When property developers apply for planning permission for their future builds, it has been common practice that when they are building more than 10 homes that they must provide a certain proportion of affordable housing in those developments (typically 25-40% of all units in a scheme – Leicester aims for 30%). This obligation on the part of property developers to the wider community is encoded in Section 106. As Leicester City Council’s web site puts it:
“Developer contributions are often referred to as Section 106 planning obligations, which are a way of making sure developers contribute towards the infrastructure and services needed to make proposed development acceptable.”
Based at the University of Northampton, housing expert Dr Bob Colenutt explains that the “development industry has long resented this requirement, saying it reduces land value and profit”; no surprise there.
“Now [property developers] have a new weapon to use – and are using it to devastating effect. The National Planning Policy Guidance 2012 requires planning obligations, local plans and Community Infrastructure Levy charges to be subject to “viability assessment”.”
“The methods of the developers and their agents are simple. They undervalue the final development by making the costs of the scheme artificially high. Costs of construction, fees, contingencies, and finance are put at the high end of the range, while sales and rental value are at the lower end of the range. Bingo! The scheme is no longer profitable enough to carry the amount of affordable housing required by the local authority. This is all carefully obscured by using complex spread sheets and so-called viability models, with smoke and mirrors about assumptions, reliability of input data, and their own benchmark profit levels.”
It is of course of the utmost importance that our Council opposes such disgusting and manipulative practices being used by fat-cat businessmen at our expense.
In 2013 the Bureau of Investigative Journalism demonstrated the extent to which property developers continue to avoid contributing towards affordable housing. Their report “established that 60% of the biggest housing developments currently in the planning system are falling short of local affordable housing targets, preventing thousands of cheaper homes being built.”
Here the Bureau of Investigative Journalism provided a number of examples of the manner in which property developers were short-changing the public here in Leicester. The first culprit identified was Urban Rhythm, which is a division of Northamptonshire-based luxury home developer Hazelton Homes. It turns out that they got away with making zero commitment to providing affordable housing when they built 172 high quality homes on the Wheatsheaf Works – the site of what was the largest footwear factory in the world when it was constructed in 1891.
The Bureau of Investigative Journalism then pointed out that when Barratt Homes built 726 housing units on the Bede Island South site, only 22 affordable units were provided, just 3% of the total stock. This is particularly shocking when one consider the massive profits that accrue to Barratt Homes (see “Why is there a Housing Crisis?”).
Finally another housing development highlighted was one that was undertaken by Westleigh Developments in partnership with Leicester City Council on the site of the former British United Shoe Manufacturing company (in Belgrave) which ended up providing 1190 housing units in Abbey Meadows, with only a 10% commitment to affordable properties. According to the Council it seems that the affordable homes were primarily funded by the ever dwindling Government grants available for such purposes, with no contribution coming from Westleigh Developments.
But it seems that even when Westleigh Developments win contracts to work on affordable housing projects pure and simple they still fail to pay their way. This relates to their ongoing development with the East Midlands Housing Association (Emh homes) on the 13-acre former allotment site off Saffron Lane. First our Council gave public land away for just £1 and then, as the Leicester Mercury reported in December 2014, “developers Westleigh, who will build the homes, were unable to make the usual financial contributions to provide open spaces and education.”
As it turns out the only member of the seven-strong Council planning committee member “to vote against the scheme” was TUSC councillor Barbara Potter. As the Mercury article continued: “She said she was shocked there was to be no financial contribution to local schools and questioned whether the land should be sold for £1.”
Cheap high quality housing is vitally needed in Leicester, and while “affordable housing” provision (which is often actually unaffordable to most people) is not enough on its own, our Council should fight to ensure that private property developers pay their way and make a substantial contribution towards funding provision of such housing. In the meantime, political groups like TUSC and the Socialist Party will continue to lend their support to trade union activists in the housing sector who rightly call for a Government that will launch a mass Council house building program.