Agenda item

Objective: Understanding performance, current trajectory, challenges to housing enabling including through the planning process and opportunities to delivery. Reflecting on ‘best practice’

Tracey Birkinshaw,  Director of Communities and Economic Development and Martin Stacey,  Housing Strategy and Partnerships Manager and Ewan Wright,  Senior Housing Strategy and Engagement Officer.

Ewan Wright, Senior Housing Strategy and Enabling Officer, thanked Members for the opportunity to present this critical area of the council’s work, meeting local housing needs, supporting residents to reach affordable home ownership, and creating thriving communities.  The report has been jointly produced with colleagues in planning policy and the major developments and regeneration teams.

He highlighted the following:

-       the government definition of affordable housing is very wide, and covers homes for rent, discounted market sale and affordable home ownership.  Rent means social and affordable rent delivered largely by the council and housing associations; this definition is found in the latest National Planning Policy Framework;

-       the Corporate Plan includes a key corporate objective to deliver 450 affordable homes between 2023/24- 2027/28, and key planning policy requirements around affordable housing are also set out in the JCS, polices SD12 and SD11;

-       the 2020 Gloucestershire Local Housing Needs Assessment tells us CBC should deliver 194 affordable homes per year up to 2041, and the housing register shows that the number of households needing affordable housing has risen from 2,200 in 2018-19 to 2,667 this year. CBC and housing associations delivered 477 affordable homes between 2018 and 2024, so it will clearly be a challenge to meet our targets;

-       the key issues holding us back are broadly:

o   planning – delivering large sites is problematic and takes a long time, there are issues with S106 delivery both locally and nationally. Updating the JCS through the Strategic and Local Plan is a huge piece of work, requiring much internal work and work with GCC and TBC;

o   financial – issues are preventing CBC from delivering more homes through the HRA, and there are many pressures on housing providers to improve the quality of existing homes, for example by remedying damp and mould and improving energy efficiency;

o   construction – due to inflation, costs associated with this have spiralled, and viability issues mean affordable housing sometimes cannot be delivered on site.  In addition, Net Zero objectives, while laudable, come at a cost, and are another of the issues holding back affordable housing delivery;

He said there are, however, opportunities to address the issues:

-       continuing to focus on additionality – ie CBC and housing associations working to provide affordable homes delivery above and beyond what the market would normally deliver through our affordable housing policies;

-       delivery of affordable housing on S106 sites – policy requirement is generally 40%, with 35% on strategic allocations – and looking to stalled sites such as Pittville School;

-       Planning policies give a great opportunity to improve existing policies and add new ones, such as updating the Strategic and Local Plan, JCS Affordable Housing Guidance Note, and First Homes Technical Advice Note;

-       there is a lot of positive talk nationally about delivering affordable housing, with a new affordable housing programme promised for Spring 2025, an outstanding NPPF consultation, and talk of higher housing targets.  It remains to be seen how all this will pan out;

-       if the sites at North and West Cheltenham deliver, this will make a huge difference to affordable housing delivery across the borough;

-       under the acquisitions programme, CBC is looking to buy 20-25 affordable houses each year and this could focus on buying back larger properties to meet the acute need for 4-5-bedroomed rented affordable homes by making use of existing stock;

-       with the marketing and planning policy teams, officers are looking to make the best use of town centre spaces, to ensure a vibrant town centre where people can afford to live, and including the delivery of affordable homes.

Members thanked officers for their detailed and interesting report, and had many questions and comments.

A Member calculated that the failure to hit the 40% target in some major developments due to viability issues, has resulted in a loss of 169 affordable home – with commuted sums of £2.2m for some, which doesn’t equate to 169 homes. Developers are allowed to make 15-20% return on developments and not provide any affordable housing.  This isn’t ideal – is there anything the council can do to push back on that? 

EW said the profit margin developers are allowed to make is taken from national planning policy guidance, and is typically a minimum of 15-20%, depending on the nature of the development and the risks involved.  Viability assessments across the borough will be updated to link in with the policies; it is a lengthy, detailed and technical exercise, but once complete should be in line with planning policy guidance, ensuring policy-compliant delivery, with no need to go down the viability route – although there are some situations where even policy-compliant developments struggle to provide enough affordable homes, such as brownfield sites. 

Regarding the acquisition strategy and the yield on buying, a Member noted that the 5.1% available is just about enough to cover interest, and wondered whether the burden of loan repayments would hinder the council’s affordable housing aims.  He noted that developers can wriggle out of affordable housing requirements, still make a healthy profit, and put homes in the pool which the council then buys back at market value.  Developers therefore reap all the rewards, while the council tries to do the right thing by its residents in providing affordable housing.

TB said it was important to break the misconceptions around viability assessment.  When an application is submitted, independent viability experts are appointed, and consider every element put forward from the cost of land to abnormal construction costs.  If there was no headroom, developers would not put schemes forward. She said officers work very hard on numbers but developers have to make a profit.  She said work around CIL and S106 agreements includes the cost of the land; developers work closely with the council, and are robustly challenged around those costs.

