is determined with regard to local incomes and local house prices. Provisions should be in place to ensure housing remains at a discount for future eligible households.
d) Other affordable routes to home ownership: is housing provided for sale that provides a route to ownership for those who could not achieve home ownership through the market. It includes shared ownership, relevant equity loans, other low cost homes for sale (at price equivalent to at least 20% below local market value) and rent to buy (which includes a period of intermediate rent). Where public grant funding is provided, there should be provisions for the homes to remain at an affordable price for future eligible households, or for any receipts to be recycled for alternative affordable housing provision or refunded to government or the relevant authority specified in the funding agreement.
Homes that do not meet the NPPF definition of affordable housing will not be considered as affordable housing for planning purposes.
The council’s Corporate Plan 2020 to 2023 priority ‘A city to call home’ outlines a number of housing ambitions including that affordable rented homes be truly affordable. As such, we expect rents on these homes to be at least the lower of 80% market rent or the Local Housing Allowance for that property size (including any service charge where applicable). Social rents are encouraged. All developers and Registered Providers are expected to have due regard to these requirements.
From 28 June 2021, First Homes are also considered to meet the definition of affordable housing for planning purposes. First Homes are a specific kind of discounted market sale housing which have been introduced by government as a national planning policy requirement.
The criteria for First Homes set out in Planning Practice Guidance (PPG) are:
a) must be discounted by a minimum of 30% against the market value
b) sold to a person or persons meeting the First Homes eligibility criteria (as specified in the PPG)
c) on their first sale, will have a restriction registered on the title at HM Land Registry to ensure this discount (as a percentage of current market value) and certain other restrictions are passed on at each subsequent title transfer; and
d) after the discount has been applied, the first sale must be at a price no higher than £250,000 (or £420,000 in Greater London).
First Homes are the government’s preferred discounted market tenure and must now account for at least 25% of all affordable housing units delivered by developers through planning obligations.
Local authorities can apply eligibility criteria in addition to the national criteria described as part of Section 106 agreements. These local criteria will apply to first three months of marketing which thereafter will revert to national criteria. They may involve lower income caps (if this can be justified with reference to local average first-time buyer incomes), a local connection test, or criteria based on employment status. First Homes are designed to allow people to get on the housing ladder in their local area, and in particular to ensure that key workers providing essential services are able to buy homes in the areas where they work. Authorities can therefore prioritise key workers for First Homes, and are encouraged to do so, especially if they have an identified local need for certain professions.
Subject to the national guidance above, the council will apply the following local eligibility criteria for First Homes during the first three months of marketing:
- Prospective buyers must have a local connection to Brighton & Hove. They must either have lived in the city continuously for two years or have employment in the city; or special circumstances must exist for example, fulfilling a caring role
- Prospective buyers must be key workers. For the purposes of First Homes key workers will include any of the following public sector employees.
- NHS: Nurses and care assistants in the city
- Sussex Ambulance Service: Paramedics
- Police: Police Officers and Community Support Officers
- Probation Service: Probation Officers and support staff, who work directly with offenders Fire Service: Uniformed fire and rescue staff below principal level
- Local Authority professions where there is an identified shortage.
Note: Local connection criteria will not be required for all active members of the Armed Forces, divorced/separated spouses or civil partners of current members of the Armed Forced, spouse or civil partners of a deceased member of the armed forces (if their death was wholly or partly caused by their services) and veterans within 5 years of leaving the armed forces.
Affordable housing delivery
The council will negotiate with developers to secure policy compliant affordable housing, or equivalent contributions as set out in the City Plan. The expectation is that the affordable housing provision is secured at the point of planning permission being granted.
The policy applies to all proposed residential development including conversions and changes of use.
In Brighton & Hove, there are a number of different routes to deliver affordable housing, e.g through Registered Providers. The form of delivery should be confirmed at the time of achieving planning permission.
New forms of delivery including (but not limited to) affordable housing provided as part of a co-living housing scheme or as part of a specialised housing development for older persons may be appropriate in specific circumstances and will be considered on a scheme by scheme basis (See Policy DM4 in City Plan Part Two).
