3. Delivering Affordable Housing
(1) 3.1 A significant proportion of affordable housing within Cambridge and nationally is likely to be delivered without any public subsidy from the Homes and Communities Agency. Applicants will need to consider this when purchasing land and considering the development economics. Applicants are responsible for the delivery of the affordable housing and working with registered providers is common practice.
3.2 The council does not preclude alternative arrangements for developing affordable housing. Innovative partnerships which maximise the opportunities for attracting external funding will be considered.
(1) 3.3 On major developments, Cambridge City Council is committed to continued partnership working with registered providers and South Cambridgeshire District Council to deliver affordable housing.
3.4 Appendix 4 of this document contains an affordable housing checklist. This checklist is designed to guide applicants and illustrate what affordable housing related information will be required as part of the planning application process.
Pre-application discussions
(1) 3.5 The council encourages early discussion of plans before submitting a planning application and designing a scheme. Early discussions with planning officers help ensure better quality applications are submitted. It is highly recommended that applicants participate in pre-application discussions if sites are subject to affordable housing requirements to ensure that the scheme includes a viable affordable housing and dwelling mix in terms of location, size, type and tenure.
(1) 3.6 Pre-application discussions may include a range of interested parties such as: planning officers; housing development officers; urban design officers; conservation officers; and the County Council’s highway advisors. To find out more about pre-application advice, see Appendix 5 and the council’s website (www.cambridge.gov.uk/pre-application-advice) for information on process and charges.
3.7 The provision of affordable housing also requires consultation and discussion with the council’s housing development team. The team works closely with the planning department, and other infrastructure service providers and registered providers to ensure new communities have all the necessary support to create attractive and sustainable new neighbourhoods. The team is especially important in the negotiation of delivery, identification of a registered provider, tenure mix, location and transfer arrangements of affordable housing. The contact details for the housing development team can be found in Appendix 5.
Planning applications
(1) 3.8 All relevant development proposals should have regard to the principles set out in this SPD. The council will expect that all planning applications will demonstrate how the design and layout of the proposal has regard to the requirements outlined in this document and in the affordable housing checklist in Appendix 4.
3.9 It should be noted that the affordable housing policy applies to the net increase in housing. For example, if an application is submitted to demolish three existing dwellings and build six, the net increase in dwellings on the site would be three. Therefore the policy would be applied to the three additional dwellings only.
Full applications
3.10 Full applications should confirm the amount of development proposed, including the amount of affordable housing to be provided; the dwelling mix in terms of tenure and unit size and the location of the affordable homes. In the event that affordable housing cannot be provided on site, applications should confirm the percentage of financial contribution to be provided. This must be agreed with the council.
Outline and reserved matters applications
(2) 3.11 If an outline application is made, the council will require applicants to define the affordable housing element of the scheme. This will be secured through a planning obligation (for more information regarding planning obligations see the council’s Planning Obligations SPD). Outline applications are therefore advised to set out the following:
- the percentage of affordable housing to be provided;
- the indicative dwelling mix and location of the affordable homes;
- the indicative tenure mix, dwelling types and sizes.
(1) 3.12 Reserved matters applications should confirm the affordable housing mix proposed on the site, including percentages, dwellings, tenure mix and location. The dwelling and tenure mix should broadly reflect the indicative housing mix specified within the outline application, unless there is a significant change to overall dwelling types and sizes proposed as part of the reserved matters application.
Qualifying sites and thresholds
(1) 3.13 The requirement for provision of affordable housing has three different thresholds outlined in Policy 45, dependent on overall net number of new units on site.
(1) Table 1: Taken from Policy 45 – Affordable Housing and Dwelling Mix
| No. of dwellings | Minimum percentage of affordable housing required |
|---|---|
| 2-9 units | 10% |
| 10-14 units | 25% |
| 15 units or more | 40% |
(2) 3.14 When implementing the policy, it must be noted that financial contributions may also be required on parts of units depending upon the application of this policy. The mix of affordable housing types to be provided on site should follow the council’s requirements set out in Cambridge City Council’s Housing Strategy3 of a minimum of 75% social/affordable rented and a maximum of 25% intermediate housing (see also Section 4. Site layout and distribution for more detail)4. This split is difficult to implement on small scale developments therefore Table 2: Minimum affordable housing requirements sets out what would be expected from smaller developments.
Table 2: Minimum affordable housing requirements
| Expected Affordable Housing Provision | Financial contribution required? See Appendix 2 | ||
|---|---|---|---|
| Site capacity (units) | Minimum number of social rent or affordable rent dwellings | Maximum number of intermediate housing dwellings | |
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No requirement |
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3.15 The financial contributions required will be calculated using the method illustrated in Appendix 2.
