Investing in social housing will help low-income households escape poverty in the current economic downturn, and change the unaffordability and unsuitability of the current housing market.
In August, the Government announced a raft of supply-side measures that intend to support the country’s economic recovery post-COVID-19. The White Paper: Planning for the Future was one such measure. As part of the Government’s drive to ‘Build Back Better, Build Back Greener and Build Back Faster’ the White Paper proposes changes that usher in the most significant reforms to the planning system since it was established following the end of the second world war.
It is right for Government to recognise that land and planning play a big role in the delivery of housing; their ambition to reform the planning system so that it is simpler and more effective in delivering homes quickly, with greater community engagement, is welcome.
However, it is important that proposed reforms to the planning system safeguard the route to delivering genuinely affordable homes, maximise the amount that can be shared through development value, and also strengthen and promote the delivery of social housing - particularly much needed homes for social rent
As the White Paper outlines, S106 obligations currently deliver a significant amount of affordable housing. In 2017/18, S106 obligations accounted for around half of all social housing net additions in England. Despite social rent being a small slice of the proportion of affordable housing delivered through S106 obligations, planning obligations currently account for almost 60% of social rent homes.
It is therefore welcome that the White Paper commits to delivering at least as much, if not more, on-site affordable housing as at present through the new Infrastructure Levy. This is the right decision, but in order to realise this ambition it is necessary to ensure that any new levy is well designed and puts the delivery of social housing at its heart.
To achieve this, we have set out the following policy principles and recommendations that the Government should follow in reforming the system of developer contributions.
- The new Infrastructure Levy should be designed to raise a greater proportion of development value and use this to deliver more social housing, particularly homes for social rent, than under the previous system.
- The reformed levy should sit as part of a wider social housing strategy which coordinates the various funding mechanisms for social housing. This will be key in determining the role that the Infrastructure Levy plays alongside grant funding and how different funding mechanisms are utilised across the country. The latter is particularly important in ensuring that the proposed new levy does not compound existing regional inequalities.
To ensure it is most effective in delivering new social homes where they are needed the Infrastructure Levy should:
- Apply to new supply brought forward through permitted development rights.
- Continue to deliver on-site affordable housing but retain an option for local authorities to opt for an in-kind payment where this best meets local needs. If an in-kind delivery approach is taken, homes delivered should meet space and accessibility standards.
- Ring-fence affordable housing provision in order to meet local housing need requirements.
- Reporting of Infrastructure Levy contributions raised and spent should be a requirement and made publicly accessible to all to ensure transparency.
The Government also needs to reconsider its short-term changes to the planning system that propose a minimum of 25% of all affordable housing units secured through developer contributions should be for First Homes. JRF’s briefing earlier this year showed that using developer contributions to fund First Homes could divert significant funds away from much-needed social housing.
What is more, relying on the planning system to deliver social rent homes is not enough, especially at a time where the current shortfall of social rent homes stands at almost 84,000 a year. The current pandemic and its economic fall-out mean that developer contributions and council building plans could be vulnerable in the event of a housing market slow down.
Given the current need for more affordable housing of all types and the significant shortfall in social rent homes, the Government’s ambition must go further to help households in poverty escape its grip, and to protect those at risk of being pulled into poverty through the current economic crisis.
By also ensuring we invest in social housing, we can help to change the current economic downturn, and the unaffordability and unsuitability of the current housing market for low-income households.