Fife Council Environment and Development Committee, 6 September 2004

AFFORDABLE HOUSING

1.0 INTRODUCTION

The purpose of the report is to advise members of the implication of the Local Housing Strategy for land use planning including Structure Plan and Local Plan policies and seek approval for the Council’s overall approach to addressing the need for Affordable Housing.

2.0 BACKGROUND

2.1 The Housing (Scotland) Act 2001 requires Fife Council to lead with the development and implementation of a Local Housing Strategy (LHS) in a broad partnership with key stakeholders and communities. The role of a LHS is to provide a framework for all housing activity over a five year period based on an assessment of local housing needs, demands and conditions, and a shared understanding of the issues and priorities for the area.

2.2 At national level, the Scottish Executive has established a context for the development of Local Housing Strategies through the Social Justice programme, which sets out five fundamental housing objectives:

• The provision of good quality affordable housing
• The regeneration of communities
• Tackling homelessness
• Ending fuel poverty
• The promotion of equality of opportunity and active citizenship

2.3 The finalised LHS for Fife, which covers the period 2003-08, was submitted to the Scottish Executive on 8 April 2004. It was officially adopted, by Fife Council, in February 2004 and has recently been formally assessed as being of a “good standard” by the Executive. The stated aim of the LHS is to ensure that everyone in Fife has access to an affordable, warm, secure, well-maintained home appropriate to their needs. The first annual review of the LHS will be submitted to the Scottish Executive in April 2005.

2.4 One of the priorities of the LHS is the development of an affordable housing policy. The Fife Housing Systems Analysis 2002, a technical supporting document, presented a detailed picture of the housing situation in Fife. In particular, it identified a number of areas of housing needs and severe shortfalls of affordable housing, for example in East Fife. SPP3 Planning for Housing states that where a housing needs assessment, within a current LHS, identifies a shortage of affordable housing this is a material consideration in planning processes. This should be addressed as the opportunity arises through reviews of the Development Plan.

2.5 In addressing the need for affordable housing, it is first of all necessary to define what is meant by the term. There is however no commonly agreed definition. In terms of the planning system, SPP3 defines it is as being “Housing of a reasonable quality that is affordable to people on modest incomes. In some places the market can provide some or all of the affordable housing that is needed, but in other places it is necessary to make housing available at a cost below market value to meet an identified need”. As this is as near to a commonly agreed definition, as exists in Scotland, it is proposed to use this definition in Fife.

2.6 The results of the Fordham Study, which was carried out in 2000, informed the LHS. The purpose of this study was to identify and assess housing needs and issues of affordability in Fife. This estimated that there was a need for 3,298 affordable housing units in East Fife and 745 units in West Fife. There are also issues of housing stock quality in Central Fife. This study is currently being updated and the results are expected to be available by late summer 2004.

2.7 The LHS recognises that the private sector can make a positive contribution to assist with the delivery of new affordable housing in areas of high housing pressure. It goes on to state that Fife Council is proposing to adopt an approach involving:

• A requirement for 30% of all housing on sites over 10 units to be affordable
• A commuted sum per unit to be required from sites of under 10 units.

2.8 Work is currently being undertaken to translate the 30% requirement from the LHS into a Structure Plan requirement. This will need to be based on geographical differences and pressures including identified local needs. In this regard, the results of the new housing needs assessment study will be crucial.

2.9 The requirement to deliver affordable housing, where justified in terms of local need, will be placed on developers and registered social landlords. Additional community benefits/gain may, in some instances, involve the provision of affordable housing. It must be recognised that where planning gain is used as a delivery mechanism, contributions to meeting the needs for affordable housing may only be one of a number of potentially competing issues such as water and or drainage infrastructure, roads, educational provision or community facilities that will face private sector developers. Nevertheless, affordable housing will be a very high priority. The planning system can aim to make a valuable contribution to meeting the needs for affordable housing – but is unlikely to be able to address it in entirety.

