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Planning to meet the need: delivering affordable housing through the planning system in Scotland

By: Shelter Scotland
Published: April 2014

Planning to meet the need

The planning system plays an important role in the delivery of affordable housing in Scotland – perhaps more important than previously realised. Around a third of all affordable units granted consent between 2007/08 and 2011/12 involved a contribution from the planning system, and the overall trend during this period was upward. This suggests that where affordable housing policies are in place, they are making a substantial contribution. Unfortunately the statistical bulletin which tracked this information has recently been discontinued; given the value of this information we would like to see a new information series on this issue.

Very few local authorities require more than the 25% ‘benchmark’ affordable housing contribution stated in current Scottish Government planning policy, and generally only in parts of their area where the need for affordable housing is particularly high. Where they do require more than 25%, some authorities have encountered difficulties securing a higher contribution on some sites because of viability issues.

The recent draft Scottish Planning Policy (SPP) has important implications for the delivery of affordable housing through the planning system, and could reduce delivery. The draft suggests that the affordable housing contribution should generally be ‘no more than 25%’. Shelter Scotland is concerned that while it may be helpful to developers to have a ceiling, this ceiling may lead to pressure to reduce percentages to lower levels, even in areas where 25% has been demonstrated to be deliverable. The guidance should make it clear that in many areas 25% will be achievable and may be regarded as the norm. The draft SPP also suggests that specialist housing – including open market housing for older people – should be exempt from affordable housing contributions. Our view is that this should be a matter for local policy makers and not prescribed by national policy.

The option of intermediate tenure – i.e. mid-market rent and low cost home ownership – has also become increasingly important. Understanding the market for different tenure types is to key to the success of this, as is good information on the tenures accepted by local authorities. Local authorities highlighted ‘golden share’ developments – a form of unsubsidised low cost home ownership which is affordable in perpetuity – as being particularly popular. However, with only one mortgage lender offering an appropriate mortgage product for this tenure, work needs to be done to promote this.

We heard some anecdotal evidence that the higher grant levels introduced recently may be feeding back into higher land values than was the case with the previous grant regime. Shelter Scotland would like to see guidance suggest that increased grant should be used to facilitate higher proportions of social rented housing. This type of housing has the greatest requirement for grant, and is most in need. Some registered social landlords (RSLs) and local authorities have done this – ensuring that the increased level of grant provides more social rented housing and less intermediate housing, so the overall receipt to the developer will not increase.

A case could be made for lower grant rates on affordable housing which is delivered through section 75 obligations. The argument for this is that because the land is transferred at a value for affordable housing, it should therefore result in lower costs to RSLs. The lower the value at which land for affordable housing is transferred, the less the requirement for grant, and so more units can be provided for the same amount of public money. For some authorities, the transfer of land for affordable housing at zero value is an option they may wish to consider. This has been the policy in Edinburgh.