Decision Maker: Cabinet
Decision status: For Determination
Is Key decision?: Yes
Is subject to call in?: Yes
A review of the affordable affordable house
prices for discounted sale new homes.
The Deputy Leader of the Council and Housing and Innovation Portfolio Holder presented a report explaining that, each year, the Council reviewed the discounted for sale affordable house prices which were published on the Council’s Website. This was important, as these prices formed a central element in housing developers’ calculations as to the financial viability of building new housing scheme and meeting the Council’s Local Plan Policy requirements and the policy requirements of the Lake District National Park Authority. The Council’s discounted sale prices were also used by the Lake District National Park Authority in South Lakeland.
The report detailed other factors which had to be taken into consideration, such as the Housing Register, income data, employment statistics, street value data and house price data. The house price to income ratio in South Lakeland showed a slight increase from 2018, so there was still a pressing need for affordable housing. As there was a significant difference in workplace income, it was not felt unreasonable to apply the CPI (Consumer Price Index) (inclusive of housing costs) increase of 1.7% to the affordable house prices.
It was proposed that subsequent affordable house price reviews followed the same approach and were reviewed on an annual basis. These annual reviews would need to be considered by the Portfolio Holder’s Housing Advisory Group. It was further proposed that annual reviews were subsequently signed off by the Director of Customer and Commercial Services, however, that any significant variation to the methodology or significant external factors that could affect this methodology would be reported back to Cabinet.
The Deputy Leader and Housing and Innovation Portfolio Holder stressed the fact that, despite all being done, there was an increased demand for affordable housing across the District.
In response to a request for a breakdown in the levels of need for households on the Housing Register and the Principal Specialist People having confirmed that it was possible to provide this type of information, the Deputy Leader and Housing and Innovation Portfolio Holder undertook to include within his next executive report to Council headline figures in terms of housing need. Concerns were raised regarding the increasing costs associated with building houses, the potential not to meet the Council Plan target for 1,000 affordable homes for rent by 2025, the fact that the best development sites had already been taken up and an increase in viability assessments submitted by developers in order to attempt to reduce the affordability element of individual developments. In response, the Deputy Leader and Housing and Innovation Portfolio Holder informed Members that he remained confident that the target for affordable homes would be met. Developers had indicated an increase in the cost of building materials and labour, however, he questioned whether developers may be paying too much for land. He also expressed disappointment with regard to planning permission being granted for applications including viability assessments.
RESOLVED – That
(1) the proposed new affordable house prices shown at Appendix 1 to the report be approved for implementation in 2020; and
(2) authority be delegated to the Director of Customer and Commercial Services, in consultation with the Housing and Innovation Portfolio Holder, to approve subsequent annual affordable housing price reviews, based on the methodology outlined at Appendix 1 to the report and the outcome of consultation with the Housing Advisory Group.
Reasons for Decision
The proposed affordable house price review links to the Council Plan priority for ‘Housing and Communities’ ‘affordable homes to meet need.’
It is expected that an increase to the affordable price of new homes will assist in improving the financial viability of new housing developments in the District whilst continuing to provide homes that meet need.
Alternative Options Considered and Rejected
Cabinet could decide not to approve the proposed increase to the affordable house prices. However, this is not recommended, as the Council has been impacted by viability issues on a number of developments following the introduction of Policy DM11 Accessible and Adaptable Dwellings. The small increase in the affordable house prices will help to offset the new Policy requirement and improve viability whilst meeting housing need.
Report author: Julie Jackson
Publication date: 07/02/2020
Date of decision: 05/02/2020
Decided at meeting: 05/02/2020 - Cabinet
Effective from: 17/02/2020