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Nicky Morrison - Drammenskonferansen 2018

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Nicky Morrison: Rimelige boliger i dagens økonomiske og politiske klima i England.

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Nicky Morrison - Drammenskonferansen 2018

  1. 1. Negotiating affordable housing in England Dr Nicky Morrison Department of Land Economy University of Cambridge 14th March 2018 Drammen
  2. 2. Presentation outline  The English context  Why affordable housing crisis has occurred  The English system – how it works  Negotiating affordable housing provision with private house builders  The role of the not-for-profit Housing Association sector  Innovative affordable housing solutions  An example of joint venture working between a local authority and a housing association  Summary  transferable lessons & cross-cultural exchange
  3. 3. The context
  4. 4. Housing completions in England
  5. 5. Affordability ratios in England Average house prices: average household income (2016)
  6. 6. English system: how it works
  7. 7. Role of land use planning system in securing affordable housing delivery • Centralised state • Government owns development rights to land • Every development must obtain planning permission • Local authorities little autonomy & must work within national planning framework • Discretionary planning system / case-by-case assessments • Town & Country Planning Act 1990: Section 106 agreements - List of requirements – essential versus desirable - e.g. highways/ education facilities/ community facilities/ open space - Require affordable housing on SAME site as market housing  Subject to negotiation  Subject to viability
  8. 8. Form of developer contributions  Local authorities seek affordable housing on: - Delivers mixed tenure scheme on the site (e.g. typical target: 30-40%) - Or deliver the affordable housing component on an alternative site…  Developers’ contributions - build housing at lower costs – housing association purchase (with grant?) at `existing use value’ - provide land at discounted price – housing association build (with grant?) - provide financial contribution/commuted sums (e.g. Belvedere, Cambridge – 2m euros) • OR Housing Association buys land directly • Equally complies with S106 & delivers mixed tenure schemes  N.B land transactions data – opaque…
  9. 9. Negotiation process Section 106 tied to market conditions/predicated on rising land values & market demand In a property upturn/buoyant market Developers achieve profits from open market housing Large windfall gains/uplifted land values – cushions developer profits Developers prepared to accept affordable housing quotas – willingness to pay/ few disputes Up until 2008 – viability not undermined/no evidence of downward pressure on housing supply  Affordable housing £2.6bn of £4.9bn total value of planning obligations in 2007/8 (Brownhill et al 2015)
  10. 10. Negotiation process cont. In a property downturn (Morrison & Burgess 2014, Morrison 2016) Reduced level of market activity – hampers delivery of affordable housing Depressed land values impact on expected residual values/ reduce contributions Hard to pass S106 costs on:  consumer  landowner if purchase price already agreed Bought land at top of market – cannot write off value from their books - seek to renegotiate S106 agreements  N.B Affordable housing reduced from 60,480 to 42,920 (2010-2014)
  11. 11. Avoiding S106 contributions
  12. 12. Delivery of affordable housing across London (2009-15) BPN Paribas 2017
  13. 13. Greenwich •Original plan: 10,010 homes of which 35% affordable, on 170 acres south of O2 •June 2012: bought by new owner •January 2013: developer argues 35% is no longer ‘viable’ •February 2013: local authority drops requirement to 21% Freedom of Information Act 2000 gives ‘right of access’ to information held by local authorities ‘Open book’ on viability assumptions This case sets a precedence.
  14. 14. Greenwich Peninsula – the plan..
  15. 15. Media outrage
  16. 16. The role of the not-for-profit housing association sector
  17. 17. Housing Association sector • 1500 not-for-profit organisations (336 own 95% of stock) • Represents 10% of England’s total housing stock - 2.5 million units for 5 million people • Independent BUT regulated by Government • Not-for-profit charitable status & governed by boards • Alternative to local authority public housing - Providing housing for lower income households - Traditional versus large scale voluntary transfer associations • Provide sub-market affordable rented housing - Existing stock:35% below market value/ new build & relets: 20% below - Approx. 60% eligible claimants still need government’s housing assistance to afford rents..
  18. 18. Housing Associations’ performance record (2016) • Surpluses (after tax) = £3 billion (25% increase from 2015) • Book value of properties £138 billion • Debt drawn from financial institutions £63.4 billion (£0.5billion from government grants) • Delivered 46,500 affordable homes p.a. (1/5th of total new builds) > Could do more?
  19. 19. Turnover £m Non-social housing development activity share of total turnover Change in % compared to 2015 L&Q 642 37 +3 Notting Hill 381 38 +9 Affinity Sutton 430 30 +18 Catalyst 212 43 +11 A2 Dominion 297 30 +3 Hyde 326 27 +6 Network 190 28 +10 East Thames 146 34 -7 Circle 412 10 +8 Family Mosaic 230 17 -8 Genesis 282 13 +5 Southern Housing 175 16 +4 Peabody 223 11 0 Large London Housing Associations Diversify into Market sales & Private rental (Morrison 2016a&b, Manzi & Morrison 2017)
  20. 20. Innovative affordable housing solution: an example
  21. 21. Joint Ventures Brighton & Hove Local authority with Hyde Housing Association – first-of-its-kind (Morrison 2018 forthcoming)  Limited Liability Partnership – 50:50 Board Ring fenced  135.6m euros – Hyde uses reserves & LA provides land  Pool resources, skills, expertise  Share risks and rewards – index-linked revenue stream  1000 units – subsidised rental housing & shared ownership  Bespoke rent setting – linked to National Living wages  Equity investor interest in future  Can act counter-cyclically  Greater London Authority and others are keen to learn how..
  22. 22. Summary • UK Government’s Town & Country Planning 1990 Act: o Legitimised use of planning system in requiring affordable housing on development sites o S106 dependent on private sector market housing output o Affordable housing contributions affected in market downturn • Role of Housing Associations • Role of joint venture arrangements o working together to find innovative solutions
  23. 23. Cross-cultural exchange Approaches to secure affordable housing & mixed tenure schemes o Mandatory versus voluntary requirement o Negotiation/bargaining versus fixed charge o Inclusionary zoning – statute/ordinances o Financial incentives – bonuses/inducements • Dependent on nature of planning system and land & housing market • Different institutional contexts and different actors • Dependent on ideological/political context • Transferable lessons in finding innovative solutions…

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