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Rural communities denied affordable housing as developers exploit loophole

3 March 2018

Housing developers are using a legal loophole to dodge building affordable homes across the countryside, according to data analysed together for the first time by Shelter and the Campaign to Protect Rural England (CPRE).

The research is released ahead of a speech on Monday 5 March by Sajid Javid, the Secretary of State for Housing, Communities and Local Government, when he is expected to outline reforms to national planning rules.

Looking at eight rural councils over one year, the analysis shows that half the affordable homes that councils were required to build were lost when viability assessments were used – demonstrating that the housing crisis is not just confined to our cities, but is having a serious impact in the countryside as well.

Developers use 'viability assessments' to argue that building affordable homes could reduce their profits to below around 20%, which gives them the right to cut their affordable housing quota.

It means developers are over-paying for land and recouping the costs by squeezing the affordable housing commitments – a tactic often used by developers building big housing schemes.

This comes months after Shelter carried out similar research on housing lost to viability assessments in urban areas. Together, the research paints a national picture of the affordable housing drought right across the country.

Shelter and CPRE are calling on the government to use their current review of planning rules to stop developers from using this loophole to wriggle out of providing the affordable homes that communities desperately need.

Polly Neate, Shelter chief executive, said: 

'With this new research, we can see for the first time the true scale of our housing crisis – it’s not just blighting cities but our towns and villages too. 

'Developers are using this legal loophole to overpower local communities and are refusing to build the affordable homes they need.'

'The government should use their current review of planning laws to close this loophole and give local communities the homes they really need. This process must act as a critical turning point in the government’s attitude towards affordable housing in this country.'

Crispin Truman, Campaign to Protect Rural England chief executive, said:

'A lack of affordable housing is often seen as an urban problem, with issues of affordability in rural areas overlooked. It cannot be ignored any longer. Too much of our countryside is eaten up for developments that boost profits, but don’t meet local housing needs because of the "viability" loophole.'

'CPRE is calling for urgent action from the Government to close the loophole to increase the delivery of affordable housing, otherwise rural communities risk losing the young families and workers which they need to be sustainable.'

ENDS

Notes to Editors

Findings

  • The research found that, on schemes where viability assessments were used 1,966 of the homes were meant to be affordable, according to the housing policies set by the local authority. As a result of the viability assessments, only 1,028 of these homes were subsequently affordable. This is a loss of 938 affordable homes that could have been built, equivalent to 48%.
  • The research follows findings from Shelter in November 2017 which showed that 79% affordable homes were lost in nine cities across England through viability assessments.
  • The official definition of ‘Affordable Housing’ generally refers to social rented, affordable rented or shared ownership homes. Local planning rules can specify what proportion of these tenures should be provided, and the precise amount on each scheme is negotiated between the developer and the local authority.

Methodology

  • The research was conducted with EGi and looked at 154 planning permissions across eight local planning authorities in rural areas in eight different English regions. The local authorities were selected to provide a spread across the country: County Durham in the North East, South Lakeland in the North West, Hambleton in Yorkshire and the Humber, Newark and Sherwood in the East Midlands, Shropshire in the West Midlands, Central Bedfordshire in the East of England, Horsham in the South East and Cornwall in the South West.
  • The records relate to planning applications granted in 2015/16 (financial year).

See also our blog: Villages are unviable without affordable homes - closing the viability loophold in the NPPF

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