NPF4 call for ideas: analysis of responses

Housing - Affordable

Proposed key objective of NPF4: To maintain the existing policy support for affordable housing provision. There is a lack of evidence that the policy is failing to deliver affordable homes, taking into account accelerated delivery in recent years and the success of the More Homes approach.

There were general statements of support for either the proposed objective or the continuation of policy support for affordable housing provision in NPF4. It was suggested that housing need and demand is outstripping supply and that there is a clear need for new social and affordable homes across Scotland.

The shortage of available affordable housing, and the subsequent social and economic repercussions, were seen as critical to the health and wellbeing of the individuals and families affected, while it was suggested that the housing system is broken with house prices unaffordable to the young and those on average incomes. It was reported that 1 in 5 children living in poverty are living in poverty solely because of housing costs and that while this happens across all tenures, one of the best ways to tackle the issue would be to have more social rented housing. The need to look at priorities for different groups under the Child Poverty Act and identify if affordable housing meets the needs of those who most need it was highlighted.

Other general comments included that investing in affordable housing generates significant benefits for the economy. Ensuring that investment can be realised in rural areas, including to support local employment and skills development, was seen as critical and worthy of support from planning policy.

However, other respondents noted that they could not agree with the objective as proposed, with reasons given including that SPP should be clearer in its support for affordable housing through a percentage contribution approach (discussed below).

A number of comments addressed what is meant by affordable housing. It was suggested that NPF4 should include a clearer definition of what constitutes affordable housing. Specifically, it was suggested that more work might need to be carried out around what equates to being 'affordable' from a resident's perspective. Other comments included that a clear difference needs to be made between affordable housing for buying and affordable housing for renting, or that self-build or mid-market rent should not be included within a definition of affordable housing, as this leads to unnecessary confusion and debate. The need to clarify how and when the affordable housing policy is applied to specialist housing was also highlighted (and is discussed further under the Housing - specialist theme).

Barriers and solutions

Some respondents identified reasons or factors which they considered to be limiting the number of new affordable homes Scotland can provide. These included:

• The development of new build housing has been monopolised by volume builders who build to minimum space and environmental standards and perpetuate the spirally cost of housing.
• In the past some LDPs have minimised identified housing requirement by separating out 'affordable' and 'private' housing requirements, then using lack of funding for affordable housing to justify not allocating sufficient housing land to meet the total requirement.
• Ambitious targets for affordable housing cannot be met without the delivery of private housing and the associated infrastructure it delivers. Fundamental to this is meeting people's aspirations for home ownership and supporting the delivery of private housing, which in turn will improve affordability.

The importance of considering the latest available evidence on need and demand for housing to ensure that the development plan includes an ambitious but deliverable housing target was highlighted. It was suggested that planning policy should support new housing developments where it can be clearly demonstrated that they fulfil the purpose of meeting the demand for affordable and social housing. However, one local authority highlighted the potential scale of the challenge and commitment, reporting that their regional housing programme is taking a place-based approach across infrastructure, land, finance, innovation and skills. It seeks to accelerate the delivery of affordable housing, seven regional strategic sites and incorporate innovation in construction. They went on to suggest that NPF4 should support this scale of development as a significant contributor to national housing supply.

Another local authority noted that the overall cost of land, infrastructure and development are the largest barriers to housing delivery, and argued that the planning system working across Scottish and UK Governments should do it all it can to minimise the cost burden on providers of affordable housing. They suggested that NPF4 must embrace opportunities to take cost out of the system and compel building on vacant land. They also suggested that these opportunities should include land assembly powers and land value uplift, concluding that land assembly at the right cost has the potential to transform not only affordable housing provision but the development of places that people want to live and work in.

Other respondents identified a range of changes or new measures which they thought would assist with maintaining or boosting the number of new affordable homes that can be developed. These included:

• Supporting affordable housing requirements for market development which are evidenced by both need and viability assessments, unless other funding and delivery mechanisms to provide full affordable need can be identified.
• Making affordable housing a different use class, and making it easier to prevent sites specifically allocated for affordable housing being lost to market housing.
• Requiring a certain percentage of any new houses built to be affordable ones - for example if five luxury houses are the last ones built, no more are allowed until five smaller more affordable ones have been built.
• Releasing land for community-led housing, cohousing, and mutual homeownership cooperatives.
• Promoting self-build opportunities within rural settlements that have facilities and services, with guidance to assist with how this can be achieved.
• Providing opportunities for smaller developers.
• Including exception sites for affordable housing, including in green belts, so long as evidence is submitted to support local need.
• Creating opportunities for innovation and new forms of housing which build the community cohesion and mutual support vital in the post COVID-19 future.

