Affordable Housing FAQ
Below are some Frequently Asked Questions (FAQ's) about Wigan Councils Affordable Housing Policy.
Why does Wigan need an affordable housing policy?
Until recently Wigan has had a surplus of affordable housing, both rented and for sale, and access was relatively easy. However, over the last four years, house prices in the borough have risen substantially, average earnings have failed to keep pace with the increases in house prices and more and more people are now unable to afford to purchase even a small terrace property in Wigan.
Demand for social rented homes in the borough has also increased in recent years, with more people are applying for Council accommodation and less properties becoming available to rent each year. There are many reasons why this has happened, including the introduction of choice based lettings, improvements to the stock to meet the Decent Homes Standard and the increases in the cost of owner occupation.
Despite the increases outlined above, Wigan borough still remains an affordable place to live when compared to other areas of the region, such as Cheshire, but this does not mean that there is no current need for affordable housing here. Our Housing Needs Study Update 2005 has identified a need for an additional 530 affordable homes in the borough by 2010.
When will the policy apply?
The policy came into force on 26th April 2006 upon the adoption of the Replacement Wigan Unitary Development Plan and will apply to any planning application received for residential development received after that date that is for 25 or more dwellings or for sites of 1 hectare or more. On applicable sites, developers will be required to provide 20% of the development as affordable housing, this may be either provided on the site or, in some cases, as a financial contribution towards alternative provision of affordable housing in the borough.
Are you expecting to meet the target, I’ve not seen any new affordable homes yet?
The planning policy has only been effective since April 2006, in this time there have been numerous planning applications submitted where the policy would apply and five planning applications have been approved with a condition requiring affordable housing provision. Negotiations are ongoing with these developers and we expect that approximately 40 affordable homes will be made available.
Up to now, only one development (Gin Pit Village, Tyldesley) has begun on site and 14 affordable units are now available for occupation. Due to the timescales involved in planning and building major residential developments it will be another year or two before substantial numbers of affordable homes are completed.
We are working in other ways to increase the availability of affordable homes in the borough. This includes the Bond Scheme, where a deposit guarantee is offered to tenants taking private rented accommodation, returning former Council asylum seeker homes to general lets and working with Registered Social Landlords to develop more homes.
By providing a range of affordable housing through a variety of routes we expect to achieve the five year target of 530 homes.
What type of housing will be provided?
Over the five year period, we aim to provide 50% of affordable homes for rent and 50% for sale.
Initially, provision on new developments via planning policy will be mainly affordable housing for sale. It is hoped that by concentrating on this type of housing we can provide an alternative to affordable rented accommodation for those that may be able to buy with some assistance thus reduce the number of people requiring affordable rented accommodation.
Properties will be offered for sale at a discount on the full market value of the home, for example if a property is worth £120,000 and is offered at a 40% discount, it will be sold at an affordable price of £72,000. The discount percentage and prices will be agreed between the Council and the house builder on each development.
As an alternative to providing new homes within a new development, we may opt to provide affordable housing elsewhere and ask the developer to contribute financially to the alternative provision. This may be re-use of existing defective or empty homes as affordable housing or new homes developed by a Registered Social Landlord.
Will there be new “Council Housing”?
Under Central Government’s current financial arrangements Local Authorities are not able to develop new homes for rent themselves but proposals in the recent Housing Green Paper may offer Local Authorities opportunities to develop new housing in the future .
Currently we work in partnership with other organisations who build and manage social rented housing. We are working closely with Housing Associations, who have development expertise and access to additional finance and subsidy, in order to build more social rented homes in the borough and with Wigan and Leigh Housing to extend their role as managers of social housing. By doing this we hope to increase choice and quality within social rented housing, whilst providing value for money for the Council.
We are currently awaiting a decision from the Housing Corporation for funding to develop 50 new social rented homes at Durham Street, Whelley in partnership with Adactus Housing and Wigan and Leigh Housing.
Where will the homes be provided?