3.0 DISCUSSION

3.1 The LHS goes on to state that the Council will set out a strategy for affordable housing. The Development Plan will play a key role in helping to implement this, particularly through the use of specific targets. The new Consultative Draft Structure Plan, “Fife Matters” which will be considered by the full Council at the end of November, will be published at the beginning of 2005. This will contain a land use policy on affordable housing. The new housing needs assessment study will feed into this Plan. This will then be followed by the publication of three Area Local Plans, the first one covering St Andrews and East Fife.

3.2 However, in addition to the policy to be included in Fife Matters, detailed guidance notes or supplementary guidance will be required. This will however, involve more than just planning guidance and consequently will be drafted by the Housing and Development Services in the late summer/early autumn of 2004. This will also be the subject of consultation.

3.3 Currently the delivery of new affordable housing is not straightforward; it is rather complex. Given this, Housing and Development Services have already been working closely together for some considerable time, with specialist input from Law and Administration and Estates. The results of this work will culminate in the Development Plan policy and the supplementary guidance. It will be critical to gain the co-operation and support of all those with a potential role to play: Communities Scotland, Registered Social Landlords such as housing associations, private housebuilders and landowners. In this respect the relationships being built up through the work of the Fife Housing Partnership will prove to be very important.

3.4 The very valuable role of housing associations in providing new affordable housing through Communities Scotland funding should not be overlooked. Nevertheless, even after taking into account provision achieved through the planning system there is still likely to be a considerable shortfall of need over provision in East Fife, where the assessed need is greatest.

3.5 On the basis of experience elsewhere in Scotland it has been decided to opt for an approach involving the planning system which will initially aim to achieve built units on site. Beyond this clear preference, it is accepted that there may be some situations in which this is not appropriate. For example, this could involve exceptional site economics, some small scale conversions or small rural sites that are poorly located in relation to public transport. In such cases, a more flexible approach is likely to yield affordable housing. Therefore the policy approach will, in all likelihood, state a very clear preference for built units on site but with limited options for off site provision or the provision of fully serviced land. As a very last resort, a commuted sum (payment in lieu) would be sought.

3.6 Apart from the purely numerical need, two other important issues are being examined and addressed. Firstly, retention of affordable stock should not be overlooked. It is however easier to achieve this with rented housing than it is with housing for sale. Secondly, the provision of affordable housing is not just about quantity it is also about quality. Such housing should be of high standard both in terms of design and construction. Affordable housing should be indistinguishable from other housing provision.

3.7 As already mentioned, the LHS identifies a shortage of affordable housing in Fife. Taken together with its reference to a 30% requirement, these are material considerations in planning processes. In the interim period, until they are addressed by the forthcoming Development Plan review and supplementary guidance, these issues should be regarded as material considerations in determining relevant planning applications.

3.8 A workshop on affordable housing for elected members in East Fife was held at the end of May. The outcomes of this valuable event will be taken into account in drafting supplementary guidance. However, as affordable housing is a Fife Wide issue, a similar report to this has been considered by the three Area Development Committees. Substantive comments made by members at these committees are reported in Appendix 1 to this report.

4.0 RECOMMENDATION

4.1 Members are asked to:

• (a) Consider and approve the general approach to facilitating affordable housing set out above.

Keith Winter, Head of Development Services Alan Davidson, Head of Housing Fife House North Street, Glenrothes

Authors: Dave Wardrope, David Robertson Date: September 2004 Ref: DSCR04.52

APPENDIX 1: SUBSTANTIVE COMMENTS FROM AREA DEVELOPMENT COMMITTEES

EAST (17TH AUGUST 2004

) A number of comments were expressed by Members of the Committee. These are summarised below:

• Planning is only one of number of tools that could be used to address the shortage of affordable housing.
• Response: Agreed.
  
