Affordable housing brief

Introduction

Within Brighton & Hove there is a significant need for affordable housing and the council is committed to maximising the provision wherever possible.

This document sets out council guidance on the housing and planning requirements for affordable housing within the city, as required through Policy CP20 in the adopted Brighton & Hove City Plan Part One.

The aim is to ensure that the council achieves mixed, balanced and sustainable communities and delivers high quality affordable housing for local people in housing need.

This document will be regularly reviewed (every 2 years) to take account of local circumstances and/or relevant policy changes and updated as necessary.

1. Policy context

National planning policy

1.1

The government national planning policy guidance is set out in the National Planning Policy Framework1 (NPPF) and in the related National Planning Practice Guidance (NPPG).

1.2

The overall objectives for housing outlined in the NPPF are to significantly boost the supply of housing in order to meet the housing needs of different groups within the community.

1.3

The NPPF requires local planning authorities to:

set out strategic policies informed by a local housing need assessment
assess the size, type and tenure of housing needed for different groups in the community including those who require affordable housing and to reflect this in planning policies
specify the type of affordable housing required (applying the NPPF definition) and expect it to be met onsite except where an off-site provision or appropriate financial contribution in lieu can be robustly justified and the agreed approach contributes to the objective of creating mixed and balanced communities

Local policy

1.4

The Brighton & Hove City Plan Part One (CPP1) was adopted in March 2016. The Plan sets out strategic housing policies for future housing delivery in the city to 2030 and policy requirements for affordable housing and housing mix.

1.5

Policy CP20 Affordable Housing requires an affordable housing contribution on all sites of 5 or more net residential units. For sites of 5 to 9 residential units, the contribution required is 20% as a financial contribution (commuted sum); for sites of 10-14 net units the contribution is 30% to be provided as either onsite provision or as a financial contribution; and for sites of 15 or more the requirement is for 40% onsite affordable housing.

1.6

Policy CP20 is underpinned by evidence relating to the need and demand for different types of housing in Brighton & Hove including the Assessment of Affordable Housing Need, December 2012 and Objectively Assessed Housing Need: Brighton & Hove, June 2015. This evidence shows there is a significant shortfall of affordable housing in the city.

1.7

The 2015 Objectively Assessed Housing Need indicates that 87% of households on the council’s housing register were unable to afford market housing and that 58% of newly forming households were unlikely to be able to afford entry-level market housing without support. Property purchase and rental costs have further increased over subsequent years. The 2015 assessment indicated a net need for 810 affordable homes per annum if all need were to be met through the provision of new affordable homes.

1.8

In addition to Policy CP20, policies relevant to the delivery of affordable housing are also included in the Brighton & Hove City Plan Part Two (CPP2).

In particular:

Policy DM1 Housing Quality, Choice and Mix - sets requirements with regard to space and accessibility standards and the provision of private outdoor amenity space; and
Policy DM6 Build to Rent Housing - sets requirements for the delivery of affordable housing as part of build to rent developments.

1.9

The council’s Corporate Plan 2020 to 2023 reinforces the need for more affordable housing to meet the needs of local people and includes a commitment to provide genuinely affordable homes. The Plan sets out a number of actions to support this.

1.10

In order to formalise the council’s position the council will develop a Supplementary Planning Document (SPD) for affordable housing delivery in the city.

2. Meeting affordable housing needs

Definition of Affordable Housing

2.1

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.

2.2

Homes that do not meet the NPPF definition of affordable housing will not be considered as affordable housing for planning purposes.

2.3

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.

First Homes

2.4

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).

2.5

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.

2.6

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.

2.7

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

2.8

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.

2.9

The policy applies to all proposed residential development including conversions and changes of use.

2.10

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.

2.11

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).

Tenure mix

2.12

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.

2.13

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.

2.14

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.

2.15

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.

2.16

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.

2.17

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

2.18

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.

2.19

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

2.20

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.

2.21

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.

2.22

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.

Housing type

2.23

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

2.24

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.

2.25

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.

2.26

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.

2.27

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.

2.28

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

2.29

The council will expect high standards of design, layout and landscaping for all developments which reflect the character of the area and local distinctiveness.

2.30

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.

2.31

The council will require all housing to meet the technical standards set out in CPP2 Policy DM1.

