DRAFT DOCUMENT

Draft SPD Affordable Housing

1

LONDON BOROUGH OF SUTTON

Draft Supplementary Planning Document (SPD)

Second Draft

Affordable Housing

2 NOVEMBER 2005

LONDON BOROUGH OF SUTTON

Page 209

DRAFT DOCUMENT

2

CONTENTS 1 INTRODUCTION 03 2 STRATEGY AND POLICY CONTEXT 05 3 TYPES OF AFFORDABLE HOUSING 10 4 HOUSING NEED 12 5 HOUSING MIX/TENURE OF AFFORDABLE

HOUSING 12

6 OVERALL AFFORDABLE HOUSING TARGET 13 7 AFFORDABLE HOUSING THRESHOLDS 14 8 SECURING AFFORDABLE HOUSING ON-SITE 15 9 OFF-SITE PROVISION OF AFFORDABLE

HOUSING 17

10 AFFORDABLE HOUSING IN PERPETUITY 19 11 SHELTERED HOUSING 19 12 OTHER TYPES OF HOUSING 20 13 OTHER DEVELOPMENT REQUIREMENTS 20 APPENDIX 1 SUTTON HOUSING NEEDS UPDATE (APRIL 2005)

APPENDIX 2 DRAFT STANDARD LEGAL AGREEMENT FOR HOUSING

(JULY 2005)

APPENDIX 3 FORMULA FOR CALCULATING THE NUMBER OF UNITS OFF SITE

APPENDIX 4 HOUSING CORPORATION TCI RATES FOR SUTTON (COST GROUP A3) 2004/05 AND 2005/06

APPENDIX 5 FINANCIAL APPRAISAL CHECKLIST (To be provided by Geoff Clark)

APPENDIX 6 DIAGRAM OF AFFORDABLE HOUSING PROCESS (to follow)

TABLE 1 TABLE SHOWING COST OF MARKET ENTRY

HOUSING/UPPER LIMIT OF OUTGOINGS FOR INTERMEDIATE HOUSING (To Follow)

TABLE 2- EXAMPLE OF PROVIDING AFFORDABLE HOUSING UNITS OFF-SITE (To Follow)

Page 210

DRAFT DOCUMENT

3

1 INTRODUCTION

Purpose of the document 1.1 The purpose of this draft supplementary planning document (SPD) is to

set out the Council’s approach to securing affordable housing provision in the Borough.

1.2 The approval of the Mayor’s London Plan in February 2004 has created

some ambiguity in relation to the application of the affordable housing policies contained in the adopted Sutton Unitary Development Plan (April 2003). Since that date, the development plan for Sutton has comprised both the London Plan and the adopted Sutton UDP.

1.3 Local development plan policies are required to be in general conformity

with the London Plan. Furthermore, in cases of conflict between policies, the more recently adopted London Plan takes precedence. Given the differences between the two plans, there has been uncertainty over the proportion of affordable housing that should be sought by the Council on sites coming forward for development and in relation to threshold sizes when affordable housing policies will apply. Clarification has also been sought on how the Council assesses off-site affordable housing contributions.

1.4 The document also stresses the importance of contacting Council

officers early in the development process so that developers are aware of the Council’s priority housing needs and any other relevant planning policy requirements and related community benefits. Scope of the document

1.5 Section 2 of this document sets out the Strategy and Policy context for seeking affordable housing. Sections 3, 4 and 5 set out the types of housing considered affordable in the Borough; the level of need; and the required mix and tenure of affordable housing that is likely to be sought from new developments providing affordable housing. Sections 6 and 7 provide the Borough’s overall affordable housing target and site threshold that will be used to determine whether affordable housing will be required. Section 8 sets out how the Council will determine the amount of affordable housing to be provided on site and Section 9 deals with all aspects relating to the exceptional circumstances where off-site provision of affordable housing may be acceptable, including how commuted financial payments will be assessed. Section 10 deals with securing affordable housing in perpetuity. For the avoidance of doubt, sections 11 and 12, set out affordable housing requirements in terms of sheltered housing and other types of housing respectively and Section 13 deals with other development requirements arising from the provision of affordable housing.

Status of the document

Page 211

DRAFT DOCUMENT

4

1.6 The circumstances in which the Council will seek affordable housing are currently set out in UDP Policy HSG 9. This policy, along with other UDP housing policies, will be reviewed through the Council’s Local Development Framework. In the meantime, this document clarifies the planning policy position on how the Council will seek affordable housing in light of emerging national guidance in revisions to PPG3 and the Greater London Authority’s London Plan and associated draft affordable housing supplementary planning guidance. The document also takes account of the Housing Strategy for South-West London; the Council’s Housing Strategy 2004/5 to 2008/9 and Community Strategy and Fordham Research’s Housing Study 2005 Update for the London Borough of Sutton.

1.7 The SPD, once adopted by the Council, will be a material consideration

in determining planning applications for new housing developments. In the meantime, planning applications for residential development will be determined in accordance with the relevant policies of the London Plan and the Sutton UDP and the Council’s Interim Policy Statement on Affordable Housing, which has been approved as a material consideration for development control purposes.