  
• The planning system can make a useful contribution but cannot address the shortfall of affordable housing in entirety. Retention of stock as affordable housing needs to be addressed although it will be difficult. In respect of low cost housing for sale it will be important to apply ownership conditions.
• Response: Agreed.
  
  
• This issue is difficult but important nonetheless. The supplementary guidance being proposed will attempt to address this issue. A mechanism will need to be applied to ensure that, in a mixed tenure development, the affordable housing component is not left until last. It should be built in an appropriate phased way.
• Response: It is acknowledged that this is an important issue and as such is being examined through the supplementary guidance.
  
  
• Partnership working will be a very important part of any approach to delivering affordable housing.
• Response: Agreed.
  
  
• Effective partnership working will be critical in delivering affordable housing. The 30% requirement is a reasonable target to aim for.
• Response: Agreed. This figure is contained in the Local Housing Strategy (LHS). Its precise application of this figure will be addressed in the supplementary guidance.
  
  
• The 30% target could be difficult for developers to meet.
• Response: the 30% figure is considered to be challenging but achievable. It is contained in the (LHS). The precise application of this requirement will need to be addressed in the Consultative Draft Structure Plan and/or in the supplementary guidance.
  
  
• Provision of affordable housing through the planning system will be a difficult and complex process.
• Response: Agreed. Consequently it is acknowledged that the planning system cannot meet the need for affordable housing in entirety.
  
  
• Commuted sums on small sites: this could push up the cost of housing on very small sites rendering the measure counterproductive.
• Response: this requirement is contained in the LHS. It is considered fair and reasonable that all residential sites make a contribution sites, appropriate to their scale. The housing land supply in East Fife is characterised by a large number of small sites. To ignore the potential contribution from them would be to decrease the potential yield of affordable housing. However, the issue of single houses, particularly for owner occupancy will be examined.
  
  
• With regard to the Scottish Executive’s proposals to give local authorities the discretion to reduce the discount on second homes, could the Finance and Asset Management Service calculate the likely financial benefit?
• Response: The Finance and Asset Management Service has initially estimated that such a change would yield approximately £600,000 per annum. However this is a complicated issue and detailed regulations will have to be published before an up-to-date and accurate estimate can be calculated.
  
  
• How will commuted sums be dealt with?
• Response: any measure to address this issue will have to be open and transparent. Several alternative mechanisms are being examined as part of the ongoing work on supplementary guidance.
  
  
• Until such time as the Development Plan is updated and the supplementary guidance published, what could/would be done to promote affordable housing?
• Response: the LHS has identified a shortage of affordable housing and sets a 30% requirement. Taken together these are material considerations in the planning process, and as such should be given due consideration. This is already being taken into account in the writing of development briefs for example.
  
  
• The Housing Service has commissioned a new housing needs survey – when will this be completed?
• Response: the survey is almost complete and should be finished by late September.

WEST (18TH AUGUST 2004)

The undernoted comments were made by Members of the Committee:

• The broad definition proposed is reasonable.
• Response: Agreed. It is acknowledged that this is a broad definition, but is the same one as used by the Scottish Executive in national planning guidance. It is also very similar to that used by other planning authorities.
  
  
• Affordable housing can only be delivered through a partnership approach with private sector involvement.
• Response: Agreed. The Council is no longer able to build affordable houses in significant numbers and housing associations can only aim to make a limited, although valuable contribution. Therefore the involvement of the private
  
  
• The identified shortage of 745 units in West Fife would seem to be on the low side.
• Response: this figure is derived from the Fife Housing Systems Analysis. However it is recognised that in recent years house prices have risen substantially. A new housing need study is being carried out and this will provide a more accurate and up-to-date figure taking into account recent changes in the housing market.
  
  
• Achieving the 30% requirement will not be easy.
• Response: the 30% requirement is considered to be challenging but achievable. It is contained in the LHS. The precise application of this figure will be addressed in the supplementary guidance.
  
