Developers are avoiding the building of tens of thousands of affordable homes in rural areas where they are most needed because of a legal loophole in planning laws, a new report suggests.
An analysis of eight rural councils over a 12 month period has found that half the affordable homes that they were required to build were lost when developers used viability assessments whereby they can cut out affordable homes from the development if building them would reduce their profits below 20%.
The report from the Campaign to Protect Rural England (CPRE) and charity Shelter says this shows the policy is having a serious impact in the countryside as well as towns and cities.
The report suggests that it means developers are over paying for land and recouping the costs by squeezing the affordable housing commitments, a tactic often used by developers building big housing schemes.
This comes after Shelter carried out similar research on housing lost to viability assessments in urban areas. Together, the research paints a national picture of the affordable housing drought right across the country.
Shelter and CPRE are calling on the government to use their current review of planning rules to stop developers from using this loophole to wriggle out of providing the affordable homes that communities desperately need.
‘With this new research, we can see for the first time the true scale of our housing crisis and it’s not just blighting cities but our towns and villages too. Developers are using this legal loophole to overpower local communities and are refusing to build the affordable homes they need,’ said Polly Neate, Shelter chief executive.
‘The Government should use their current review of planning laws to close this loophole and give local communities the homes they really need. This process must act as a critical turning point in the government’s attitude towards affordable housing in this country,’ she added.
According to Crispin Truman, CPRE chief executive, a lack of affordable housing is often seen as an urban problem, with issues of affordability in rural areas overlooked. ‘It cannot be ignored any longer. Too much of our countryside is eaten up for developments that boost profits, but don’t meet local housing needs because of the viability loophole,’ he said.
‘CPRE is calling for urgent action from the Government to close the loophole to increase the delivery of affordable housing, otherwise rural communities risk losing the young families and workers which they need to be sustainable,’ he added.
One area covered by the study is the South West where high housing demand from people seeking to buy second homes and people looking for a place to retire results in homes often selling at more than nine times average earnings for the area and pricing out local people.
The report says that despite this huge affordability gap developers have still been able to exploit the loophole to cut the number of affordable homes that would have been built if they had stuck to the local authority policy.
The report reveals that Cornwall missed out on 232 affordable homes where viability assessments were submitted so that these sites will deliver just 26% affordable housing when they would have delivered 40% if local policy had been followed.
In one case affordable homes were eliminated from a Redruth development on the grounds it was not financially viable, reducing the quota from 40% of the development to zero yet the land was advertised as an attractive development opportunity with a guide price of £1.3 million.