The Cabinet Member for Major Developments and Housing Regeneration agreed that allowing developers 15-20% headroom while the council operates on nothing when buying properties in the open market is out of balance.  He said the acquisitions programme was originally around buy-backs of ex-council houses, and the acceleration of that scheme around the open market came further down the line in response to the refugee crisis and was partly funded by government.  He conceded that buying from the open market to provide for need was ludicrous, but said that unless the government system changes, the council will continue to do this if it is the only way to deliver affordable housing. 

Another Member had three questions, as follows:

-       he asked if the acquisitions, buy-backs and commuted sum figures for affordable housing were brought into the overall totals for additionality or considered separately, and whether extra affordable housing bought by those schemes fit into S106 or additionality figures. EW confirmed that acquisitions and buy-backs are broadly the same thing, and included in additionality. Where commuted sums translate into delivery, with buy back or assisting with supporting additionality on a certain scheme – this would also be counted as part of additionality.  All this is difficult to present, but where buy-backs, acquisitions and commuted sums equate to delivery, these are included in the additionality totals;

-       he noted that the report states that acquiring empty homes is an area to capitalise and wondered if the limitations in pushing forward with this are due to staffing and resource issues.  EW confirmed that housing officers are working with the private sector housing team to consider how to move forward, but there are resource issues, with pressure on the private sector housing team significantly increased, partly due to the Ukraine crisis, and pressures of improving standards in the private sector, with further pressures anticipated going forward in light of the supported housing act requiring new licensing of exempt properties;  officers have to work out their priorities from a policy point of view and find finance to deliver against all these schemes if required;

-       as the Strategic and Local Plan provides an opportunity to consider new policies, he asked whether it would be possible to stratify housing delivery targets further:  rather than the current 35/40% targets, could the requirement be 30% on developments of 10-50 houses, 35% on developments of 50-100, and 45% on developments of 500+? The officer said this could be done in theory, but there would be complications – it would need to be viability tested, with a number a typologies/apologies tested to see which strikes the sweet spot.  It would also need agreement with Tewkesbury and Gloucester.

Another Member welcomed the sense of innovation in the report, and all the ideas of how to get more out of the system.  He hoped that the housing team was permanent.

Following up the comments of TB, he noted that some councillors were not happy with the developer making 20% profit from Stone Crescent, but pointed out that developers, like everyone else, need to make money.  He had three questions:

-       the local housing needs assessment suggests that CBC needs to build 194 homes a year but has failed to do this so far, and would need to build 275 a year up to 2030 to get back on target. EW stated that the likelihood of achieving that is small, though if we get strategic allocations on line, this will go some way to meeting the need.  With outline applications for strategic allocations submitted, he is confident that numbers will rise, although the 194 affordable housing figure should be taken with a pinch of salt, as it uses a different methodology from a few years ago.  The housing list shows that we are going in the right direction, though not as quickly as we would like;

-       regarding the number of people in B&Bs paid for by CBC, following the introduction of the new law on no-fault evictions in February, the officer was pleased to say the council makes very few placements, and length of stay is very short, with families accommodated for just a few days, and single people for less than a month before being moved to more secure long-term accommodation.  CBC is also looking at innovative schemes to avoid using B&Bs, such as working with the YMCA to provide emergency accommodation.

A Member noted the huge transition of CBH to CBC and wondered how well-resourced the council currently is, to enable it to deal with any challenges.  The officer confirmed that there is definitely a resource issue, despite great staff, and there are further pressures coming down the line, with the delivery of first homes and the admin following on.  An officer of the major developments and regenerations team concurred that resourcing was challenging and difficult, nationally and locally, and but with the return of CBH, three new starters were now in position to help deliver projects, which is great news for 320 Swindon Road and Monkscroft School.  He said the team was not looking to expand further but to consolidate and define, and strategically consider the right way forward for the team.

The Member had three further questions:

-       he wondered about the £180m for new house-building and where the council has got to with that.  The Cabinet Member for Major Developments and Housing Regeneration said that spending on current projects is around £40-50m; this will ramp up with projected delivery at West Cheltenham;

-       he noted that the Pittville School scheme had stymied and that there were other outstanding permissions affecting the five-year housing supply, and wondered what the council is doing to bring forward schemes such as this which include affordable housing.  EW confirmed that the council is doing what it can to help bring forward these applications, in particular the critical scheme at Pittville School.  He was pleased to say that 320 Swindon Road and Monkscroft School are progressing well;

-        there are three definitions of affordable housing, but the key one, and one we need most, is social housing.  He asked whether planning applications which include social housing against other types of affordable housing are being prioritised.   EW said the through negotiation with developers, the council tries to achieve 70% rental properties  – social housing as councillors would term in – and generally prioritise the delivery of this, the most genuinely affordable tenure for our residents.  However, he said that compromise is sometimes necessary, for example at Shurdington Road, where the greatest need is for one-bed and four-bed properties.  As a compromise, these are being included at social rent (50-55% of the market rate), with the remaining two-bed and three-bed properties at affordable rent (about 80% of the market rate).  So yes, we are prioritising social rented housing, and this will come forward in the affordable housing guidance note as well as in the Strategic and Local Plan policies.

Councillor Chelin thanked everyone for a good airing of the issues, and officers for their report and responses.  The Cabinet Member for Housing and Customer Services also thanked officers, and Members for their excellent questions.  She said if they had any further questions to ask, they should get in touch with the team – this is the whole point of Overview and Scrutiny.