  
• The definition proposed is too broad. What is being sought is, in effect, subsidised housing.
• Response: It is acknowledged that this is a broad definition, but is the same definition as used by the Scottish Executive in national planning guidance. It is also very similar to that used by other planning authorities. There is no single commonly agreed definition. To alter the definition significantly would run the risk of generating considerable debate, without achieving consensus.
  
  
• Retention of stock as affordable housing needs to be addressed, as owners of low cost housing for sale could sell it on at a profit, thereby negating the strategy.
• Response: Agreed. This issue is difficult but important nonetheless. The supplementary guidance being proposed will attempt to address this issue.
  
  
• What happens if we meet targets early and the target is reduced substantially? This could lead to undesirable fluctuations.
• Response: a statistical monitoring mechanism will be set up to assess what is being achieved. If/when the target is met then it would have to be reviewed. In the housing needs survey will also be kept up-to-date. This issue will be addressed in the detailed guidance. However, it will have to be applied it in a fair and transparent way that avoids undue fluctuation.
  
  
• The overall approach is generally supported, but is on the cautious side. It could be stronger.
• Response: The supplementary guidance is still to be finalised and when this has been done, the approach should be clearer and hopefully stronger.
  
  
• The allocation of capital funding to housing associations should be examined.
• Response: it is entirely possible that responsibility for the management of development funding (capital allocations to housing associations) will pass from Communities Scotland to Fife Council. If/when this happens, this will give the Council an opportunity to influence the distribution of finance.
  
  
• A good report. Affordable housing is an issue, especially in East Fife. The Council should apply the 30% requirement fairly but very firmly.
• Response: It is agreed that affordable housing is a major issue in East Fife. The 30% requirement will be applied fairly. Its precise application will be addressed in the supplementary guidance.
  
  
• The LHS, referred to in the report, is a sound strategy as a basis for policy, and was received very well by the Scottish Executive. The guidelines that it sets out must be adhered to.
• Response: Agreed. The LHS does provide a sound basis for the Development Plan, and the development of an effective strategy for the delivery of affordable housing.
  
  
• It is important that all forms of residential development, including affordable housing contain a good mix of house types and sizes to cater for all needs. There should be no distinction between, and segregation of, affordable units and other forms of housing.
• Response: Agreed. The supplementary guidance being produced will encourage a mix of property types paying due regard to quality. Affordable housing should be indistinguishable from other forms of housing.

CENTRAL (24TH AUGUST 2004)

A number of comments were expressed by Members of the Committee. These are summarised below:

• the 30% requirement is generally to be welcomed. However, a strong approach is required.
• Response: The Council is very keen to promote a partnership approach in meeting this challenge. However, the requirement will be firmly but fairly applied.
  
  
• The situation in Central Fife is complex, as there is a mismatch between need for affordable housing and existing stock; issues of quality and vacant stock.
• Response: Agreed. The Local Housing Systems Analysis identifies such issues as housing type and condition. Quality is an important issue and this will also be addressed.
  
  
• The approach taken by the Consultative Draft Structure Plan and the supplementary guidance will acknowledge and address these complexities. Affordable Housing needs to be clearly defined
• Response: It is agreed that the definition should be as clear as possible and that the proposed definition is broad. However this is the same definition as used by the Scottish Executive in national planning guidance and is very similar to that used by other planning authorities. There is no single commonly agreed definition. To alter the definition significantly would run the risk of generating contentious debate without consensus being reached.
  
  
• Provision of affordable housing through housing associations may not be the best solution.
• Response: Housing Associations have a valuable role to play in addressing the shortage of affordable housing, but it is recognised that there are other means of delivery as well, such as low cost housing for sale or self build.
  
  
• The report is not helpful in addressing the problem of affordable housing.
• Response: Currently, the report can only aim to briefly summarise the proposed overall approach. A report on the detailed supplementary guidance will be submitted to Development Committees later in the year. It has to be acknowledged that the planning system cannot meet the need for affordable housing in entirety, but it is considered that the proposed approach represents a positive attempt to address the shortage of quality affordable homes.
  
