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Guide to Developing Affordable Housing Schemes

This section provides a brief overview of the process and includes information about: Obtaining Land, Community Consultation (and assessing local needs), Planning Permission and Section 106 agreements, Finance, Design and Build, Legal Aspects, Options for Legal Entities.

The Business in the Community website provides some useful guides that can be downloaded:

  • Developing new affordable rural housing
  • Making use of empty space for affordable rural housing
  • Affordable Rural Housing: Opportunities for Farmers and Landowners
  • Affordable Rural Housing: An opportunity for business


Further information can be obtained via the Contacts and Links section of this website.


Obtaining Land

Land adjacent to town and village development boundaries may be suitable for affordable housing development.

Most of this land is privately owned and can be sold for an agreed sum, it can be leased on a long term lease (99-999 years) for an initial premium and subsequent ground rent, or it can be rented.

Existing brownfield sites or empty plots within town and village boundaries are generally preferable to new developments that extend the boundaries.

All local councils are now obliged to maintain an ‘Asset Register’ of council-owned land that is suitable for affordable housing.

Other possible sources of land for affordable housing projects include church organisations, the Forestry Commission and businesses (especially those that employ significant numbers of local people).

New housing developments should be built on land that is close to local services and facilities such as settlements, shops, businesses, schools, etc. in order to minimise any additional pressure on existing local services, and to minimise the environmental impact (due to extra vehicular travel for example).


Community Consultation

It might be necessary or desirable to carry out a local Housing Needs Assessment in order to prove the need for local provision of affordable housing.

This may be a requirement of the planning permission process, but it will also assist with the project planning.

A Housing Needs Survey also gives the developer the opportunity to inform the local community about the plans and progress of the project.

It is very important to have the support of the local community. Some people might object to new affordable home in their village, for example and they may need to be reassured.

Careful thought needs to go into the preparation of the Housing Needs Survey: planning how to design the questionnaire, how it will be delivered and by who, how to ensue that the data collected is accurate and informative.

DEFRA have produced a standard housing needs questionnaire - http://www.defra.gov.uk/rural/pdfs/arh/hnsquestionaire.pdf

The 2004 Bro Ddyfi Housing Needs Survey can be found at
http://commfirstpowys.org.uk/brodyfi/downloads/Surupdatedsurvey.doc


Planning Permission

Section 106 of the Town and Country Planning Act 1990 provides for planning authorities to negotiate "planning gain" with developers who are applying for planning permission.

For example the developer may wish to build a housing estate. The planning authority may identify a need for road improvements, an extra classroom in the local school, or a play area.

The developer can expect to be asked to provide finance for these in exchange for receiving permission.

A common use of S106 is to ask the developer to provide a proportion of affordable housing as part of the housing development.

The section 106 agreement is there to ensure that the housing is made available to local people and that the housing remains affordable for local people in perpetuity. (Powys County Council)

The Exceptions Policy means that housing can be built on land that would not otherwise gain planning permission, as long as some or all of the houses are affordable.

Land which is deemed suitable for development in this way is therefore more valuable than agricultural land, but is not as valuable as it would be if it was suitable for a normal commercial development.

It is likely that local authority planning departments are becoming more flexible with respect to planning applications that address the need for affordable housing.

However, the established planning guidelines still exist and so any development proposal should pay attention to factors such as environmental impact, proximity to settlements and services, and other standard constraints.

A proposal should be discussed with the planning department at an early stage.

Contact the relevant planning departments at:

  • Powys County Council - tel 01597 826000
  • Gwynedd County Council - tel 01286 679545
  • Ceredigion County Council - tel 01545 572105
  • Snowdonia National Park Authority - tel 01766 772261


The Powys CC Affordable Housing Interim Development Control Guidance (IDCG) is available on the PCC website:


Powys County Council Planning Department have provided the following additional notes:

There would be no opportunity for cross subsidy in an affordable housing development (ie no open market housing outside the development boundary will be allowed).

The site / any designs would need to address the full range of ordinary planning considerations - policies throughout the UDP including access, land use mix, flooding, drainage, utilities, energy efficiency, biodiversity, archaeology etc.

The group/community would then need to find someway of financing the preparation of a planning application without any guarantee that the site will achieve permission. (The risk).

Preparation of the application may include the need for detailed species / habitats surveys, the need for legal input into the legal agreement to ensure that the properties remain affordable into the future / other necessary planning obligations, the need for drawings and a design statement (community involvement to influence the design) to explain how the design responds to all of the planning considerations, any flood risk work that is needed.


Finance

There are several options for financing affordable housing schemes. Also see the links section.

Personal investment: the landowner may wish to develop an affordable housing project (or a mixture of affordable and standard private housing) with their own finance.

Private capital investment: some companies are involved in affordable housing development.

Corporate Finance: banks and building societies lend money to finance commercial schemes. Some are 'ethical' investors (e.g. Ecology Building Society, Triodos Bank) that specialise in community and environmental schemes.

Social Housing Grant: is normally accessed by housing associations, and therefore there are opportunities to partner with housing associations on affordable housing projects. Private developers are now also allowed to apply for Social Housing Grant funding.

Other grants: Funding can be accessed from central funds and certain charities for social and community projects. Contact Ecodyfi and PAVO for more information.