Page 212

DRAFT DOCUMENT

5

2 STRATEGY AND POLICY CONTEXT 2.1 This section sets out firstly the Strategic and then the Policy context for

seeking affordable housing at national, regional and local level.

National Strategy - Sustainable Communities Plan (February 2003) 2.2 The Sustainable Communities Plan sets out the policies, resources and

partnerships the Government intends to put in place to achieve successful thriving sustainable communities in every part of the country. The key strategic challenges it identifies for housing in London include tackling homelessness; ensuring decent homes for all; promoting the construction of good quality, high density, mixed-use and mixed tenure affordable housing; and better co-ordination between strategies and funding for affordable housing. As a result, a London Housing Board has now been established, which brings together representatives from the London boroughs, Housing Corporation, the GLA, English Partnerships, and other relevant bodies in the region. The Board takes responsibility for preparing a Regional Housing Strategy. In addition a new single fund (called the Regional Housing Pot) for housing capital resources has been established, which takes the place of the local authority Housing Investment Programme (HIP). The Board advises Ministers on the allocation of the Regional Housing Pot to meet priorities set out in the London Housing Regional Strategy.

Regional Strategy – A Housing Strategy for Southwest London Borough Of Sutton

2.3 The Housing Corporation, in partnership with London boroughs (through the ALG) has divided London into five sub-regions in order to direct resources to deliver the regional investment strategy and has also set priorities for these sub-regions. Sutton is part of the southwest London sub-region, together with Croydon, Kingston, Merton, Richmond-upon-Thames, Wandsworth and Lambeth. The seven authorities have formed a Partnership with four aims: to set out the evidence of housing need, the priorities for action, and the available resources and opportunities; to provide a clear plan of action; to put the case to the London Housing Board for investment in southwest London; and to promote cross-borough working at a strategic and operational level.

2.4 Public investment in additional affordable housing provision, primarily

through the Housing Corporation, within the framework of the London Housing Strategy agreed by the London Housing Board, is on the basis of lettings being pooled on a sub-regional and regional basis relative to housing need. This is because there is considered to be a mismatch between those areas experiencing greatest housing need and the availability of sites to meet that need.

Local Strategy- Sutton Community Partnership-Community Strategy

Page 213

DRAFT DOCUMENT

6

2.5 The Sutton Community Strategy contains a number of targets between 2005 and 2008, including:

“To meet the affordable homes target, developing with partners 291 units for rent and 37 units of shared of shared ownership housing during the period 2005-2007”.

Local strategy - London Borough of Sutton Housing Strategy (2004)

2.6 The council’s five-year Housing Strategy sets out five priorities, which

include maximising the supply of affordable housing and making the best use of Sutton’s existing housing stock.

National Policy– PPG3 (March 2000)

2.7 PPG3 states that a community’s need for a mix of housing types,

including affordable housing, is a material consideration that should be taken into account in formulating development plan policies. Where there is a demonstrable lack of affordable housing to meet local needs (as assessed by up-to-date surveys and other information), development plans should include a policy for seeking affordable housing in suitable housing developments.

2.8 PPG3 also states that where a local authority has decided, having

regard to the criteria set out in paragraph 10 of Circular 6/98, that an element of affordable housing should be provided in the development of a site, there is a presumption that such housing should be provided as part of the proposed development of the site. Failure to apply this policy could justify the refusal of planning permission.

National Policy-Circular 6/98

2.9 Circular 6/98 sets the criteria for councils seeking affordable housing: in outer London, suitable sites are defined as those providing 25 dwellings or greater or developments on sites of 1 hectare or more. However, lower thresholds can be employed where exceptional local circumstances can be demonstrated.

National Policy - Government Revisions to PPG3 ‘Planning for Mixed Communities’ (Janaury 2005)

2.10 The document “Planning for mixed communities” is proposed to replace

paragraphs 9-17 of PPG3. Circular 6/98 on affordable housing would also be cancelled.

Page 214

DRAFT DOCUMENT

7

2.11 This guidance states that affordable housing policies can be used to deliver additional affordable housing or improve the quality of existing affordable housing. This guidance now makes it clear that authorities should set out in local development documents the proportions of social-rented and intermediate housing to be provided.

2.12 This guidance changes the emphasis on affordable housing site

thresholds. The revised guidance states that site thresholds should not normally be above 15 units, or sites more than 0.5 hectares. In addition, it is proposed that local authorities should be able to apply affordable housing policies to applications below site-size thresholds in certain circumstances. They must however demonstrate that the sites are capable of delivering more housing than proposed and would be above the appropriate site-size threshold; and/or that the site forms part of a more substantial development, which would in its totality be above the appropriate site-size threshold.

2.13 This guidance also states that planning obligations should include a

fallback mechanism to ensure delivery of affordable housing through an alternative agreement should the level of subsidy, which was reasonably anticipated, not be forthcoming.

Regional Policy-London Plan 2004

2.14 Policy 3A.6 of the London Plan states that affordable housing should be defined in UDPs as housing that meets the needs of households whose incomes are not sufficient to allow them to access decent and appropriate housing in their Borough. Affordable housing comprises social housing, intermediate housing and in some cases, low cost market housing. These three types of housing are each defined in detail in the London Plan and the GLA’s Supplementary Guidance on Affordable Housing.