  
• Provision of affordable housing is a difficult and complex process
• Response: Agreed. Consequently it has to be acknowledged that the planning system cannot met the need for affordable housing in entirety.
  
  
• It will be especially important to provide housing for rent
• Response: Agreed. Housing for rent will play an important role in the Council’s proposed approach. This will be addressed in more detail by the supplementary guidance.
  
  
• Retention of stock as affordable housing needs to be addressed although it will be difficult.
• Response: Agreed. This issue is difficult but important nonetheless. The supplementary guidance being proposed will attempt to address this issue.
  
  
• It is important that residential development should include a mix of house types and sizes
• Response: Agreed: It is important that residential development, including affordable housing, contains a good mix of house types and sizes appropriate to meeting the needs of the area concerned. This will be addressed in the detailed guidance.
  
  
• The report is a reasonable attempt at setting out an overall approach.
• Response: Affordable housing is a complex issue, but it is considered that the proposed approach represents a positive attempt to address the shortage of quality affordable homes. It will be important to monitor the effectiveness of the approach to ensure continuous improvement.
  
  
• The broad definition being proposed is reasonable.
• Response: Agreed. It is acknowledged that this is a broad definition, but is the same definition as used by the Scottish Executive in national planning guidance. It is also very similar to that used by other planning authorities.
  
  
• Until such time as the Consultative Draft Structure Plan and detailed guidance are published, the Council should still be looking to take account the 30% target in determining planning applications.
• Response: Agreed. The LHS has identified a shortage of affordable housing and sets a 30% requirement. Taken together these are material considerations in the planning process, and as such should be given due consideration.
  
  
• Affordability should take into account household income.
• Response: Affordability is a relative term. Household income is especially important in relation to low cost housing for sale. This issue will be taken into consideration in writing the detailed guidance.
  
  
• The 30% requirement needs to be explained more fully.
• Response: Agreed. The precise application of this requirement will need to be addressed in the Consultative Draft Structure Plan and/or in the supplementary guidance. This should be as clear as possible.
  
  
• If the housing market experiences a downturn, this could lead to large numbers of repossessions which would exacerbate the need for affordable housing.
• Response: Agreed. It will be important to monitor a range of factors including house prices, new house completions and progress in delivering affordable housing. Existing monitoring mechanisms, such as the annual Housing Land Audit will be important in this regard. It is crucial that the Council’s approach responds to changing circumstances.
  
  
• Provision of affordable housing through the planning system is a difficult and complex process, but the proposed approach will help.
• Response: Agreed. Consequently it is acknowledged that the planning system cannot meet the need for affordable housing in entirety, but it is considered that the proposed approach represents a positive attempt to address the shortage of quality affordable homes. It will be important to monitor the effectiveness of the approach to ensure continuous improvement.
  
  
• Who would bear the cost of subsidising affordable housing?
• Response: This will, in effect, be borne by landowners. It is very important therefore that developers are made aware, at a very early stage, what will be required of them. This will then allow them to factor these costs into their land negotiations.
  
  
• The Council needs to adopt innovative solutions including self build.
• Response: Agreed. All development, including affordable housing, should be based on imaginative and innovative design. A separate Fife Design Guide is currently addressing this issue. National planning guidance specifically mentions self build housing as contributing to meeting affordable housing needs and this will be addressed in the detailed guidance.
  
  
• Affordable housing is a major issue which the Council cannot solve by itself. The Scottish Executive should play an active role and set an overall framework.
• Response: This is recognised and agreed. The Council can make a useful contribution but cannot address the shortfall in entirety. The Scottish Executive is currently considering what further changes can be made to the planning system to make it easier to address affordable housing shortages.
  
  
• Committee recommendation: the report should be submitted to the Adult Services Committee.
• Response: the Council’s Housing Service has indicated its intention to take a report on affordable housing to the Adult Services Committee.