Living the Dream? Experts on 'Housing' are hard to find, so will use this as a framework of asessment. If Khan can, pan the can : http://www.planningresource.co.uk/article/1394787/why-khans-affordable-h...
"A promise to ensure that half of all homes built in London are "genuinely affordable to rent or buy" formed a key plank of Labour candidate Sadiq Khan’s successful bid for the mayoralty. Khan’s manifesto said his affordable housing drive will be spearheaded by Homes for Londoners (HfL), a new team that will bring together mayoral housing, planning, funding and land powers to raise investment, assemble sites and commission and build homes." HfL v HoL, Heckles. The bill received Royal Assension on 13th May. Like it or lump it. Wot are the Challenges? https://www.youtube.com/watch?v=H7_sqdkaAfo
HfL’s remit will include council and housing association homes for social rent and "London living rent" homes with rents tied to local wages. Londoners wishing to buy have been promised "first dibs" on "part-buy part-rent" homes on public land and homes on publicly-owned brownfield sites." Ah, so 'first dibs' ... locals first. Oranges & Lemons, to St Ives, strives - define a Londoner? Mebbe its becos I'm a ... ah, so. Putney.. putting on the Ritz: https://www.youtube.com/watch?v=FxYw0XPEoKE
"Elsewhere, the new mayor signalled guidelines for the use of his call-in powers to maximise affordable homes in new developments, increase transparency around viability assessments and enforce "use it or lose it" regulations to make sure planning permissions are delivered on." More jargon ... tis a juggernaut 'Elsewhere?' the NPPF are big on 'viability assessments' see here : http://planningguidance.communities.gov.uk/blog/guidance/viability-guida...
And therein lies the Catch 22. Viability - wot does that mean? A housing development needs to be deliverable, viability + costs = deliverable. Any new development is not to be thwarted at the planning stage by obligations. (Eg S106 & contribution to affordable housing). Development must provide a competitive return to a landowner & developer. A+B = C ... apples n pears = stairs. First steps.
Definition of 'affordable housing' : - social rented, intermediate, eligibility needs of householders not met by the housing market.
Social rented has (up til now) been owned by Local Authorities. Affordable Rent = subject to 80% of the market rent.
Intermediate :- Housing that is for sale/rent based on affordability, defined as 3.5 times gross household income. Eg in Skardiborg the median house costs £135K the EPRN = £24,908. The local intermediate to house price ratio is 5.4.
So wot has changed? Starter Homes, included as affordable, UK wide 200,000 by 2020 to be developed at 80% of market rates. And herin lies the challenge - who is going to build them? Is it viable? The 20% saving is from removal of S106 & CIL promises. Starter Homes are also limited to eligibility - first time buyers, over the age of 23 and under the age of 40. Add in the 5 year rule and with an option to buy after 3 years... Pickled Times : https://www.gov.uk/government/news/young-first-time-buyers-can-register-... don't all rush at once : https://www.youtube.com/watch?v=h9rCobRl-ng
Oh, Ok who is going to pay for this? Second home owners : https://www.gov.uk/government/news/help-to-buy-new-announcements "From 1 April 2016 people purchasing additional properties such as buy to let properties and second homes will pay an extra 3% in stamp duty" And, further who is going to build them? "£2.3 billion will be spent on building 200,000 Starter Homes over the next five years. This money will be given to house builders to provide a 20% discount on new homes."
Oh that seems fair, cough, obviously its not that simple, running before we can walk? Talk the talk "Right to Buy will now be extended to housing association tenants during 2016, giving 1.3 million households the chance to become home owners."
Mind the gap ... meet the criteria? https://righttobuy.gov.uk/. Meanwhiles, LA supported Housing Association tenants who are eligible to buy at discount also reduces the housing stock. But, thats OK in 5 years time there will be housing for all... Mebbe. Perpetuity - big word. Perpetuity - for the lifetime of the scheme. The five year rule - price reduction will last for 5 years - ergo buy your start home within 5 years - reduces the housing stock. https://www.youtube.com/watch?v=ewxmv2tyeRs
Ah, so : Perpetuity - clear as mud : http://www.planningresource.co.uk/article/1376039/nppf-consultation-affo... (LA's can define 'perpetuity' at their own peril)
On the other side of the 'challenge' is the house builder, constructive construction: The Residual Valuation Moles. Moles or models, Moles: The value of a development is dependent on 'return', costs of land & development and mitigation (policy input/obligations)
Residual Land Value - one of the main factors is land prices, this is in part flexible and the possible only variable*. (Land prices are major factors, often inflated by the planning process. Though overvaluing land can be haphazzard - in short a Land Value is what the market considers it is worth, AKA what the buyer considers it is worth. Under or over valuation the Land value contributes to the Gross Development Value = construction + fees + finance : Residual Value. A return to viability. Site specific assessments are needed to establish a developers view on 'return' often between a scoping range 0 - 50% it is the LA's job to pin point or add some realism into an expected dim case of viability. GDV's vary according to areas; eg Scalby has a GDV of 2400m2 over an average in Skardiborg of 1500m2 based on a typical 25 house development. A quite staggering differential based on a change of assumption. Eh? Do they just make it up? Nope, tis all brilliantly matrixed and modelled using RICS.
So, erm what has changed to challenge the construction companies? Facts & Figures: Building Cost Info Specifics - Since 2011 the National House Price Index - house values have risen by 7.6%.