National affordable housing policy is geared towards both housing for rent and home ownership and the council recognises that there are households seeking a range of different types and tenures of affordable housing in the city. However, local assessments of affordable housing need in Brighton & Hove indicate the greatest need in the city is for affordable rented housing and this will be treated as the priority when bringing the affordable housing forward. The council will seek to ensure that affordable housing delivered in the city addresses these identified local housing needs as far as possible, subject to viability considerations.
Earlier versions of this guidance specified a tenure split consisting of 55% affordable rent and 45% intermediate housing. The NPPF has subsequently introduced a wider range of affordable routes to home ownership which may also be considered. The introduction of First Homes policy nationally in 2021 now means that a minimum of 25% of affordable housing units secured through developer contributions should be secured as First Homes.
Within Brighton & Hove, First Homes will form part of the affordable ownership element (within the 45% intermediate housing). In addition, the council will continue to seek to ensure that at least 55% of affordable housing will be provided as affordable rented tenure. An updated city-wide assessment of the impact of the First Homes requirement on development viability will be undertaken in due course.
The appropriate level and type of affordable housing provision will continue to be subject to criteria i. to v. in Policy CP20, namely:
i. local need in respect of the mix of dwelling types and sizes including the city’s need to provide more family-sized affordable housing;
ii. the accessibility of the site to local services and facilities and public transport;
iii. the costs relating to the development; in particular the financial viability of developing the site (using an approved viability model);
iv. the extent to which the provision of affordable housing would prejudice the realisation of other planning objectives; and
v. the need to achieve a successful housing development.
The mix of affordable tenures will be agreed through negotiation on a site by site and phase by phase basis, informed by local housing needs assessments, the individual characteristics of the site/neighbourhood, viability and the type and tenure of the development proposed having regard to council priorities of providing affordable rent and family homes.
The requirements for the delivery of affordable housing are set out in Policy CP20, with the council’s priority being for onsite provision of affordable housing. Developers should seek early discussions with providers of affordable housing to secure its delivery. Where a suitable tenure mix is proved not to be viable for financial or other reasons the council will consider the following options in the order shown below:
- Council purchase of the affordable rent homes subject to viability and an alternative partner for the affordable ownership units (unless all the affordable housing units can be made for rent).
- Provision of a financial payment in lieu (commuted sum) for all or part of the affordable housing element which will be used to fund affordable housing for rent through other council programmes. The council’s commuted payments formula will apply (see Section 3 below).
Build to Rent housing
Policy DM6 in CPP2 sets out the council’s approach to the provision of affordable housing within build to rent developments. The policy draws on evidence from the Brighton & Hove Build to Rent Study 2019 which assessed the viability of build to rent development in the city and its potential to deliver affordable housing that meets identified local needs.
The policy outlines how developers of build to rent schemes will be required to provide private affordable rented (discounted market rent) units on site integrated within the development. As set out in the policy, the council will negotiate with the build to rent developer to:
- seek provision of up to 20% affordable housing at genuinely affordable rents to be agreed with the council, taking account of the overall viability of the proposed development and subject to consideration of criteria i. to v. in Policy CP20 (This will generally require that the affordable rents are set no higher than the Local Housing Allowance (LHA) Housing Benefit limit (including service charges)
- agree eligibility criteria for the occupants of the affordable homes to be included in the Section 106 agreement
- agree the size mix of affordable housing units
- ensure that the affordable homes are secured in perpetuity through the inclusion within the Section 106 agreement of a ‘clawback’ arrangement in the event of affordable units being sold or taken out of the build to rent sector. This could be achieved through the alternative provision of other affordable housing or a financial contribution equivalent to the value of the affordable housing lost as a result of the sale/conversion of the build to rent scheme
As set out in the supporting text to Policy DM6, the council will require build to rent scheme operators to produce an annual statement confirming the approach to letting the units, rent charged, ongoing status and clearly identifying how the affordable housing provision specified in the planning permission is being met.
Planning Practice Guidance indicates that both the proportion of affordable private rent units, and the discount offered on them can be varied across a development, over time. Provision for this will be addressed through viability review mechanisms and will be set out in Section 106 agreements.
