Practical Conveyancing - PPS3: a change of emphasis

Planning Policy Statement 3: Housing (PPS3) has been issued to replace Planning Policy Guidance 3: Housing (PPG3) and Circular 6/98 ‘Planning and affordable housing’, taking effect from 1 April 2007. PPS3 is very similar to its consultation draft of February 2006, which was at the time criticised for increasing regulation in real terms without putting forward commercial solutions for encouraging housebuilding, in order to achieve the government’s 200,000 per annum new homes target.

(Arguably, requiring high levels of affordable housing may have the effect of driving down land values to the point where retention as commercial/industrial is the more attractive option. This will be particularly the case where there are additional development costs, such as the remediation of industrial contamination.)

Key points

At first glance, the new PPS3 is very similar to PPG3 and much of the difference lies in a change of emphasis. The key points are as follows:

• PPS3 contains the same emphasis on developing upon brownfield land (the 60% target remains). However, allowances will be made in rural areas where affordable housing may impinge on greenfield land.

• Under PPG3, county councils had a strategic role in setting housing targets, and the need assessment for affordable housing was made at local level. Under PPS3, the Regional Spatial Strategies will have the key housing role, assessing demand and need, as well as suitable locations and overall targets. Local authorities will then interpret this into their local development frameworks (LDFs).

• The projection of housing requirements is still a long-term game (15 years), but the emphasis has shifted to LDFs assessing provision in the first five to ten years of that 15- year period. Windfalls can no longer be included. The emphasis is on planning, monitoring and managing housing supply.

• The overall national density is 30 units per hectare, but the PPS allows a lower threshold, and encourages a range of densitites, all at or below the threshold. In reality, this is likely to have the aggregated effect of lowering the overall density of new developments.

• Payments in lieu of on-site affordable housing provision will only now be allowed where such payment can be ‘robustly justified’. This is a more emphatic reiteration of the position in PPG3. ‘Affordable housing’ is now a clearly defined term, as is ‘social rented’ and ‘intermediate’ housing (the latter being sharedequity housing or low-cost housing provided by a registered social landlord (RSL), and excluding developer- provided low-cost housing). (See box overleaf for Annex B of PPS3, where these terms are defined.) Worryingly, the PPS indicates developers should consider providing low-cost housing alongside market housing (and therefore in addition to any affordable housing requirement).

• Mix is important to both PPG3 and PPS3 but the emphasis in PPS3 is on achieving an overall mix of occupancy, which may well have the effect of some sites bearing proportionately more affordable housing to make up for a shortfall elsewhere.

• The threshold for affordable housing provision used to be one hectare (0.5 hectares in London) or more than 25 units (15 units in London). Under PPS3, the threshold is simply more than 15 units. Local authorities are encouraged to consider lower thresholds if ‘viable and practicable’.

• Local authorities must consider the ‘risks to delivery’ of housing, including funding and economic viability. This goes further than Circular 6/98.

• Previously, local authorities were instructed to be neutral on the tenure of affordable housing. In practice, they have proved quite demanding, including in relation to the choice of housing association (or RSL), although that too in policy terms has been strictly outside their brief. Under PPS3, LDFs are to set targets for different types of affordable housing in their area. Some flexibility will be required though, as non-RSL affordable housing providers may now receive public grants under the Housing Act 2004.

• The sustainability test in PPS3 emphasises availability of the site (within the next five years) and how achievable the housing delivery is, alongside proximity to infrastructure and transport. The change is one of emphasis rather than content. There is new emphasis on achieving a low (ultimately nil) carbon footprint, and quality design.

• The recommendation to local authorities to consider recycling redundant employment land as housing in the 2004 Employment Land Reviews: Guidance Note is reiterated in PPS3.

Conclusion

The new PPS3 is shorter than the old PPG3 and as such achieves its aim to be leaner and tidier. However, the differences remain ones of emphasis and weight rather than significant reform of policy. Lawyers will welcome clear direction on nomenclature and definitions, but developers will no doubt be left wondering how more, cheaper housing can be provided against the environmental and affordable housing requirements set out in the policy statement. It is important to note that any applications which have not been determined by 1 April 2007 (even if they have received a committee resolution to grant) will be determined under PPS3 not PPG3 and Circular 6/98. The requirements on density and affordable housing may therefore be more stringent. Again, developers should note that any permissions not implemented by 1 April 2007, applications for fresh permission or applications for renewal of an old permission will be determined under the new policy.

Affordable housing defined

Affordable housing is: Affordable housing includes social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market. Affordable housing should:

• meet the needs of eligible households, including availability at a cost low enough for them to afford, determined with regard to local incomes and local house prices; and

• include provision for the home to remain at an affordable price for future eligible households or, if these restrictions are lifted, for the subsidy to be recycled for alternative affordable housing provision.

Social rented housing is:

Rented housing owned and managed by local authorities and registered social landlords, for which guideline target rents are determined through the national rent regime.The proposals set out in the Three-year review of rent restructuring (July 2004) were implemented as policy in April 2006. It may also include rented housing owned or managed by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Housing Corporation as a condition of grant.

Intermediate affordable housing is:

Housing at prices and rents above those of social rent, but below market price or rents, and which meet the criteria set out above.These can include shared equity products (eg HomeBuy), other low-cost homes for sale and intermediate rent.

These definitions replace the guidance previously given in PPG3 and Circular 6/98.

The definition does not exclude homes provided by private sector bodies or provided without grant funding.Where such homes meet the definition above, they may be considered, for planning purposes, as affordable housing, whereas those homes that do not meet the definition – for example,‘low cost market’ housing – may not be considered, for planning purposes, as affordable housing.

There is further guidance on eligibility for affordable housing, recycling of subsidy, specific features of social rented and intermediate affordable housing, and the application of the affordable housing definition, in particular with regard to the extent to which non-grant funded and private sector low-cost housing products meet the definition in the Affordable Housing Policy Statement.

The terms ‘affordability’ and ‘affordable housing’ have different meanings.‘Affordability’ is a measure of whether housing may be afforded by certain groups of households.‘Affordable housing’ refers to particular products outside the main housing market.