2.15 Policy 3A.7 of the London Plan deals with affordable housing targets. It

states that UDP policies should set an overall target for the amount of affordable housing provision over the plan period in their area, based on an assessment of all housing needs and a realistic assessment of supply. In setting targets boroughs should take account of regional and local assessments of need, the Mayor’s strategic target for affordable housing provision that 50 per cent of provision should be affordable and, within that, the London wide objective of 70 per cent social housing and 30 per cent intermediate provision, and the promotion of mixed and balanced communities. They should take account of the most robust available assessment of housing capacity, and of a wide range of potential sources of supply, including private residential development negotiations and Registered Social Landlords’ developments.

2.16 Policy 3A.8 of the London Plan sets out advice on negotiating affordable housing in individual private residential and mixed-use schemes. Boroughs should seek the maximum reasonable amount of affordable housing when negotiating on individual private residential and mixed-use

Page 215

DRAFT DOCUMENT

8

schemes, having regard to their affordable housing targets adopted in line with policy 3A.7, the need to encourage rather than restrain residential development and the individual circumstances of the site. Targets should be applied flexibly, taking account of individual site costs, the availability of public subsidy and other scheme requirements.

Regional Policy- Draft SPG to the London Plan on Affordable Housing (July 2004)

2.17 This draft Supplementary Planning Guidance (SPG) is intended to assist

in the application and implementation of the affordable housing policies contained in the London Plan. When approved, it will be a material consideration in determining planning applications. It is also intended to assist boroughs in reviewing their UDPs and preparing Local Development Documents. It deals with issues such as the definition of affordable housing, the issue of intermediate housing, housing need and choice, affordable housing targets, negotiation on individual schemes, site size thresholds, off site provision, loss of affordable housing and estate renewal.

Local Policy – Adopted Sutton Unitary Development Plan (April 2003)

2.18 Policy HSG9 of the adopted UDP deals with the provision of affordable

housing from large sites.

“The Council will require all residential developments on suitable sites capable of accommodating 20 or more dwellings or on sites of 0.8 hectares or more (regardless of the number of units) to provide an element of affordable housing. In exceptional circumstances, the council will consider contributions to provide affordable housing on an alternative site”.

2.19 The reasoned justification to policy HSG9 states that, in light of the

London situation, where a large proportion of the housing provision is accounted for by windfall sites, the Borough-wide target is 30% of all units on all suitably large sites (over 20 units or larger than 0.8 hectares) should be affordable. However, because of site constraints or other planning obligations, this figure may be varied between individual sites.

2.20 Furthermore, the provision of affordable housing means the provision of

subsidised housing which is available at a cost equivalent to the Housing Corporation benchmark rents for accommodation of similar size and quality. In order to meet the housing needs of the borough, this will normally mean the provision of socially rented housing provided by a Registered Social Landlord (e.g. Housing Associations).

2.21 Policy HSG10 deals with the provision of affordable housing from other

sources. It states:

Page 216

DRAFT DOCUMENT

9

“The council will encourage the provision of affordable housing and low cost market housing from the following sources: (i) The provision of affordable housing on sites smaller than the

threshold in policy HSG9; (ii) The use of vacant housing units; (iii) The conversion of larger houses to smaller units and the

change of use of vacant offices and accommodation over shops to flats; and, the full and effective use of any vacant and derelict land, particularly sites located close to town centres”.

Local Policy- Interim Policy Statement on Affordable Housing

2.22 Pending the approval of an affordable housing SPD, in July 2005, the

Council agreed an Interim Policy Statement on Affordable Housing as supplementary guidance and as a material consideration for development control purposes.

2.23 The Interim Policy Statement indicates that in accordance with Policies

3A.7 and 3A.8 of the London Plan and having regard to Policies HSG9 and HSG10 of the Sutton UDP:

Policy HSG9A: Interim Supplementary Planning Policy on the Provision of Affordable Housing from large sites

“THE COUNCIL WILL SEEK TO ACHIEVE THE MAXIMUM REASONABLE AMOUNT OF AFFORDABLE HOUSING ON ALL SUITABLE SITES IN THE BOROUGH CAPABLE OF ACCOMMODATING 20 UNITS OR MORE OR ON SITES OF 0.8 HECTARES OR MORE (REGARDLESS OF THE NUMBER OF UNITS) IN ORDER TO HELP ACHIEVE A BOROUGH-WIDE AFFORDABLE HOUSING TARGET OF 40%.

The Council will therefore normally expect that at least 40% of all new housing on such suitable sites should be affordable, with a tenure mix of 70% socially and 30% intermediate affordable housing. In seeking to comply with the policy, the onus will be on developers to demonstrate, by means of a financial appraisal, that the provision of the required level and tenure mix of affordable housing would make the site uneconomic to develop without grant subsidy, having regard to the existing use value of the site and the reasonable costs of its development, other planning policy requirements and related community benefits.

The Council will expect developers to have taken into consideration any abnormal costs in developing a site before acquiring the land. In assessing costs, developers should consult the Council on particular planning policy requirements and related community benefits. The Council will also advise on its housing needs, preferred RSL partners and the prospects for achieving grant subsidy”.

