Agenda item

To consider the report of the Director of City Development on a proposed update to the Leeds Affordable Housing benchmark prices. The update to the Affordable Housing benchmark methodology is necessary to ensure the benchmarks are properly aligned with Core Strategy Policy H5. The Chief Planning Officer has delegated powers to adopt new benchmarks but seeks the view of Development Plan Panel before proceeding with proposed amendments.

The Panel considered the report of the Director of City Development which sought Members’ views on proposals to update Leeds’ Affordable Housing benchmark prices. This matter had previously been withdrawn from the meeting held on 27^th September 2016 (minute 34 refers).

The report explained that an updated methodology for setting new benchmarks would accord with Policy H5 of the Leeds Core Strategy which had been adopted in 2014 and superseded previous UDP policies. Policy H5 sets the principle that new Affordable Housing in Leeds should be made affordable enough for households on lower decile (social rent) and lower quartile (sub-market/intermediate) earnings. The benchmark figures set the price that housing developers sell affordable dwellings to Registered Providers (RPs).  Using the same income data, benchmarks also set the rent for affordable dwellings within Build-for-Rent developments.

The Planning Strategy Team Leader highlighted the key changes as being:

·  A proposed increase to the lower decile benchmark

·  A proposed decrease to the lower quartile benchmark

·  The inclusion of the earnings of part-time workers within the lower decile methodology

Overall however, the changes would not alter the amount paid by Registered Providers for the Affordable Housing element of schemes.

The Planning Strategy Team Leader noted that previously, the benchmark figures had been updated annually by the Chief Planning Officer using a methodology devised in the early 2000’s. Given the change in approach following the adoption Core Strategy, it was considered appropriate to obtain the views from Development Plan Panel.

The Panel discussed the following matters:

·  Concerns that developers did not want to provide Affordable Housing on site and would rather offer a commuted sum.

·  Anticipation that commuted sum costs would rise as they took into account rental costs which had increased. Construction costs had also increased. Open market values had increased, so the difference between the open market value and the affordable housing value would be included within commuted sum calculations.

·  Whether the 1100 annual target had been met.

·  Whether it was feasible in the circumstances where the authority was asked to set aside its policy requiring affordable housing on site, to charge a premium affordable housing rate, to cover administration costs, to those developers who only offered commuted sums for affordable housing. The Panel received advice from the Chief Legal Officer setting out the circumstances where a commuted sum could be considered and clarifying that there was no provision to uplift that sum. After further discussion, it was agreed that this issue would be further discussed as part of the Selective Review of the Core Strategy

·  Concern that there was little affordable housing in some of Leeds’ outlying towns and villages, which prevented younger people entering the housing market in their own home towns

·  The technical definition of “Affordable Housing” - Government White Paper proposals set the income for  “Starter Homes” as £80,000 or £90,000 in London – was not affordable to normal wage earners when mortgage lending terms offered by a bank or building society are set at 2½ or 3 times salary

The Chief Planning Officer gave assurance that the revised methodology was sound. Additionally he reassured Members that there was sufficient flexibility in the system, if, during the transition phase, the new methodology was found to cause an issue for developments already being constructed.

The Executive Member for Regeneration, Transport and Planning indicated that a report on the development of mixed residential communities was due to be considered by the Council’s Executive Board on 22^nd March 2017 with a view to developing a policy approach.

The Chief Planning Officer indicated that the Core Strategy Review process, informed by a new SHMA, would look at future target setting; and work would be undertaken at a local level to assist in the development of a broad view on need for the whole city. Panel noted the debate revealed the current tensions in the housing market and the comment that a full review of the housing market strategy was needed. A comment that the 5% city centre Affordable Housing target required review in due course was also noted.

RESOLVED – To note the contents of the report and the comments made during discussions