Reading adopted their local plan in November 2019, it is said to ‘guide development in Reading… it will play a decisive role in how the town evolves over the next two decades’.
Regarding their Affordable Housing Policy (H3 of the Local Plan), there are different expectations based on the number of dwellings being created in a development. For those providing 10 or more units, 30% is required to be AH, 5-9 units is a financial contribution equivalent to 20% so that it can be built elsewhere in the borough, and 1-4 units will provide a financial contribution equivalent to 10%.
Usually, 10+ units would be expected to provide the affordable units onsite; however, under exceptional circumstances there could be an opportunity to provide this % of AH as a financial contribution off-site.
According to Reading’s Affordable Housing SPD (March 2021),some developments of 10+ units may find a surrogate site in which they can deliver their affordable housing contributions instead of on the proposed development site. However, it will still be expected to provide the same amount of affordable dwellings as expected beforehand.
This section from the Reading Affordable Housing SPD below shows the basic calculations that the Council will carry out to determine what financial contribution is to be expected from the developers that do not have on-site provisions:
When a development provides a financial contribution, the combined sum of in-lieu payments will be spread across different affordable housing schemes with the whole of Reading. The annual Infrastructure Funding Statement sets out how the financial contributions provided by these developers has been spent. Across 2020-2021 the borough of Reading spend a total of£1.973million of S106 contributions, it was spent on multiple different things ranging from affordable housing, education and transport.
Previous Work in Reading
Proposed development = Demolish the existing building and erecting a new building to create 4 X high specification apartments. Proposes a combined GIA of 283m2 of residential accommodation.
Policy implications/requirements = 1-4 dwellings should provide a financial contribution equivalent to delivering 10% of the units as affordable housing off-site.
Expectation on Affordable Housing = 10% results in 0.4 dwellings, Council seeks 5% of GDV, 5% of £1,240,000 (£62,000).
Result = The residual site value was determined to be less than the benchmark land value, therefore resulting in a negative figure and only allowing a profit of 0.56%, which is much lower than the targeted 20%. The contribution towards affordable housing was dismissed as it was not deemed viable.
Please get in touch with us if you have any problems with the Reading Affordable Housing Policy impacting the viability of your development.