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Affordable housing – what is it? Is it really affordable or just propaganda?

Alison Wheelhouse

The use of the term “affordable housing” in relation to planning applications is very misleading indeed.


Taking the planning application for Wilton Park as an example (planning ref:17/01763/OUT), initially the developers’ advisers (Montagu Evans) submitted their report stating that the development at Wilton Park would not be sufficiently "viable" to provide any affordable housing:



This is because the developers’ “viability statement” showed a “deficit”. This doesn’t mean that the scheme would make a loss, in fact very much far from it. The residential sales at Wilton Park were projected to be £351,354,526, with total costs (including developers’ profit of c. £62 million) stated to be £290,825,275.


The way a viability statement works is that total costs are then deducted from total income (in this case producing a difference of £66,450,664). And that sum of c.£66 million is then compared to the current value of the land (not the actual price paid). This is where things get a bit twilight zone.


Rather than using the price the developers actually paid for the site, developers are allowed to use a different value for the site, namely the existing value (there are a few different ways of valuing the land). This means that if a developer buys the site for a bargain price or if they land bank it for a while and it increases in value, the value which can be used for the viability statement can be far higher than the price actually paid by the developer for the land.


The value of the land used in this example is stated to be £72,550,000, which is far far higher than the price the developer actually paid for the site. They are allowed to do this.


So income minus costs in this example = c. £66 million. But because the value attributed to the cost of the land is stated in the viability statement to be c. £72 million (despite the developers actually paying far less), the statement shows a “deficit.”


That is just the way a viability statement is legitimately allowed to work. It creates a “deficit” even though the developers’ profit would be huge. This is a legitimate loophole.


In this case, I challenged the viability statement, pointing out that the real profit made would be very healthy indeed and that the scheme should obviously be considered viable to provide affordable housing. Bucks Council agreed.


So, the developer in this example will be obliged to pay an affordable housing contribution of

£3 million AND provide 12 affordable rent units and 67 shared ownership units (“or such other tenure mix as may otherwise be agreed in writing by the District Council from time to time.”).


What does “affordable rent” and “shared ownership” mean? Most would agree that these types of “affordable housing” are not truly affordable. Shared ownership is market price housing where buyers buy a share in the property and pay rent on the remaining share (e.g. a buyer might buy a 25% per cent share at market price and pay rent on 75%). It is possible for buyers to “staircase” to increase their ownership share as and when/if they can afford to do so.


Affordable rent units were introduced by the Government to allow social housing providers to charge up to 80% of the local market rent – still a big proportion of market rent and expensive in areas of high market rents.


Most agree that affordable rent units and shared ownership units are not truly affordable but it is attractive propaganda for the Government and developers to claim that “affordable housing” is being delivered, when in areas of high land value it is only the provision of social housing which would really solve the problem of unaffordable housing which is the real “housing crisis.” Building more and more executive homes will not solve “the housing crisis,” so don’t be fooled into thinking that releasing high value green belt will provide a solution and provide affordable homes. It won’t.


Also bear in mind that the Government’s method of calculating the number of homes “needed” results in Office of National Statistics household projection numbers being uplifted by c.50% in our area – we simply don’t need the number of homes the Government says we do. It’s just more propaganda.

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