Page 217

DRAFT DOCUMENT

10

3 TYPES OF AFFORDABLE HOUSING 3.1 Circular 6/98 defines affordable housing as encompassing “both low cost

market housing and subsidised housing (irrespective of tenure)”. PPG3 states that local plan policies for affordable housing should define what the authority considers to be affordable in the local plan area in terms of the relationship between local income levels and house prices or rents for different types of households. This position is repeated in revised PPG3. Therefore, in order to provide consistency across London and be in general conformity with the London Plan, the Council will apply the following definition of affordable housing:

'Housing designed to meet the needs of households whose incomes are not sufficient to allow them to access decent and appropriate housing in their borough. Affordable housing comprises social housing, intermediate housing and, in some cases, low-cost market housing”

3.2 The above types of affordable housing are defined below, based on the

London Plan definition and associated SPG, but refined to meet the local situation.

Social Housing

3.3 Social housing is housing provided by a landlord where access is on the basis of housing need, and rents are no higher than target rents set by the government for housing association and local authority rents.

Intermediate Housing

3.4 Intermediate housing is based on the London Plan definition, but has been refined to meet the local situation. It is defined by the London Plan as sub-market housing that is above social rents, but is substantially below open market levels and is affordable by households on incomes of less than £40,000 (as at October 2003). It includes shared ownership, sub-market rent and market provision for outright purchase, including key worker housing that meets the above criterion.

3.5 The GLA’s draft Supplementary Planning Guidance (July 2004) states

that it is essential that intermediate provision provides for households with a range of incomes below the upper limit, and also provides a range of dwelling types in terms of a mix of unit sizes (by number of bedrooms), and that average housing costs, including service charges, are affordable to households on annual incomes of £27,500 per annum (i.e. the midpoint of the £15,000 to £40,000 range).

3.6 The above approach is supported by the findings of Fordham’s Housing

Study 2005 Update (see Section 4). The Study found that in respect of one and two bedroom units, where need would appear to the greatest in the Borough, entry level market housing (rented) is available below the £40,000 limit, being affordable to households with incomes of about £27,000 and £32,000 per annum respectively (see Table 1). Therefore the cost of intermediate housing for these size units would need to be

Page 218

DRAFT DOCUMENT

11

made available to persons with household incomes substantially below these levels to be considered affordable. Table 1 is based on the minimum entry level for rented market housing by unit size, but amended to incorporate the Mayor’s upper limit for intermediate housing. In order to meet the Council’s definition of intermediate housing, such housing should be made available at costs substantially below these upper limits. The ODPM has indicated that it expects intermediate rents to be around 75% to 80% of local market rents1.

Low-cost market housing 3.7 Low cost market housing will only be considered affordable where it

meets the above affordability criteria, meets priority needs and can be held as affordable in perpetuity. Given that Fordham’s Housing Study 2005 Update indicated that the cheapest one bedroom accommodation for sale started at £115,000, property for outright sale is unlikely to be considered affordable in Sutton.

TABLE 1 COST OF MARKET ENTRY HOUSING (RENTED)/UPPER LIMIT OF OUTGOINGS FOR INTERMEDIATE HOUSING (Based on Fordham’s 2005 Housing Study Update Table 9.7) Unit Type Cost per week

(including all service charges)

Cost per month (including all service charges)

Gross Income required to afford rented market accommodation

1 Bed £130 £565 £27,120 2 Bed £152 £660 £31,680 3 Bed + £192* £833* £40,000

• *These figures represent what a household with an income of £40,000 per annum could afford to pay, based on rented accommodation and on the basis of not paying more than 25 % of its gross household income (upper limit of London Plan intermediate housing).

• Fordham’s 2005 Housing Study Update uses the following affordability test (in line with ODPM guidance) that a household is unable to afford private sector housing if it has a gross income of less than one third its mortgage requirement and renting privately would take up more than 25% of its gross household income.

4 HOUSING NEED

4.1 1Government guidance requires that affordable housing policies should

be based on a clear and up-to-date assessment of local need for affordable housing. Accordingly in 2005, the Council commissioned Fordham Research to update the Council’s 2001 Housing Needs Survey in order to provide revised estimates of affordable housing needs in the Borough. This Study was published in September 2005 as the Housing

1 Key Worker Living- Settle for More ODPM

Page 219

DRAFT DOCUMENT

12

Study 2005 Update (HSU). It identifies the need for 1,062 new affordable homes per year for the next five years. This is the sum of the backlog of existing need (76) and the newly arising need (1,473) minus the supply of affordable units (487).

4.2 A more detailed breakdown of the affordable housing needs in the

Borough, taken from the above Study, is provided at Appendix 1. 5 HOUSING MIX/TENURE OF AFFORDABLE HOUSING

Mix 5.1 In addition to identifying the scale of affordable housing required, the

Fordham Study also identifies the need for different sizes of accommodation in terms of numbers of bedrooms. In keeping with government advice, the detailed mix of affordable housing types most appropriate to a specific site should be determined by a rigorous and realistic assessment of local need. Therefore, the Council will expect new developments to take in to account the findings of this Study as well as complying with all other relevant planning policies, including housing mix (UDP Policy HSG 11) and meeting the needs of disabled people (UDP Policy HSG 15) as well as London Plan Policy 3A.4 regarding lifetime homes and wheelchair accessible housing. Furthermore, in order to create mixed and balanced communities, affordable units should be distributed throughout any site rather than concentrated in one particular area (see also Section 13).

