Wakefield MDC

The problem

In Wakefield MDC, the authority was having financial viability issues within the current market. Schemes were being presented by developers without affordable housing provision at all, on the basis that they were not viable, despite having an evidence base through a Strategic Housing Market assessment that affordable housing could be delivered on eligible sites.

What did they do?

The authority modelled the viability of different affordable housing scenarios across the District. A number of key variables were selected and adjusted in isolation to test the impact of different levels of affordable housing provision on 5 hypothetical sites. The key variables were; location, value area (high medium and low), density (high, medium and low) and tenure split (70/30, 50/50 and 30/70 social rented/intermediate tenure).

The problems were reflective of the current housing market conditions. At the baseline position of August 2008 it was demonstrated that, across the District, there was little scope to deliver any affordable housing in the prevailing market conditions and further more that the delivery of any housing development is potentially unviable and unlikely due to extended build periods, uncertainty in the financial market and a fall in property values. The impact of the unprecedented market conditions at the baseline date of valuation mean that if the affordable housing policy were formulated based solely on this analysis, an affordable housing requirement of 0% would be deliverable.

However, In order to assess appropriate affordable housing percentages to reflect changing market positions, analysis of different scenarios or market conditions was undertaken to determine at what point and level affordable housing delivery is viable. Scenarios to reflect the height of the recent market in early 2007 showed that 30% affordable housing could be viably delivered at a 50/50 split between social rented and intermediate tenures.

The outcome

The modeling concluded that, in isolation, site density and tenure split have a limited effect on the level of affordable housing that was sustainable on the hypothetical sites tested. Land value, on the other hand is a very significant factor in determining affordable housing viability. Changes in build rates also have a significant positive impact on the viability of schemes as shortening the timeframes for a development derisks and reduces costs.

The methodology behind the model was presented to key stakeholders from a range of organisations, such as adjoining local authorities, housebuilders, registered social landlords and members of the community in order to secure general endorsement to it prior to being tested at public examination as part of the Local Development Framework.

Wakefield Council now hopes to use the evidence base in assessing the viability of affordable housing on schemes at different points in the property cycle by comparing to the scenarios which are most relevant to current market conditions. This means that the evidence base can be applied flexibly to help understand whether schemes can meet the affordable housing target. Wakefield is also exploring ways of negotiating on current planning applications where it is not economically viable to deliver affordable housing under current market conditions. This includes the possible use of legal agreements to ensure that affordable housing can be delivered at later stages of developments when it may become more viable to deliver affordable housing by clawing back payments or on-site provision.

Harrogate Borough Council

The Council has been unable to confirm the financial viability of any level or mix of affordable housing in the current housing market as current conditions are unlikely still to be in place when the completed units come to the market and it would be unreasonable to fix a level of affordable housing dictated by the current slump in values when, at point of sale, it is reasonable to expect that the market will have recovered.

Wakefield MDC

York City Council

In York, developers were offering lower affordable housing provision that required.

Also in York, the pepper potting of a scheme was stalling build.