Alternative approaches to affordable housing calculation - Teignbridge District Council

This case study is part of the LGA's Housing Advisers Programme which funds the provision of an independent adviser offering bespoke expert support to local authorities for a specific project working to deliver homes, reduce homelessness, or generate savings or revenues.


The context
This project was undertaken on behalf of a partnership of local authorities led by Teignbridge District Council and including the other Greater Exeter Strategic Partnership authorities (Exeter, East Devon and Teignbridge), with Dartmoor National Park Authority joining the programme after its start.

The Greater Exeter Strategic Partnership have developed the Greater Exeter Strategic Plan. The purpose of preparing the Greater Exeter Strategic Plan is to:

  • have a joined-up vision and aspirations for the area
  • meet the area’s housing needs in the right locations
  • secure economic growth and increased prosperity
  • provide transport and infrastructure improvements needed to support sustainable growth
  • conserve and enhance the area’s environment

In order to deliver the area’s housing needs, the partnership required more robust tools to appraise development viability. The partnership were concerned that using the mechanisms open to them now meant that the local community could be losing out on the delivery of affordable housing and infrastructure delivery – estimated to be worth in the order of £500 million if housing delivery rates are only maintained over the next 20 years.

Project aims and objectives
The partnership submitted two parts to their project

  1. guidance to improve viability evidence

Within this broad aim, study objectives are summarised as follows:

  • identify a consistent methodology which narrows down the range of variants in viability appraisals - each with slightly different data sources, assumptions and evidence
  • evaluate alternative forms of guidance and identify the most appropriate.  In practice there are a range of alternatives ranging from formally adopted Supplementary Planning Document (SPD) through to officer informal guidance
  • identify the scope and depth of guidance proposed and which can be used by both developers and decision makers
  • explore how the guidance can be used across the partner authorities that are supporting this study – acknowledging the different approaches adopted in their current local plans and revisions to their plans currently being drafted.

Outcomes
The immediate outputs from the Housing Adviser is a greater understanding of how the current arrangements for dealing with viability (and the role of viability studies) are working. This includes where the main stress points are and what is working well from both the Local Planning Authority and application perspective.

With this information, the partnership are able to assess how best to present the guidance (as SPD or another mechanism) and the scope and depth of the guidance.

The process of discussing viability with council officers across the partner authorities and retained viability consultants has been useful in sharing issues and best practice in the short term. There has been discussion about continuing this process in the medium term, which will extend the benefits.

The partner authorities are expecting the longer term impact to be that the process for dealing with applications is sped up, is more transparent and consistent. This should reduce the time taken in negotiating section 106 agreements and reduce the incidence of planning appeals. These gains, of themselves, should help speed up the pace of housebuilding, potentially bringing forward start on site of new schemes by up to six months.

In addition, the Local Planning Authority (LPA) is better placed to maximise the contribution from new housebuilding in meeting its affordable housing targets and the provision of other essential community infrastructure. Assuming that the guidance reduces losses by 50 per cent due to a more consistent approach to viability assessments – this would equate to £250 million over the next 20 years. This is a very broad estimate but reflects the impact of the difficulties experienced now and the changes which a more consistent approach to viability assessments could bring.

Learning for local authorities
During the lifetime of the Housing Advisers study, there was a change to national policy/guidance proposed, which was published after the discussions of the study had taken place.

Issue Approach 

Changes to national policy/guidance proposed during the course of the study – MHCLG publishing a new draft NPPF and draft guidance on undertaking viability studies on 5 March.

Publication post-dated discussions with the development industry and the LPAs involved.

Important to gain an appreciation of the MHLCG policy approaches and review how the LGA study can incorporate this into recommendations.

LPAs involved fully appraised of impact of government publications

Development industry resistance to having more guidance at the local level.  Negative attitude to the study and to the potential guidance that will emerge.

Industry representatives invited to a workshop. Workshop well-attended and issues of concern to businesses discussed in depth. Further opportunities for input offered.

Workshop cannot overcome all industry concerns in one meeting but large degree of consensus was reached on many issues and topics of continued sensitivity identified. 