5.2 The Housing Study Update indicates that there is a need for all types of

accommodation but the majority of the gross affordable housing need in the Borough is likely to be met by smaller units (1 and 2 bedrooms). However, given the predominance of schemes coming forward comprising small units and because families with children will often be in priority need, the Council will place a high priority on achieving family sized accommodation. There is a particular need for 4 bedroom socially- rented accommodation

5.3 This position is supported by the Council’s Housing Register, which

indicates a substantial need for all sizes of accommodation. However, although there are larger numbers of persons seeking one and two-bedroomed accommodation, in terms of priority needs, there is a far greater need for larger units, particularly 4 bedroomed or larger houses, because the existing supply of this size of unit is very limited.

5.4 In terms of market housing, the Housing Needs Update indicates a need

for predominantly 1 and 2 bedroom accommodation.

Tenure 5.5 The Housing Study Update suggests that the Council should continue to

focus on the provision of socially rented accommodation. Although a significant proportion of those identified as being in need could afford more than the cost of socially rented accommodation, their available incomes fall considerably short of the entry level to market housing.

Page 220

DRAFT DOCUMENT

13

Furthermore, as the cost of shared ownership units normally falls close to, or just below, entry level to market housing, unless some cheap form of intermediate housing is pioneered, the majority of need in the Borough could only be met by social rented housing.

6 OVERALL AFFORDABLE HOUSING TARGET 6.1 Circular 6/98, PPG3 revisions and the London Plan allow the setting of

an affordable housing target. The London Plan requires boroughs to set their own individual targets, taking into account the Mayor’s strategic target that 50% of all new housing should be affordable and be based on an assessment of all housing needs and a realistic assessment of supply.

6.2 The London Plan sets a minimum allocation figure for Sutton of 7,400

units between 1997 and 2016, which equates to an annual target of 370 units. However, it is intended that in 2006 an updated target in the London Plan Review will supersede this figure. This compares to the requirement for 1,062 new affordable homes per annum in Sutton, as set out in the Housing Study Update (2005). Therefore the setting of a target, considerably in excess of the current UDP target of 30%, is justified, along with a lower threshold in order to move towards satisfying the above need.

6.3 Based on housing need, a target of 50% or more could be justified.

However, this is not considered realistic as consultants’ work undertaken on behalf of the GLA (Three Dragons and Nottingham Trent University Study) indicated that new development within the London Borough of Sutton could support in excess of 30% but less than 50% affordable housing, before other planning obligations and site constraints were taken into consideration. The draft London Plan also proposed the appropriate target for Sutton as 35%, which was replaced by an overall London-wide target in the approved plan. The Council considers that the Borough target should reflect the largest source of affordable housing, which is likely to be private sites and therefore it would be appropriate to set an achievable target between these two figures. On this basis, an initial borough-wide target of 40% is proposed, which will be kept under review. However, in order to meet this target, allowing for developments that fall below the site size threshold and in accordance with the London Plan Policy 3A.8 to maximise affordable housing, the Council will normally seek to achieve at least 40% affordable housing when negotiating on individual sites.

7 AFFORDABLE HOUSING THRESHOLDS 7.1 Circular 6/98 sets out the criteria whereby councils may seek affordable

housing on sites. In outer London, the threshold includes housing developments of 25 or more dwellings or on sites of 1 hectare or more, irrespective of the number of dwellings.

Page 221

DRAFT DOCUMENT

14

7.2 The Circular also permits authorities, which are able to demonstrate exceptional local circumstances, to seek to adopt a lower threshold. Sutton demonstrated such circumstances at the Public Local Inquiry into the UDP in 2001 and Policy HSG9 of the adopted UDP seeks affordable housing from developments on suitable sites capable of accommodating 20 or more dwellings or on sites of 0.8 hectares or greater.

7.3 Draft revised PPG3 (January 2005) changes the emphasis on affordable

housing site thresholds. The revised guidance states that site thresholds should not normally be above 15 units. The London Plan does not set a London-wide threshold below which affordable housing would not be sought. However, it states that boroughs should set thresholds at no greater than 15 units and are encouraged to seek a lower threshold through the UDP process where this can be justified. In addition, it is proposed that local authorities should be able to apply affordable housing policies to applications below site-size thresholds in certain circumstances. Councils must however demonstrate that the sites are capable of delivering more housing than proposed and would be above the appropriate site-size threshold; and/or that the site forms part of a more substantial development, which would in its totality be above the appropriate site-size threshold.

7.4 In line with draft revised PPG3 and the London Plan, the Council will

therefore apply a threshold to all sites capable of achieving 15 units or more or sites larger than 0.5 ha regardless of the number of units. In terms of units, the threshold applies to the total units contained in the development proposed and not to the net increase that may arise from redevelopment of existing housing.