These are:

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

2.32

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.

2.33

Schemes funded through Homes England or other funding programmes must meet any additional standards as required by the funder.

Viability assessment

2.34

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.

2.35

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.
Review mechanism

2.36

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.

2.37

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.

2.38

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.

3. Alternative developer contributions

Introduction

3.1

Onsite provision of affordable housing remains the council’s first priority.

3.2

Other than the policy requirements for smaller sites (5-14 units) as set out in CP20 Affordable Housing in the City Plan Part One, offsite provision of affordable housing on an alternative site or by way of a financial payment in lieu (or commuted sum) will only be sought in after full investigation of all onsite options.

3.3

For sites of 15 or more units, there will need to be good planning or housing reasons to accept offsite provision or a commuted payment in lieu. Such justification will need to be clearly evidenced, as the general presumption will remain for onsite provision unless specific circumstances indicate otherwise. This is a matter for the developer to demonstrate and for the council to consider and agree.

3.4

Circumstances which might justify offsite provision or payment in lieu are set out below:

Where mixed community objectives/housing priorities could be better met in an alternative location. For example where family sized (3+ bedroom, outdoor space) housing cannot easily be provided on the development site itself or where there is already a concentration of social housing in an area, it may be preferable to seek offsite provision or a commuted sum to fund affordable housing elsewhere.
Where there are high housing costs for occupiers associated with the development. For example, in expensive flatted developments such as conversions of listed buildings leading to high service/ maintenance charges and where this cannot be satisfactorily overcome or avoided by alternative design, massing or separate new build for the affordable housing.
Where on small sites it is not practical from a management perspective to provide and manage a small number of onsite affordable housing units.
Where the location of the development is less suitable for those on lower incomes (e.g because it is remote from public transport, local facilities, employment, etc).

3.5

It is important to note that economic viability will not on its own determine whether there should be on or offsite provision. Viability determines the overall amount of the affordable housing contribution, i.e the appropriate percentage of affordable housing overall, the type (tenure, size mix) of affordable housing sought, and whether provided onsite, offsite or as a commuted sum payment.

3.6

Neither offsite provision nor financial contributions will be a less expensive option than onsite provision but will be equitable. In circumstances where the proportion of affordable housing is being negotiated, the council may require the development’s financial information be provided on an open book basis which will be required as part of the process.
Offsite provision on an alternative site

3.7

Where the case for no onsite provision is agreed, the council may consider offsite affordable housing provision on an alternative development site. An example may be where a private developer can ‘pair’ up development sites.

3.8

Provision of affordable housing on an alternative development site will be in addition to any requirement arising from the development of the alternative site itself. Where an alternative site is insufficient in area to accommodate all the affordable housing requirement then financial contributions to remedy the shortfall will be sought.

Commuted payments formula

3.9

The council’s Developer Contributions Technical Guidance sets out the approach and methodology for calculating commuted sums for affordable housing based on the difference between Open Market Values and Affordable Housing Values. The commuted sums are updated on a regular basis to reflect changes in the average housing market values. Find details on our Affordable Housing Commuted Sums page.

Commuted payments: Proposed uses

3.10

The use of any commuted sum will be secured via a Section 106 legal agreement. Sums will be negotiated for planning sites where affordable housing is required, but where the provision cannot easily be made on site, nor can it be provided on an alternative site within the locality.

3.11

For maximum flexibility it is proposed that the council will use commuted payments to fund affordable housing in the city in the following ways:

To contribute to the costs of building new affordable housing
To contribute to the costs of area regeneration in connection with council owned land that will provide new affordable housing
To contribute to the costs of purchasing land or properties for use as affordable housing
To contribute to the cost of bringing long term empty homes back into use as affordable housing

Appendix 1 - preferred partners for the provision of affordable housing

The council has established a good relationship through the Brighton & Hove Affordable Housing Delivery Partnership with a number of Registered Providers and works in partnership with these preferred partners to provide affordable housing which meets local housing needs.

The current preferred Registered Provider partners adhere to the requirements of the council’s Affordable Housing Brief and actively contribute to the council’s strategic housing objectives. As such, the council requires developers to meet their affordable housing obligations by working in partnership with these preferred partners.