Policy DM6 also sets out other general policy requirements for build to rent schemes, including that the homes are held as build to rent under a covenant for at least 15 years; that the build to rent housing is under unified ownership and will be subject to common management; and that the development will offer tenancies of at least 3 years available to all tenants with defined in-tenancy rent reviews.
For the city as a whole the preferred affordable housing mix in terms of unit size and type as set out in Policy CP20 is:
- 30% one bedroom units
- 45% 2 bedroom units
- 25% 3 or more bedrooms
Assessments of housing need show that the highest need numerically is for smaller, one and two bedroom properties. However, there is also significant pressure on larger, family sized homes with those households on the Housing Register seeking a three bed or larger property having to wait significantly longer for a suitable home.
Where the affordable housing is provided by a Registered Provider the council will be able to nominate people from the Housing Register for 100% of all affordable rented homes on initial lets and 75% on subsequent lets, in accordance with the council’s Housing Allocations Scheme and Guidance.
For affordable housing provided through alternative providers, the form of nominations from the council and a Local Lettings Plan will be agreed as part of the planning process/Section 106 Agreement.
Affordable home ownership provision must meet the national household income and other requirements and should be targeted to house those currently resident and/or working in the city as priority. The council will expect marketing to reflect this.
All planning applications for 10 or more residential units that provide policy compliant levels of onsite affordable housing should be supported by an Affordable Housing Statement setting out details of the proposed affordable housing offer. This should include information on the individual affordable units, including floor area (sqm); tenure; housing type; number of storeys; bedrooms; bedspaces.
For schemes of between 5 and 14 residential units where an in lieu financial contribution (commuted payment) is to be provided, a separate Affordable Housing Proforma should be completed.
Further information is set out on the council’s website.12
Affordable housing design
The council will expect high standards of design, layout and landscaping for all developments which reflect the character of the area and local distinctiveness.
The affordable housing should not be visually distinguishable from the market housing on the site in terms of build quality, materials, details, levels of amenity space and privacy.
The council will require all housing to meet the technical standards set out in CPP2 Policy DM1.
- all residential units should meet the nationally described space standards;
- all residential units should as a minimum be accessible and adaptable in accordance with Building Regulation M4(2)
- for proposals providing 10 or more dwellings, 10% of the affordable residential units and 5% of all the residential units should be suitable for occupation by a wheelchair user in accordance with Building Regulation M4(3). Where this is not practicable onsite an equivalent financial contribution should be provided; and
- all new residential development will be required to provide useable private outdoor amenity space appropriate to the scale and character of the development
The preferred tenure for wheelchair accessible housing is affordable rent, where viable and practicable. For clarification, the council will require such units to be wheelchair accessible at the point of completion and will nominate suitable occupants for the wheelchair housing.
Schemes funded through Homes England or other funding programmes must meet any additional standards as required by the funder.
Applications for development which do not comply with the Policy CP20 affordable housing policy requirements for reasons of development viability must be supported by a detailed viability assessment submitted alongside the planning application. Specific requirements for any such viability assessment are set out in the Viability Assessment Checklist on the council’s website. The submitted viability assessment will be made publicly available in the same manner as the other documents that form part of the planning application submission.
The council will review the viability assessment provided and consider whether the approach adopted and the inputs applied are appropriate and adequately justified by evidence. In doing so, specialist advice will be sought from the Valuation Office Agency (VOA) or other external consultants and the applicant will be required to pay the costs of this process.
Where a scheme does not comply with the council’s policy requirements for affordable housing for viability reasons and following an independently assessed open book appraisal of the scheme’s costs and revenue, a review mechanism (or re-appraisal of scheme viability) will be incorporated into the Section 106 agreement, This is to ensure that any future uplift in development value is shared with the council in the form of an improved affordable housing contribution up to a policy compliant level.
The Section 106 agreement will specify the details of the review mechanism, setting out clear, simple triggers for any viability review.
These may include:
- where there is a significant delay in starting on site;
- commencement of phases for large sites;
- on submission of reserved matters application(s);
- at a specified point prior to the completion of the development.
A review will also be required in the event that an applicant or developer seeks to reduce the provision of affordable housing after the grant of planning permission on the basis of updated viability information. In such cases, it will be necessary to amend the Section 106 agreement to reflect any review findings.