This will largely depend upon where developers choose to develop and which sites are granted planning permission. However, we will decide whether it is appropriate to provide affordable housing on site in each location.
Despite the increases in average house prices in the borough there are variations in the performance of the housing market across the borough. We have identified areas where the market is more prone to decline – these are areas with high proportions of old terraces and Council properties, lower than average house prices and higher levels of deprivation. In these areas the provision of further affordable homes may increase or cause new problems with the existing stock and will need more careful consideration than in the areas where there is a strong housing market.
Will provision of affordable housing in certain areas lead to ghettos?
The policy aims to achieve a balanced housing market and promote mixed communities across the borough.
This is why we will consider carefully the type of provision required where the existing market is vulnerable and not necessarily provide new affordable homes in these areas.
Where affordable housing is provided within a new development, this will only form part of the development and will never predominate. We will require developers to design the affordable housing to the same design and quality as the market housing and to disperse the properties throughout the development. Thus, the affordable homes should not be distinguishable from other homes on the development.
Can the developer opt out of providing affordable housing?
No, where a decision is made not to provide affordable housing as part of the development the developer will be required to make a financial contribution of equal value to provision on the site.
The amount of affordable housing contributed by a developer may be reduced or waived only in exceptional circumstances where there are unforeseen abnormal costs associated with the development or where the provision of affordable housing on the site would compromise other planning objectives that are given priority on the site.
How will you ensure that the homes are truly affordable?
We will negotiate affordable sale prices with developers based on information on local income levels.
The Council has adopted a new allocations scheme for affordable homes for sale, this sets out strict financial criteria to ensure that the homes are affordable to occupiers. When the homes are sold we will assess potential purchasers financial resources and ensure that they are able to afford to purchase at the affordable price but are unable to buy at the full market value based on 3.5 x income (or joint income where there are joint purchasers). We will ensure that purchasers are made aware of the associated costs of home ownership and obtain mortgage advice before entering into a purchase.
Rents on social rented properties will be set at target rent levels according to a formula and increases will be controlled in this way.
Will people from other areas be able to access the affordable homes?
The qualifying criteria set in the new allocations scheme for affordable homes for sale will ensure that the homes are occupied by those with a local connection to the borough, this means they must live, work or have a long standing connection in order to be eligible.
Social rented homes will be allocated according to the existing Council Housing Allocations Scheme and Nomination Agreements with Housing Associations.
Will occupiers of affordable homes benefit financially when they re-sell their home in the future?
Purchasers of affordable homes will be subject to certain obligations in relation to their affordable home. If the home is sold in the future it must be re-sold as an affordable home and sold at the equivalent percentage discount, thus the occupier will only benefit from a proportion of any increase in value of the property.
For example, if the home described above, first sold at £72,000 (60%) of the full open market value, is resold it must be sold at 60% of the current open market value. If it is valued at £150,000 upon resale, the affordable sale price would be £90,000.
Occupiers will be given the opportunity to buy out the remaining equity at current market values at any time. This will remove the property from the affordable housing scheme but all sales receipts will be reinvested into more affordable housing.
How will Commuted sum payments be spent?
All commuted sums received in lieu of provision of on site affordable housing will be ring-fenced for the alternative provision of affordable housing in the borough.
Sums received cannot be spent on other community facilities such as roads, open space or car parking and the obligation to provide affordable housing is in addition to any other obligations to provide other community facilities on a particular site.
Sums received will be utilised to fund a variety of affordable housing projects, both large and small, throughout the borough. We intend to combine commuted sum payments with other sources of capital investments to increase the overall amount of money invested in affordable housing in the borough.
There are no guarantees that commuted sums will be invested in the area where they have been collected as there is a need to target resources to best meet the varied needs of different areas. We will also be investing in specialist housing schemes, where suitable sites are likely to be limited. However, the policy aims to achieve a balanced programme of schemes that invests in existing poor housing as well as providing new homes.