Importance of providing guidance that works for policy planners, housing enablers and Development Management colleagues dealing directly with applications.  Issues both around application process (e.g. at what point in the process does viability get considered), use of external advisers (DM officers not always a well-informed client) and technical content of viability studies. Provide separate briefing for DM planners to understand the issues they face directly and what they need from the guidance. 
Ensuring that councillors have the information they need to make informed decisions. Development industry criticisms that decisions appear inconsistent. Councillors not directly consulted but industry feedback (and officer knowledge) taken into account in considering what guidance will be of most use to councillors.
Limited examples of recent viability studies available from the participating authorities. Concerns about releasing the information to third parties.

This is disappointing but sufficient information collected so as not a problem. Three Dragons supplemented this with examples from their own library of viability studies from other comparable locations. In addition, the study process included consultation with retained viability consultants for the partner authorities and this was useful in filling gaps.  (Note – individual studies will not be referenced in the final report. However, the draft MHCLG guidance confirms that viability reviews should ordinarily be published.)

If going down the SPD route, limited examples of good practice elsewhere to draw on. Use of the local authorities and Three Dragons network of contacts to identify best examples of published SPDs and use made of the web. Sufficient information collected to inform the study.

Key learning points

  • time taken for meaningful consultation (e.g. with the development industry in this instance) is very worthwhile for a project of this kind
  • importance of securing views of both policy and DM planners in achieving good practice viability guidance
  • collegiate viability discussions with council officers across the partner authorities and retained viability consultants has been useful in sharing issues and best practice at an informal level
  • possible implications of emerging investigation into build costs
  • good practice sourced from other localities provides a useful ‘mirror’ in reviewing own activities/policies
  • must keep in touch with changing government policy and be ready to react positively to new announcements

If undertaken again, what would be done differently?
The team would have allowed more time for contacting other nearby local authorities to talk through the issues and to see if more LAs could have joined in considering the options for new guidance.

Project aims and objective
This element of the project relates to Teignbridge District Council only.The project’s primary aim is to challenge the traditional affordable housing policy of quantifying affordable housing delivery by a percentage of “front doors”. It was anticipated that alternative measures likely to be more flexible in delivering the kind of affordable housing needed in Teignbridge.

Its objectives are to:

  • research other measures of quantifying affordable housing and their relative merits. Measures could include percentage of bedrooms, bedspaces, net internal floor area and habitable rooms;
  • If the above yields suitable options – undertake viability testing to demonstrate the impact of using different measures of affordable housing;
  • To use the most suitable method identified to underpin revised guidance to maximise the delivery of affordable housing;

Issues and challenges and how they have been overcome
There have been a number of issues and challenges with different approaches to tackling them – as set out in the table below.

Issues  Approaches
 Shortage of known examples of different measures used by other authorities to indicate relative ‘popularity’ of the measures

Systematic web review of 1/3 of local authorities plans and associated documents to maximize coverage of alternative approaches.

Following review only seven LAs emerged that had used alternative measures, unclear from policy documents or other publicly available resources, how easy it had proved to implement their policy. Follow up interviews with adopters of alternative measures to explore their views on ease of use/benefits.
Finding the relevant officer with knowledge of policy and gaining agreement with relevant officers to take part in the research and then finding the time to do so. Perennial research issue – requires persistence and adequate resources for the task.
Negative feedback from ‘adopters of other measures’ – either not implemented (e.g. proved difficult to ‘measure’) or found not to deliver more affordable housing/more affordable housing of the right type Important to record views accurately and provide unambiguous feedback to the council.

 

The anticipated impact

Short term - Clarity that alternative measures of affordable housing would not be the right way to proceed as alternative measures have not led to more affordable housing being delivered. Spotlight back on improving ways of identifying types of affordable housing required of new developments (particularly larger strategic sites) and of taking this forward through s106 agreements.

Medium/long term - No specific long term impacts – other than recognition of ways of making best use of current policy.

Key learning points:

  • value of research in ‘proving the negative’
  • identifying the right person to talk with takes persistence
  • written policies tell only part of the story – how they are implemented also matters and it was this aspect that strongly shaped the findings from the research
  • don’t undertake tasks for the sake of it – having abandoned the idea of using alternative measures of affordable housing - no point in undertaking the viability analysis of alternatives.  Time saved spent on identifying relevant officers to talk with

If undertaken again, what would be done differently? If time and resources had permitted the project would have looked at all LAs to make sure any good examples had not fallen through the net. However, arguably the sample size was sufficient and although the result of the study was not as expected the research outcome was quickly recognised and acted upon.

Contact 
Graham Davey
graham.davey@teignbridge.gov.uk
01626 215412

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