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Future-Proofing Affordable Housing through Planning Obligations

This workshop will discuss the concept of future-proofing affordable housing secured through the planning system and outline different options, their strengths, and weaknesses. It will help disseminate the recommendations in Ark's report on Good Practice Guidance.

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Future-Proofing Affordable Housing through Planning Obligations

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  1. South West Improvement and Efficiency Programme Future Proofing Planning Obligations and Affordable Housing

  2. Purpose and Background • To define ‘future proofing’ in relation to affordable housing secured through the planning system • To outline the options for future proofing and discuss their relative strengths and weaknesses • This workshop will help disseminate the recommendations in Ark’s report

  3. Good Practice Guidance • HCA – Investment and Planning Obligations – Responding to the Downturn • Atlas Guide Topic Papers • T.1.1.1 Developing a Strategy for Addressing Stalled Schemes • T.1.2.3 Financial Appraisal and Viability in the Planning Process • T.1.3.1 Reviewing Section 106 Agreements • T.1.3.2 Contingent Deferred Obligations

  4. Future Proofing Options • A1 FIXED CONTRIBUTION [A2 Fixed with deferred contribution] • B1 OPEN BOOK REVIEW [B2 Open book with overage agreement] • C1 AUTOMATED REVIEW (CLAWBACK) [C2 Automated with escalator provision]

  5. STRENGTHS Balances provision across the scheme Easy to define external subsidy Clear cut obligations where sites sold on by land promoters WEAKNESSES Heavily reliant on quality of initial negotiations One party could suffer dependent on changes in market conditions Re-plans or value engineering only benefit developer Option A1 :Fixed Contribution Fixes the contribution of affordable housing at a level below policy but above what is viable currently.

  6. STRENGTHS Helps promote delivery in short term Possible to reach compliant levels eventually WEAKNESSES Imbalance in distribution of affordable housing Option A2 :Fixed but Deferred Contribution As A1 but contribution steps up to agreed levels over time.

  7. STRENGTHS Transparency Partnership approach Responsive to market conditions Can reduce intensity of initial ‘haggling’ WEAKNESSES Most developers will resist open book approach For LPA could result in affordable % going down Review is time consuming and provokes argument Is there sufficient incentive for developer? Option B1 :Open Book Review Open book review of relevant data at appropriate intervals to determine affordable housing provision by phase.

  8. STRENGTHS More incentive for developer to optimise outturns and co-operate WEAKNESSES Does not maximise affordable housing provision Usually links to an agreed minimum level of contribution Option B2 :Open Book Review and Overage As per B1 but any ‘super profit’ is shared by both parties

  9. STRENGTHS Simplified review Reliance on verifiable data Lower costs than open book review WEAKNESSES Difficult to agree formula Indices may not relate to scheme characteristics Tends to ignore impact of infrastructure and abnormals Option C1 :Automated Review - ‘Clawback’ Bases review on movements in agreed indices. Clawback is usually overage based.

  10. STRENGTHS Improves clarity on what will be provided assuming certain changes Simplifies review process even further WEAKNESSES Even more complexity in initial negotiations Option C2 :Automated Review - ‘Escalator’ As for Clawback but with additional affordable contribution stepped dependent on changes in indices.

  11. Delivering Positive change on behalf of our clients for the benefit of their customers

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