Design and Build

There are many good reasons to build environmentally friendly homes.

They are not necessarily more expensive than conventional designs when cheaper running costs and reduced fuel bills are taken into account.

Self-build projects offer opportunities to learn new skills as well as obtaining an affordable home.

There are two types of self-build: one where you are the manager of the project and the other where you are involved with the building work.

Sweat Equity schemes offer stakes in the housing that a person helps to build. For example, if you help to build a house you can end up owning a percentage of the value of the house.

Self-build schemes can provide a great sense of achievement as well as a building designed to suit your needs and desires.

However, before embarking on a self-build project it is necessary to undertake careful consideration because they require a substantial amount of commitment and energy.

Detailed planning and rigorous project management are crucial to the success of a self-build project.

The Centre for Alternative Technology has a large free information database on many aspects of environmental living, designing and building, energy systems, products, materials and suppliers. They also run courses and provide building and design consultancy services.
www.cat.org.uk

George and Tomos Architects in Machynlleth also have experience in sustainable solutions and self-build schemes
www.georgetomos.co.uk

EcoHomes is an environmental rating scheme for homes in the United Kingdom. It is the domestic version of the Building Research Establishment's Environmental Assessment Method BREEAM, which can also be applied to a variety of non-residential buildings. In England it was replaced by the Code for Sustainable Homes in April 2007.

EcoHomes can be applied to new private and social housing schemes, as well as in the case of major refurbishment.
http://www.breeam.org/ecohomes.html

The Code for Sustainable Homes is the environmental rating scheme for housing in England. The Code specifies standards in the areas of energy efficiency, water conservation, surface water management, site waste management, household waste management, and the use of materials.

The Community Self Build Agency aims to make it possible for men and women from all backgrounds to benefit individually and collectively from being a member of a self build housing group.

See also the Links and Contacts sections.


Legal Aspects

Community affordable housing projects may need to form a legal entity to run the project and possibly own the land on behalf of the community.

Types of Legal Entity

The main options for forming an affordable housing community organisation are:

  • Limited Liability Company
  • Company Limited by Guarantee
  • Company Limited by Shares
  • Trading Arm of a Registered Charity
  • Industrial and Provident Society
  • Community Interest Company (CICs).


Both companies and industrial and provident societies may operate on a 'not-for-profit' basis - possibly as a co-operative.

This is usually achieved by ensuring that the Memorandum and Articles or the Rules have social objects, a non-profit distribution clause and provides that assets cannot be distributed to the members when the organisation winds up.

Such organisations are usually eligible for certain types of grant funding.

Co-operatives may register as an industrial and provident society or as a limited liability company. What makes them a co-operative is their 7 co-operative principles which should be found in the memorandum and articles or rules.

The Wales Co-operative Centre can give advice and they also provide a formation service to form a co-operative, non-profit company or industrial and provident society.


Limited Liability Company

A company limited by shares is the 'standard' form of limited company. Normally used for profit-making organisations they can be bought 'off the shelf' but are not normally suitable for community organisations.

A company limited by guarantee is a type of a limited liability company that is generally formed for charitable, social and other non-trading purposes.

The social enterprise status is achieved by having the correct form of Memorandum and Articles of Association.

The process of forming a Company Limited by Guarantee or a Company Limited by Shares takes place through Companies House (this website also has useful information on setting up companies).

You may form companies directly through Companies House or through legal firms.

Companies may also be registered by registration agents which are generally cheaper than legal firms.

The organisation should draft a Memorandum of Association, an Objects Clause and the Articles of Association appropriate to the organisation's aims. These can be modified from standard sets.

Companies House has excellent Guidance Booklets and FAQs as well as commonly used application forms for the formation of companies.

There are web-based company formation services around. Accountancy firms can also help with company formation.

Trading Arm of a Charity

A community organisation can operate as a trading arm of a charity. The charitable parent body operates under the Charities Commission.

Operating rules governing trading arms of charities require special care.

There are certain tax advantages to having a charitable status, but more onerous rules for management accounting and governance.

Industrial and Provident Society (IPS)

There are two main types of IPS:

   1. organisations can register as 'societies for the benefit of the community'
   2. organisations can register as bona fide co-operatives.

These types of entities are considered suitable for social enterprise and can be eligible for those wishing to apply for and receive grants.

They are Mutual Societies and as such promote goodwill and mutual self help.

They have one advantage over guarantee and share companies - they can raise funds by issuing shares (or loan stock) to the public.

The IPS is the most common type of organisation for Community Land Trusts.

The Wales Co-operative Centre can advise on the best type of Rules. They have model rules which can be adopted by community organisations.

Industrial and Provident Societies are governed by the Industrial and Provident Societies Acts 1965 - 1978 and are registered with the Mutual Societies Section of the Financial Services Authority.


Community Interest Company (CICs)

This type of company is a new legal form for companies that want to use their profits and assets for public good.

More info: http://www.cicregulator.gov.uk/

CICs are easy to set up, with all the flexibility and certainty of the company form, but with some special features to ensure they are working for the benefit of the community.

CICs report to an independent regulator on how they are delivering for the community and how they are involving their stakeholders in their activities.