7.5 The Council is aware that frequently planning applications for residential

development are submitted just below the threshold for affordable housing. In line with emerging guidance in draft revised PPG3, the Council will need to be satisfied by the developer that such proposals are not an underdevelopment of the site. The Council will also need to be satisfied that developers are not bringing sites forward in phases in order to avoid the threshold for affordable housing. If this proves to be the case, the Council will apply the affordable housing target to all subsequent phases, based on the capacity of all phases, including those already built.

7.6 In order to help assess site capacity, the Council will have regard to:

• table 4B.1 of the London Plan, which provides a Density Location and Parking Matrix;

• the local character of the surrounding area; and

• any relevant planning policy considerations e.g. conservation areas etc.

8 SECURING AFFORDABLE HOUSING ON SITE

Page 222

DRAFT DOCUMENT

15

8.1 In order to promote mixed and balanced communities, and because of the limited supply of land, the Council’s preference is to seek the provision of any appropriate element of affordable housing on-site, in accordance with PPG3. This states that where a local planning authority has decided, having regard to the criteria set out in paragraph 10 of Circular 6/98, that an element of affordable housing should be provided in the development of a site, there is a presumption that such housing should be provided as part of the proposed development of the site. This approach is also advocated in draft revised PPG3 (January 2005) which states that the presumption is that affordable housing should be in kind and on site.

8.2 The Council will seek the maximum reasonable amount of affordable

housing in negotiating the provision of affordable housing in individual schemes and will have regard to its affordable housing target; the suitability of the site for different forms of affordable housing provision; and the economics of site provision, taking account of individual site costs, the availability of subsidy and any other relevant planning requirements.

8.3 The Council will seek affordable housing on all suitable qualifying

housing sites (i.e. capable of accommodating 15 units or more or 0.5 ha. or larger).

8.4 The affordable housing requirement will be based on a minimum of

40% of the housing capacity of the site. The Council with seek the affordable housing to be provided in the proportions of 70% socially rented and 30% intermediate housing. This provision should be expressed in units, but there may be instances where the Council may agree to the affordable housing requirement being assessed as a proportion of the total floorspace of the development.

8.5 The Council strongly advises all future applicants to meet with Council

housing and planning officers as early as possible to discuss their initial proposals for providing affordable housing. Prior to submitting a planning application the Council would expect future applicants to agree with the Council:

• the number of affordable and market units to be provided;

• the number of socially-rented and intermediate units;

• the mix of both affordable and market housing (bedroom size);

• the cost to a future occupier of any intermediate housing, including all service charges by reference to Table 1 of this document; and

• details of the future management of the properties (RSL to be involved) and the arrangements to ensure the units remain affordable in perpetuity.

8.6 The Council will expect developers to have taken into consideration any

abnormal costs in developing a site before acquiring the land. In assessing costs, developers should also consult the Council on particular planning policy requirements and related community benefits.

Page 223

DRAFT DOCUMENT

16

The Council will provide advice on its housing needs, preferred RSL partners and the prospects for achieving grant subsidy.

8.7 The Council will normally expect that the affordable housing element

needs to be achieved without social housing grant. This position is justified on the basis that there is insufficient Housing Corporation funding for all potential private schemes. The Council must ensure that SHG is used efficiently and effectively to maximise affordable housing on private sites. Therefore only where a development may not provide sufficient value to enable the full contribution towards affordable housing to be made, will the Council seek to support the scheme with SHG funding. In addition, where SHG is used the Council has to pool its nomination rights to the units with other boroughs in its sector of London. As a result no-subsidy schemes have a greater impact in meeting local housing need.

8.8 If the developer considers the scheme is not viable without SHG

subsidy, then an independently verified financial appraisal should be submitted to the Council. The financial appraisal should demonstrate that the provision of the required level and tenure mix of affordable housing would make the site uneconomic to develop without grant subsidy, having regard to the existing use value of the site and the reasonable costs of its development, other planning policy requirements and related community benefits (see Appendix 5 which sets out the items the Council would expect to be included in such an appraisal). Such appraisals will be scrutinised by council officers or a Third Party with relevant professional experience. In assessing the financial viability of a site to provide affordable housing, the Council will also have regard to the GLA/Three Dragons’ Toolkit.

8.9 In the event that the development is not viable without SHG grant and

SHG is not available, then consideration may be given to varying the tenure mix of the affordable housing by increasing the proportion of intermediate housing relative to the socially rented element.

8.10 Where it is demonstrated that the required proportion of affordable

housing cannot be achieved because of other significant planning obligations and/or development costs, and neither SHG is available nor an appropriate mix can be agreed, the Council may be prepared to accept the transfer of an area of land, at no cost, to the Council/RSL on which the appropriate number of affordable units could be provided at a later date.

8.11 In order to secure the provision of affordable housing, the Council will

require developers to enter into a S106 Agreement with the Council. The form of the S 106 Agreement will be based on that found in Appendix 2 which will need to be tailored to meet individual site circumstances, but it is intended to help draft legal Agreements at an early stage of the development process. This model Agreement will be kept under review and may be updated from time to time.