3.16 Planning applications submitted for housing development capable of providing two or more dwellings (net) will be assessed against Policy 45 – Affordable housing and dwelling mix.
(1) 3.17 Where it appears that a larger site has been subdivided into smaller development parcels in order to circumvent the requirements of this policy or for any other reason, the full affordable housing percentage for the larger site will be applied to each parcel.
On-site provision and financial contributions
Sites of 2 to 9 dwellings
3.18 On sites capable of delivering between 2 and 9 dwellings, financial contributions towards the provision of affordable housing off-site are considered acceptable. This does not prohibit on-site provision of affordable housing on sites of this scale, but recognises that circumstances may often not allow for delivery on-site.
3.19 The financial contributions required in lieu of on-site provision will be calculated using the method illustrated in Appendix 2.
Sites of 10 dwellings and over
3.20 Sites with capacity for between 10 and 14 dwellings will be required to provide a minimum of 25 per cent affordable housing on-site.
3.21 Sites with capacity for 15 dwellings or more will be required to provide for a minimum of 40 per cent affordable housing on-site.
3.22 On sites of 10 units or more, developers will be expected to deliver whole units on site with financial contributions provided for fractions of units.
(2) 3.23 For developments capable of providing 10 units or over, affordable housing will be provided on site, in the interests of creating sustainable, inclusive and mixed communities. However, in exceptional circumstances, if both the council and the developer agree that it is not appropriate to provide affordable housing on a particular site, then off-site provision or a financial contribution in lieu may be agreed. This will only be considered where there is certainty that such an arrangement will actually result in the provision of affordable housing. The amount of a financial contribution in lieu of on-site provision will be calculated in the same way as illustrated in Appendix 2.
(1) 3.24 Financial contributions received from developers will be pooled in a specific affordable housing fund to support the provision of new affordable homes. The council will spend commuted sums on direct provision in building affordable homes on sites within the council’s ownership or via the acquisition or purchase of land on the open market. Alternatively, the sums collected can be administered in the form of grant to other registered providers to build new affordable homes in the city.
3.25 The council’s Strategic Housing Service will administer the fund and identify development opportunities and appropriate schemes in accordance with the council’s procedures on capital projects.
(1) 3.26 Financial contributions will be ring-fenced to enable the local authority to provide stimulus to the affordable housing market, examples of how this may be achieved include:
- local authority development including estate renewals;
- a registered provider’s development;
- housing purchased on the private market to be transferred to a registered provider;
- vacant properties brought back to use;
- other housing schemes that qualify under planning policy.
(2) Viability
(2) 3.27 Planning obligations, like the Community Infrastructure Levy (CIL), are a necessary cost of development and it will be expected that the likely cost of obligations, including the cost of affordable housing provision, will be factored into development from an early stage. The council has tested the viability of development as part of the preparation of the Cambridge Local Plan 2014 and the Cambridge Submission CIL charging schedule. The viability assessments5 tested the impact of the proposed CIL rates, alongside Local Plan policy requirements and planning obligations on development. The results of these residual land value development appraisals produced land values that would still incentivise landowners to make their land available for redevelopment. These results were based on area-wide viability assessments, which included additional headroom (the CIL rates are not set at the margins of viability), something that would not be relied on for site specific cases.
(1) 3.28 The costs incurred in delivering a workable, high quality development should be anticipated and reflected in the price paid for land and will not normally reduce the ability of a site to provide what is required under the planning obligation.
(3) 3.29 Anticipated costs must include as a minimum: affordable housing; site clearance and remediation; good quality; design measures; landscaping; noise and other environmental attenuation measures; and appropriate infrastructure provision. Price paid for land may not be a determining factor if too much has been paid or historic land values or developer profit margins are being protected at the expense of required planning contributions.
(3) 3.30 However, there may be exceptional circumstances where development proposals are unable to meet, in full, the policy requirements of the Local Plan. If the applicant can demonstrate, to the satisfaction of the council, that the scheme cannot be fully compliant and remain financially viable, the council may consider a reduced level of contributions in one or more areas.
