Sunday, 01 March 2015

Fed concerned by section 106 payments

The National Housing Federation is concerned councils are too eager to accept cash payments from developers instead of affordable housing.

The umbrella body said large cash payments can prevent more affordable homes being built and stop poorer people accessing more affluent areas.

The NHF spoke out after two authorities accepted payments instead of homes in high value areas.

Westminster Council received £78 million for reducing an affordable housing requirement from the Chelsea Barracks scheme earlier this year. Proposals are in place for 123 affordable homes but developers say they are unable build any more and instead offered the cash.

Southwark Council accepted £22 million to reduce affordable homes targets on the King’s Reach development on the South Bank.

Section 106 planning requirements on large schemes can demand developers provide a portion of affordable housing on site or nearby.

If neither of these is deemed feasible developers can make a payment to the council, which is used to develop affordable homes elsewhere.

Cameron Watt, head of neigbourhoods at the NHF, said: ‘I think there is a concern because you get an immediate social benefit delivering [affordable housing] on site and we believe that successful sustainable communities should not be segregated by wealth.

‘In central London it’s not just the cash value of the section 106 for affordable housing that is the issue, it’s the access to a site.

‘Even if the local authority has a large commutable sum there is no guarantee they will be able to access that site to deliver the sum of affordable housing required as good sites are so scarce.

‘There does seem to be a worrying trend that some local authorities are giving in a bit too easily to developers.’

Both Westminster and Southwark Council have said affordable housing would not be feasible on the schemes and the money will be used to identify and develop sites for affordable homes elsewhere.

Readers' comments (8)

  • Councils should not have the option to take cash instead. This enables more ghettos of rich and poor to emerge, rather than income mixed communities. A great deal of research points to income mixed communities being successful communities.

    Also, this is a way for developers to evade their obligation to local people. "Oh we'll give you money instead". That option means councils can be manipulated. This should not be an option at all.

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  • Melvin Bone

    I agree.

    There should be no get out clause.

    The rule should be absolute.

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  • The purpose of providing affordable housing through the s106 mechanism is to create 'mixed and balanced' communities. So I agree that it should be provided on site or not at all. Commuted payments don't necessarily create mix and balance. The fact that these are sought suggests that the motivation is value cpature not the creation of mix and balance.

    If the area already exhibits a sufficient mix and balance then the affordable hosuing contribution is unnecessary. If the affordable hosuing contribution renders the scheme unviable, then it must either be reduced to a viable level or waived altogether in the interest of supporting house building and alleviating gross house price inflation which is the consequence of undersupply.

    Whether we need to live in mixed and balanced commmunities is a more interesting question.

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  • I think it is basically unwise for local authority to demand cash as against developing affordable housing considering the economic implication of rising future cost of providing affordable homes,local authority should think along the line of future social benefit as against the short term cash gains.Moreover,the mixed balance community integration is mortgaged at the expense of immediate cash gain.

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  • Only One

    It shouls be considered on a case by case basis, as cash in place of houses is better than nothing at all if the develop pulls out. However, as we have (not) learned from RTB the cash should be ringfenced for the provision of affordable housing in place of grant to deliver the desired outcome. Lets not forget, as much as we don't like it, it is the private developers that drive the market, not the RPs.

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  • Part of the obligaion of councils is to provide "Affordable (often a cryptic word) homes for the homeless in need. This payment seems like a bribe, not to pursue what usually is the agreement to include council / social homes within the scheme. Bet this payment is not used to provide any extra homes, remember councillors are now being paid handsomely.

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  • Ivana Hart

    In areas of high housing demand and high employment eg Central London, why should an LA be forced to develop any social housing at all? That is a Stalinist perspective. Thanks to "needs" based allocation, developers loathe putting social housing next to swish new developments in pricey areas. They know the intake will be 100% benefit cases from the so-called "priority" list which ensures only the most feckless will get housed. Up goes the crime rate and the denizens then start predating on those who are in work and have paid full whack to acquire their flat. It would be altogether better for developers to be able insist that social housing allocations in these area only go to those in work with Councils have the option to house only those in work. Then there were obviously be less opposition to such developments from both developers and acquirers. Scrapping the '77 Homeless Persons Act would be a start to removing the curse of "needs" based allocation which destroyed social housing as a desirable tenure for the majority.

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  • Only One makes a good point about ring-fencing. The councils should be made to show what and where exactly that money will be spent on – housing builds / purchase – nothing else – if not in what they consider their ‘poshest’ area then perhaps an outskirts area / borough.

    Apoica – there are still plenty of decent, working, tax paying people that live in social housing, tenancies after ’77 though I reckon it’s halved in the past decade or so and “needs based” is definitely an impact. The RSLs themselves have placed plenty in to HB via large rent increases and they also know that if they fully implement Shapps cr@p then more of the same.

    The mixed community does not exist in reality – there are no great areas with an eclectic mix of tenures and people integrating – the design of builds alone, differentiates immediately, the neglect of same (sometimes by the landlord, not tenants) then further degenerates area before the behaviour type of some occupants is even considered.

    The demise of street properties (plenty sold off by RSLs) doesn’t help.

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