Page 224

DRAFT DOCUMENT

17

9 OFF-SITE PROVISION OF AFFORDABLE HOUSING 9.1 In exceptional cases, the Council may consider that the required

affordable housing could be provided off-site or that a financial contribution, instead of on-site provision, is acceptable. The following are suggested circumstances where it may be more appropriate to seek off-site rather than on-site affordable housing provision. These are not exhaustive and each case would need to be considered according to its particular circumstances. However, on-site provision should always be sought in the first instance. Possible general examples might be:

• Sites where there is already a very high concentration of social housing in the area and to make provision elsewhere in the Borough would help achieve a more balanced community.

• Where the acceptable form of site development would not meet current affordable housing needs or would do so inefficiently (e.g. development on a site in excess of 0.5 ha within a low density area).

9.2 In those instances where it is considered appropriate that an off-site

approach or cash in-lieu contribution is appropriate, the development proposal will need to reflect the fact that the facilitating site will be developed for 100% private market housing. The example below in Table 2 shows how, with an indicative target of 40%, the approach would work:

Table 2- Example of providing affordable housing units off-site Total units

on facilitating site

Market Affordable Total No.of units

% affordable

On-site affordable housing provision example

100 60 on-site 40 on-site 100 40%

Off-site Affordable housing provision example

100 100 on-site 67 off-site 167 40%

(The formula to calculate how many units are required off-site is set out at Appendix 3) 9.3 Where affordable housing is to be provided on an alternative site, the

Council will expect the site to have permission for residential development and that the affordable housing to be ready for occupation before an agreed proportion of the main site is occupied. Alternatively,

Page 225

DRAFT DOCUMENT

18

the Council may be prepared to accept the conversion or acquisition of existing housing to be used as affordable accommodation.

Commuted Sum

9.4 Where an alternative site is not available, then a cash in-lieu payment should be calculated. This would involve the use of the table set out in Appendix 4, which sets out the Housing Corporation’s Total Cost Indicator (TCI) for different unit sizes of unit for Sutton. The contribution is assessed by reading off the appropriate cost for the size of unit and multiplying the figure by the current Social Housing Grant (SHG) rate Marie Pagan to insert (currently xx%). The resultant figure is the contribution required for a unit of that particular size. The SHG is the ratio of the cost (assessed as the TCI) of each unit that the Housing Corporation may pay as a subsidy towards the cost of the development.

9.5 The level of contribution will be based on the number of units that would

be required if off-site provision was being made. If the developer considers that this level of contribution would make the development unviable, then the onus falls on the developer to submit a financial appraisal for the site.

9.6 The Council is aware that because of changes in the Housing

Corporation’s funding arrangements, annual updates of the TCI table may not be available in the future. At such time the Council will need to review its methodology for assessing off site contributions.

10 AFFORDABLE HOUSING IN PERPETUITY 10.1 The Council will seek to ensure that all affordable housing is managed

by a Registered Social Landlord or governed by a mechanism to ensure that it remains affordable in perpetuity. Therefore, the Council will encourage the involvement of a registered social landlord prior to the submission of any planning application. The Council will provide developers with a list of RSLs who work in the borough.

10.2 In the case of shared ownership, RSLs will be expected to confirm that

all sale receipts received from the owner/tenant increasing the household’s share of ownership (‘staircasing’) are put back into affordable housing provision, subject to Housing Corporation regulations. This will be form part of a Section 106 legal agreement.

11 SHELTERED HOUSING 11.1 The Council will assess requirements for affordable housing from

applications for sheltered housing in line with Policy HSG12 of the adopted UDP. The justification to this policy states that the development of housing for older people will not be exempt from the need to provide affordable housing under Policy HSG9, unless there is a high element of continuous care for people requiring more consistent nursing and attendance, such as the frail elderly. Fordham’s 2005 HSU shows that

Page 226

DRAFT DOCUMENT

19

13% of total affordable need is from elderly persons and early discussions should be held with the Council’s housing officers to establish whether the Council’s priority need at the time will be for sheltered or mainstream affordable housing. Therefore for the avoidance of doubt, the Council will seek affordable housing from all qualifying sheltered housing developments that fall within Class C3 of the Town and Country Planning Use Classes Order 2005. However, the Council may favourably consider an off-site contribution on small sheltered housing sites.

11.2 The Council will adopt the following approach in assessing whether a

sheltered housing development will be required to provide an element of affordable housing. The proposed site will be assessed to determine whether the alternative site capacity for mainstream housing would be likely to meet or exceed the affordable site-size threshold (in units), based on achieving a satisfactory development that would be acceptable to the Council for that site or if the site exceeds 0.5 hectares in area. In order to help assist in determining site capacity, the Council will use the approach set out in paragraph 7.6 above.

12 OTHER TYPES OF HOUSING

Student Housing 12.1 In accordance with the London Plan, the Council does not consider that

student housing should be considered as equivalent to social housing, on the basis that it is not permanent housing and is only provided to individuals who are members of a specific educational institution.

Key Worker Housing

12.2 There is often some confusion over the provision of intermediate

housing and key worker housing. In accordance with the London Plan, the Council considers that the definition of intermediate housing should relate to affordability and not to employment status or function of individual household member. Furthermore, because of wide range of key worker groups and their different income levels, key workers are likely to require both socially-rented accommodation as well as intermediate housing. Therefore, the Council will expect that the affordable housing element of all appropriate planning applications in the borough to be expressed as socially-rented and intermediate housing rather than in terms of accommodation for key workers.

