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Feature: Shaking up the Affordable Housing secto

By Guy Horne, CEO and co-founder at HSPG

News that the government is planning on widespread planning reform that could see a Community Infrastructure Levy replace Section 106 has sparked debate across the Affordable Housing sector. Whilst many in the sector fear that the replacement of Section 106 could see a reduction of affordable homes, if this reform is implemented as the government suggests it could actually be the shake-up needed to deliver more of this vital housing.

With house prices continuing to rise at the fastest pace in 18 years and inflation reaching 7% last month, the need for affordable homes has never been more pressing. However, with government targets seeming unattainable, a simplification of planning obligations could provide a positive change for the sector and enable the delivery of this Affordable Housing.

Meeting targets

The UK government’s manifesto pledge of building 300,000 new homes each year by the mid 2020s is becoming an increasingly unlikely proposal. In fact, in order to meet this pledge, the 20 largest cities in the UK would need to increase their existing home-building targets by 35%. For example, London would need to deliver 94,000 homes a year with current plans for the decade only targeting 53,000 each year.

As a result of this unattainable target, current housebuilding goals are being consistently missed leaving many without access to safe and affordable homes. With the delivery of much needed Affordable Housing already falling by 12% over 2020/21, the need to address the provision of housing is clear.

Under the proposed levy, the government suggests that there could be significantly reduced delays and uncertainty around planning. As a result, this reform could significantly improve the provision of Affordable Housing. With housebuilding targets currently seeming unrealistic rather than attainable, this reform could be what the sector needs to enable improved delivery of Affordable Housing.

Don’t forget Social Housing

However, if this proposed levy is to truly be successful in addressing the lack of supply of housing, Social Housing must be at the heart of any changes. Over the past five years, social housebuilding has

averaged at just 6,500 homes a year. This supply is completely failing to keep pace with the more than 1.1 million people on the waiting lists for this housing, leaving many at risk of homelessness.

Equally, with the current cost-of-living crisis leaving many households facing significant financial pressures, councils have warned that the number of homeless people in England will jump by a third by 2024. As a result, the need for improved provision of Social Housing has never been greater.

Traditionally, Section 106 has been fundamental to the provision of this housing with these agreements accounting for roughly 57% of all social homes built in England. Clearly, in order for the government’s proposed planning reforms to be successful, they must put Social Housing front and centre of policy change to ensure the most vulnerable members of our society do not fall through the gaps.

Time for action

Ultimately, with the UK continuing to face a chronic shortage of Affordable Housing, the need for reform within the sector is significant. Exponential rises in house prices have refused to slow with March seeing the average house price reach a record high of £265,312, an increase of £33,000 in the past year alone. With the government setting the target of ending rough sleeping by 2024, ensuring the most vulnerable members of our communities have access to safe and affordable homes will be essential to achieving this goal.

At the same time as these house prices have risen, households across the UK are facing significant financial challenges with April seeing tax rises come into force at the very moment which the energy cap rose by 54%. With the spike in energy prices predicted to put as much as 40% of the population into fuel poverty, the economic difficulties being faced by families across the UK is clear. These combined pressures mean that the need for Affordable Housing has never been more significant.

Whilst the proposed Section 106 reforms have sparked significant discussion across the housing sector with many fearing a negative impact on Affordable Housing provision, the need for change within the sector is clear. With previous targets setting unrealistic goals that councils are struggling to meet, the need for a new solution to the provision of housing is evident. Now is the time for action and reform.