Meanwhile the costs of housebuilding have risen by 30% (recognised as a direct impact caused by the recession with efficiencies being made througout the supply chain creating shortages og both materials and direct labour costs) (ergo should too many constructions projects be permitted, the costs rise; that old fave 'supply and demand' - imported goods and labour cost more. (nobody moaned about Polish skilled tradesmen pre-recesession :-)
In 2011 the cost of building a house £761 sqm. At 2016 £ 993 sq m. = 30% increase. This is a fixed national figure. A typical 25 dwelling development has an increased cost of £522,000. (7.6% increase v 30% increase in costs - tis a no brainer) So how to adjust this locally, the Land Registry holds a database of sale values, LA's can only use comparables on new builds. An average 3 bed = 90 sq m, 4 bed = 115sq m so the average/approx new house build is calculated at £90k.
Ah, so ... add on : professional fees 6-8%, finance costs 6% (interest rates), external costs ie roads, basic utility infrastructure and residuals average 14.21% - SBC uses 15%, contingency at 3-5% (3% greenfield, 5% brownfield), marketing 3% etc etc is it any wonder that construction companies are resisting, lol - blames the EU : http://www.thenorthernecho.co.uk/business/14491362.Construction_suffers_...
Fun innit? Makes that bedist in Bracknell very comforting ... Anyhoos as costs of builds increase in high build areas (supply and demand) a GDV of 10% can be assessed as a more true view than a 0-50% as some developers would have believed. LA's are not as daft as they appear. It is the LA's role to secure as much affordable housing as a developer can possible bear/bare. Yet perhaps explains the Govts. need to assist with 20%. Do the math.
On top of all that, grant funding for housing development has changed, formerly the HCA contributed to affordable housing - that is no more. So, with current culmative Govt. Housing policies, compounding and in many areas in conflict with construction development (reducing returns) tis all a bit of a mess, especially for those in need of 'affordable housing'.
To sum up - pre recession a developers profit was expected to be 15-25%. As a contrubition to affordable housing SBC accepts a 20% return but uses 18% where affordable provided. An Inspectors rule of thumb allows 15-20%. Either way the Law now says housing developments have to be 'viable'. Local planning policy is shaped by evidence, best not mention the shifting sands.... https://www.youtube.com/watch?v=wNIcVTmUSOU.
Rainy days ... stuck in a rut? Who cares ... Live the dream. If anyone can make sense of the 'housing crisis' mebbe Sadiq Kahn can. Cornerstones. The answer is obviously (as previous). Anyhoos I is not the Chancellor of Exchequers ... just living the dream :-) with some urban myths busted along the way... nah can't sing or dance either hey ho : https://www.youtube.com/watch?v=sWa5vE4MUpU
Catch 22: Back to the experts :
"Nick Belsten, a director at Indigo Planning, warned that "very few" schemes in London are able to deliver 50 per cent affordable housing," so viability will become even more of an issue".
Ian Anderson, executive director at consultancy Iceni Projects, said: "Unless the right policy framework is in place, there is little chance [of meeting the target]. Landowners will not release land at half price simply because the mayor is committed to affordable housing. They will retain the existing use or develop for uses that do not attract affordable obligations, such as retail, leisure, office, hotel or student accommodation."
Simon Ricketts, planning partner at law firm King & Wood Mallesons, doubted that the 50 per cent target was achievable, citing viability constraints, high existing use values, construction costs, Community Infrastructure Levy non-housing demands and the lack of public finance for traditional forms of affordable housing.
Ricketts said the government’s requirement for 20 per cent of homes on major developments to be provided as discounted Starter Homes for first-time buyers would "cannibalise" the affordable housing component of most schemes, leading some boroughs to consider increasing their overall affordable targets beyond 50 per cent. "Such policies would need to be consistent with the London Plan and pass examination, so it will be a slow process. Even then, they would have to be implemented pragmatically, or development will not happen," he said.
Anderson said pressure to increase boroughs’ targets would not make much impact in inner London, where many councils already require 50 per cent affordable housing. "The real difference could be in other areas of London, particularly in locations around railway stations and other infrastructure," he said. He also warned that the mayor’s commitment to protecting green belt will do little for affordability. "Applying a 50 per cent affordable target to green belt land is viable because obligations can be built in before it is allocated, while there is clear daylight between existing use and development values," he said.
Andrew Simpson, a planner at London consultancy Dominic Lawson Bespoke Planning, said the mayor’s team will need to explore different ways of treating public land values to subsidise affordable housing, and should be open to different forms and definitions of affordability. "Khan will have to put a rocket under public bodies that are slow in bringing sites forward," Simpson added.
Belsten suggested that a fixed tariff of around 25 to 30 per cent affordable housing for all develop-ments would create more certainty. "If developers and landowners know there is a clear rate, they can factor it into their bids for sites," he argued. But Ricketts said a fixed tariff would mean losing out on some affordable housing in schemes that could support a higher proportion, while development would stall on sites where even the lowest tariff rate is unachievable."
Wishful thinking ... https://www.youtube.com/watch?v=8RhOTFjWcy4
Mustav got their UK and Ukraines mixed up again ... Bless.
Grrrr ... Grunt. https://www.youtube.com/watch?v=m3-hY-hlhBg
PSS fat chance of the Womens Refuge being built ... ergo no chance of an all inclusive refuge.
Next Up - Houses of Multple Occupation v Land Banking.
* Missed a few bits out but will update as n when, but get the jist. Less is more .... make it up as we go along :-) Welcome to The Twilight Zone du du dooo X