(3) 3.31 In order to determine such applications, the applicant is required to submit an ‘open book’ viability assessment to the council. In all cases, the council requires viability assessment to be undertaken using a residual land value approach. The applicant should use the Homes and Communities Agency Development Appraisal Tool (www.homesandcommunities.co.uk/ourwork/development-appraisal-tool) or an equivalent well recognised appraisal tool, to be agreed with the council in advance of the assessment. The viability assessment will need to address the fundamental issue of whether an otherwise viable development is made unviable by the extent of the planning obligations and CIL requirements. The assessment will need to derive a residual land value for the proposed scheme, which can then be compared against a benchmark or threshold land value (Market Value, Existing Use Value or Alternative Use Value.
(2) 3.32 Viability costs should only include costs that are essential to the development, or required through Local Plan policies, National legislation, regulation and guidance. The provision of additional benefits to development not required through the above e.g. additional parking spaces, underground parking, should not be included as a reason to demonstrate a non-viable development.
3.33 The schedule of information to be provided as part of a financial viability assessment on any development scheme can be found at Appendix 3.
(1) 3.34 Once submitted, the viability assessment will be considered and assessed by the council and an independent viability advisor appointed by the council, with full costs to be borne by the applicant. Commercially sensitive information will be treated in due confidence. However, it may be necessary to report the key issues and broad conclusions to elected members at the time of their consideration of the planning application.
(1) 3.35 Where the applicant fails to demonstrate that a reduced level of contributions should be applied or that the level of planning obligations that the development can viably support cannot mitigate the impact of the proposed development, then the planning application will be refused.
(2) 3.36 If it is proved that meeting the full policy requirements for affordable housing would make a scheme unviable, then negotiations will take place to reduce the planning obligations to a point which maximises affordable housing, but results in a viable well designed scheme.
(1) 3.37 Where the council agrees, on viability grounds, to a reduction in the level of affordable housing below that specified by policy, it will require the resulting Section 106 to include an ‘overage’ provision, so that if the actual return to the developer when units are sold exceeds the level included in the submitted viability assessment, a proportionate additional contribution is made to affordable housing in the city. The council will require the Section 106 agreement in these cases to make provision for an assessment of overage at the time of sale of units and for 50% of any uplift to be contributed to the council for affordable housing elsewhere in the city. The council will not expect the additional affordable housing required to be provided on-site, in the case of overage provision and instead financial contributions will be dealt with as set out in paragraphs 3.24 to 3.26.
3.38 The Growth and Infrastructure Act 2013 provides a route for applicants who already have the benefit of extant permission on a site to apply under Section 106BA of the Town and Country Planning Act 1990 to reduce the quantum of affordable housing included in a development if the original provisions of the associated Section 106 agreement render the development unviable. The council strongly urges applicants who have concerns about viability to raise and resolve these with the council during pre-application discussions or the application process, when planning obligation issues can be examined comprehensively, and changes to the design of a scheme may help to address the issue of viability. An application under Section 106BA will not allow either of these avenues to be explored.
3.39 If applicants believe they must utilise the provisions of Section 106BA, they are advised to follow the guidance offered in the DCLG document Section 106 Affordable Housing Requirements: Review and Appeal (April 2013)6. Government advice in this document is that an application under Section 106BA must include the maximum level of affordable housing consistent with the applicant’s viability assessment. The guidance also states that unless the application provides the ‘open book’ evidence referred to in paragraph 3.31 above, it may not provide a sufficient basis for a decision to be made by an Inspector in the event of appeal.
(2) 3.40 A successful application under Section 106BA will allow the proportion of affordable housing to be reduced for a period of three years. The council will require an overage provision to be made for such developments in the same way as for schemes where a reduced level of affordable housing is agreed bilaterally between the council and developers (see paragraph 3.37 above). At the end of the three-year period, the council will require the proportion of affordable housing required to revert to that required by policy unless a new ‘open book’ residual land value assessment demonstrates that the development remains unviable. Affordable housing must be provided on site at the level required by policy if the development has not been commenced. If the development is partly complete after three years, affordable housing must be provided (at the level required by policy for the whole site) on any uncompleted part of the site. This provision should be on-site unless a clear justification for not doing so is provided. If the affordable housing cannot be provided on-site, contributions must be made at the rates set out in Appendix 2, based on the qualifying sites and thresholds for developments of 2-9 and 10-14 dwellings in Section 3 of the SPD.
3 www.cambridge.gov.uk/housing-and-related-strategies 4 Or as amended in future. 5 Local Plan/CIL Viability Assessment, Small Sites Affordable Housing Viability Assessment, Student Accommodation Affordable Housing Viability Assessment, SHLAA Viability Assessment 6 www.gov.uk/government/uploads/system/uploads/attachment_data/file/192641/Section_106_affordable_housing_requirements_-_Review_and_appeal.pdf