13 OTHER DEVELOPMENT REQUIREMENTS

Design

13.1 The Council seeks a high standard of design for all developments and affordable housing will be subject to the same policies as other housing, including building design, protection of local character, use of materials, amenity space and landscaping. Affordable housing units should not be

Page 227

DRAFT DOCUMENT

20

distinguishable from the market units and should be spread throughout the development rather than concentrated in one area. In the case of flatted developments, it may be more appropriate for affordable units to be contained within one or more blocks or served by one staircase(s) in order to assist future management of the affordable units. Early discussions are therefore required between the developer, council officers and the RSL to ensure that the layout, design of the accommodation and materials and arrangements proposed for the future management of the site meet the requirements of both the Council and the RSL.

13.2 In accordance with London Plan Policy 3A.4, the Council will also expect

any development to provide for:

• Lifetime Home Standards, which exceed the requirements of Part M of the Building Regulations and allow the accommodation to be adapted to meet the changing lifestyle needs of the occupier; and

• That 10% of all new homes are designed to be wheelchair accessible.

13.3 The affordable housing provided will be expected to comply with the

Housing Corporation Scheme Development Standards in force at the time, Lifetime Homes Standards and a minimum of "Very Good" in BREEAM Eco-Homes Standards.

Car parking

13.4 Car parking standards for residential development are set out in Appendix 7 to the Sutton UDP. These standards will be applied to the whole development including the affordable units, unless agreed to the contrary by the Council.

Page 228

DRAFT DOCUMENT

21

APPENDIX ONE SUTTON HOUSING NEEDS UPDATE (FORDHAM, APRIL 2005)

Summary of Basic Needs Assessment Model

Page 229

DRAFT DOCUMENT

22

APPENDIX TWO DRAFT STANDARD LEGAL AGREEMENT FOR HOUSING

(SEPARATE DOCUMENT)

Page 230

DRAFT DOCUMENT

23

APPENDIX THREE

FORMULA FOR CALCULATING THE NUMBER OF UNITS OFF-SITE

Calculating the number of units off-site The following formula should be used to calculate the number of units to be provided off-site:

C= 100 X A - A 100 - B Where A = capacity of application site in units B = % of affordable housing sought C = number of units to be provided off-site. Example on a development of 20 units and with 40% affordable housing:

C = 100 X 20 - 20 100-40 C = (100 X 0.333) - 20 C = 33.3 – 20 C= 13.3 units-rounded to 13. Therefore across the two sites 13 out of 33 units would be affordable, thus maintaining the 40% affordable ratio.

Page 231

DRAFT DOCUMENT

24

APPENDIX FOUR

HOUSING CORPORATION TCI RATES FOR SUTTON

Housing Corporation TCI Rates for Sutton (Cost group A3) 2004/05 and 2005/062

Unit floor area m3 Probable occupancy (persons)

Total unit costs4 £ per unit

Up To 25m2 1 £70,100 Exceeding–not exceeding

25–30m2 1 £79,300 30–35m2 1 and 2 £88,500 35–40m2 1 and 2 £97,600

40–45m2 2 £106,800 45–50m2 2 £116,000 50–55m2 2 and 3 £125,100 55–60m2 2 and 3 £134,300 60–65m2 3 and 4 £143,500 65–70m2 3 and 4 £152,600

70–75m2 3, 4 and 5 £161,800 75–80m2 3, 4 and 5 £171,000 80–85m2 4, 5 and 6 £180,100 85–90m2 4, 5 and 6 £189,300 90–95m2 5 and 6 £198,500 95–100m2 5 and 6 £207,600 100–105m2 6 and 7 £216,800

105–110m2 6 and 7 £226,000 110–115m2 6, 7 and 8 £235,100 115–120m2 6, 7 and 8 £244,300 Calculation of Cash in Lieu: The off site contribution (C) = appropriate rate from above table (based on size) X SHG rate. E.g the contribution for 1 unit of up to 25 m2 would be £70,100 X xx% = £ xx,xxx

2 See

http://www.housingcorplibrary.org.uk/housingcorp.nsf/AllDocuments/1395450A28D30C8980256DC90055EBBF for mote detail 3 Note:

In selecting the appropriate TCI floor area band the actual floor area should first be rounded to the nearest whole number. This rounded figure must then be used to select the TCI floor area band. For example: Actual floor area = 40.2m2 Actual floor area rounded = 40m2 Selected floor area band = >35–40m2 You must not make the wrong assumption that 40.2m2 falls into the range 40–45m2 because 40.2m2 must be first rounded to 40m2 which falls in the band 35–40m2. 4 All self-contained accommodation (including all frail older persons and TSH)

Page 232

DRAFT DOCUMENT

25

APPENDIX FIVE FINANCIAL APPRAISAL CHECKLIST (GC TO ADD)

Page 233

DRAFT DOCUMENT

26

APPENDIX SIX DIAGRAM OF AFFORDABLE HOUSING PROCESS

Page 234