27 January 2020

New panel to assess provision by developers of new low-cost homes

We’re proposing to set up an independent panel to assess the financial business cases of new private housing developments in the city.

The aim is to reinforce requirements for developers to provide low-cost homes for rent or shared ownership as part of new housing schemes.

The new model will enable the council to set some of the assessment criteria and give us more control over reviewing whether new developments could increase the percentage of affordable housing.

What happens now

Currently we ask that all planning proposals for more than five new homes include between 20 and 40% of low-cost homes. 

If the developer thinks this can’t be delivered within the budget for the development, they must submit a viability assessment to prove how it would not be financially viable to provide the amount of affordable housing that council policy requires.

In some cases the council will take a financial contribution to build affordable housing elsewhere in the city. This is known as a ‘commuted sum.’

However, developers are increasingly submitting applications with a reduced  number of affordable homes on their sites or in some cases offer no low-cost homes at all. 

Using our influence through planning

Councillor Tracey Hill, chair of the city’s planning committee, said: “We want to be doing all we can to address the housing crisis in the city and through planning we will use our influence to get as much new affordable housing as we can.

“As well as our commitment to deliver 800 new affordable council homes we are looking at how to maximise the number of low-cost homes on all developments of more than five homes. Offering a wider pool of resources and using our own model will help ensure we have a more robust capability to review viability, identify where there is room for manoeuvre and increase the affordable housing percentage that is being proposed.

“The panel will offer a range of companies that developers can use, so will also speed up the delivery of the service, enabling us to get acceptable schemes in a position to be started more quickly on site.

“I’d like to thank the members of the planning committee who have helped to shape this work; their comments – drawn on the real experience of deciding planning applications – will ensure we are providing relevant and robust challenges to developers.”

Viability assessments

Most planning applications for developments involving more than 10 homes (around 20 a year) are submitted with a viability assessment. Reviews of these assessments are currently carried out by the District Valuers Service (DVS) which is independent of the council and paid for by the developer. Our planning service uses the independent assessment to negotiate the level of affordable housing on the site.

Viability assessments are usually undertaken by a chartered surveyor and assess:

  • How much the development is worth once the scheme has been developed, which includes the sale of homes
  • Construction costs
  • How much it cost to buy the site
  • Financial contributions as part of the planning process, which includes affordable housing but could also include sums for transport, open space, education, community facilities or public art
  • The level of profit for the developer after costs. 

Our proposal will enable developers to choose a consultant from the independent panel to carry out the viability review.

More information

Proposals for the provision of viability consultancy advice to the planning service were agreed by the Tourism, Equalities, Communities and Culture Committee (agenda item number 40) in January 2020.
 

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