It was noted that much of the funding available for affordable housing is reliant upon the Strategic Housing Investment Plan so the continuation of this is essential to help realise affordable housing targets.

It was suggested that policies to deliver real tenure integration and improve everyone's life chances should be set out in NPF4 and that affordable housing provision should be planned and not able to trump all other policies and the strategy of the LDP.

Affordable housing contributions

The more detailed comments made generally related to affordable housing focused developer contributions and the percentage contribution to the number of homes in particular.

One perspective was that the current reference to no more than 25% of the total number of houses (SPP paragraph 129) being affordable has been unhelpful and has led to the development industry challenging the need to provide the maximum standard 25% of affordable housing. Going forward, there was a concern that with NPF4 becoming part of the development plan, any continuation of wording that is open to interpretation will lead to increased debate and challenge at planning application stage. It was also suggested that the 25% cap stops identified need being met unless the local authority owns available land in the right places to plug the gap.

An alternative perspective was that the current SPP policy is correctly framed but that, in practice, local authorities are increasingly seeking higher contributions. It was suggested that NPF4 should seek to manage these variations by requiring any higher requirements to be justified, based on evidence of need and viability, to ensure that any increased level would not impact the delivery of plan policies and the viable delivery of housing sites and associated infrastructure.

Suggested changes to policy going forward included that a benchmark for affordable housing at 25% should be set and it should be stated explicitly that LDPs can adjust this depending on local circumstances, supported by evidence that is appropriate and proportionate.

Other comments included that if the contribution is to be set at a national level there should be a local exemption to allow a specific affordable housing percentage to be achieved, taking into account pressured/highly pressured areas within the LDP area.

The third position was that it is not clear that it is appropriate for national policy to set a cap on affordable housing provision when evidence may indicate that the local requirement is greater. It was suggested that an evidence-led approach would also set the context for continued support of rural exception policies (discussed further below).

Another suggestion was that, since affordable housing contributes to infrastructure pressure, national policy could address whether or not it should pay developer contributions or benefit from an exemption. Differences in approach across Scotland were reported and it was noted that if affordable housing providers do not make a contribution, the local authority will have to take on that additional burden. It was also reported that, for housing authorities who may be paying market value for internal land transfers, this can be an additional burden which limits the scale of housing delivery.

It was suggested that the 25% provision may be having the unintended consequence of encouraging developers to build fewer and more expensive houses than they might otherwise do. This is because the cost to the developer of providing one affordable house does not vary whether their development is of large, high value, low density houses or whether it is of modestly priced and sized starter homes. It was suggested that this could be alleviated by imposing an 'affordable housing levy' on new house selling prices with the rate of levy being low on starter homes and rising sharply on 'luxury' developments. This would replace the current system and give planning authorities greater influence over where affordable housing units were placed.

Finally, there was a query as to whether the cap should not relate to the proportion of affordable houses in an area rather than focusing only on new homes. It was suggested that this would allow the housing need in the area and the total number and mix of existing housing - both in terms of type and affordability - to be taken into account.

The rural and island dimension

As with responses to the Housing Technical Statement Paper, a number of respondents commented on the particular challenges associated with delivering affordable housing in rural, remote and/or island communities.

In terms of the impact of a lack of appropriately located, fit-for-purpose housing, the challenges faced by island communities, including in relation to population decline and the sustainability of local services, were highlighted.

The need for flexible responses that recognise the local context was highlighted. For example, it was reported that within the Outer Hebrides LDP all the housing allocations are for affordable housing, as private houses are built on windfall sites. This means that it has been difficult to predict the requirement for non-affordable housing. Other distinctive features which respondents highlighted included that:

• The scale of development of affordable housing sites in the rural parts of the islands is significantly smaller than urban areas and can vary in size from one to ten houses.
• Construction on the islands can be more difficult due to higher transportation costs.
• Affordable housing needs to be of high-quality design and located in the right place to encourage retention/ repopulation of the islands.

It was suggested that NPF4 needs to enable distinct and responsive approaches to affordable housing delivery for rural and islands areas. Specific suggestions included that:

• Planning authorities with rural areas should be required to develop specific rural development and rural planning policies that take account of the needs and nature of rural areas.
• There should be capacity to diverge from the 25% affordable housing figure, including for the percentage to be higher. One local authority respondent explained that their present approach asks for housing proposals within settlements to demonstrate how they have considered and incorporated housing types and tenures which meet local housing requirements. They have found this approach to be flexible and responsive to changing requirements and suggested a similar approach be taken in NPF4.
• SPP needs to reflect different local circumstances with regard to what is considered affordable housing and the provision available for that. For example, crofter housing was historically recognised as affordable housing. Consideration should be given to how rural communities can be supported, and how croft land - which is a finite resource - can be managed and planned for.