Reading Affordable Housing Policy

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:

    The most appropriate way to calculate the contribution is to calculate the     Gross Development Value (GDV) of the entire proposed development. The     financial contribution will usually be directly proportionate to the GDV of     the scheme assuming it is 100% private sales. As the financial contribution     required by an RP to fund one unit is 50% of a unit's market value, the     financial contribution equates to 50% of the proportion required under     policy. Therefore, the following will generally apply:      For sites of 1-4 dwellings, where the contribution required by policy H3     is 10%, this will equate to 5% of GDV of the development;      For sites of 5-9 dwellings, where the contribution required by policy H3     is 20%, this will equate to 10% of the GDV of the development; and      For sites of 10 dwellings or more, where the contribution required by     policy H3 is 30% and where, in exceptional circumstances, a     justification has been made for an off-site rather than on-site     contribution, this will equate to 15% of the GDV of the development.  For the avoidance of doubt, for mixed use developments, where the 'development' is referred to above, this means the new dwellings.

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.

info@s106management.co.uk

01392 840002

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