Tenure mix and transfer values in an affordable housing statement

An affordable housing statement has to say three things precisely: how many affordable homes are offered and in what tenures, what size and type each one is and where it sits on the layout, and on what financial basis the homes will transfer to a registered provider. Everything else in the document supports those three answers. A statement that gives percentages without a schedule of units, or a tenure split without transfer values, will come back from the housing officer with questions that take weeks to resolve.

Start from the adopted local plan policy and the authority's housing strategy, not from the national position. Local policy is what the officer applies.

What the statement has to set out

The document is a record of an offer, so it has to be capable of being written into a section 106 agreement without further interpretation. An Affordable Housing Statement that reads like a policy essay is useless to the solicitor drafting the obligation.

Six elements make a workable statement. The total number of dwellings in the scheme and the affordable number as a percentage of that total, with the basis of the percentage stated, whether by unit, by habitable room or by floorspace. The tenure split by unit. A schedule listing every affordable unit by plot number, bedroom count, bed space count and floor area. A plan identifying each affordable unit on the layout. The transfer basis for each tenure. And the trigger points for delivery and occupation.

State the basis of the percentage explicitly. Thirty per cent by unit and 30 per cent by habitable room produce different outcomes on a scheme with large market houses and small affordable flats, and the difference is worth a great deal of money. Authorities usually specify which basis their policy uses, and where they do not, say which you have applied.

Tenure split and the policy expectation

National policy expects a proportion of affordable home ownership products within the affordable provision on most major schemes, with exceptions including build to rent and specialist accommodation. The split between rented and ownership products is set by local policy.

The rented element usually divides between social rent and affordable rent, and the distinction matters to the authority because the two have different rent levels and different effects on housing need. Where the authority's evidence identifies a shortage of social rent specifically, offering affordable rent across the whole rented element will be resisted.

Affordable home ownership covers shared ownership, First Homes and discounted market sale, and these products are not interchangeable from the authority's point of view. Shared ownership transfers to a registered provider and carries a staircasing mechanism. First Homes are sold to qualifying first time buyers at a discount of at least 30 per cent with the discount secured in perpetuity, within price caps. Discounted market sale depends entirely on how the local policy defines it, and some authorities will not accept it.

Set the split out as a short table in the statement, with the number of units in each tenure and the percentage of the affordable total that each represents. Then say which policy requirement each line answers.

Unit mix, size and distribution across the site

The mix argument is about bedroom and bed space numbers rather than unit numbers, because that is how housing need is expressed.

Take the mix from the authority's most recent housing need evidence rather than from what is convenient to build. Where the evidence identifies a shortage of three and four bedroom affordable family housing, a scheme offering the affordable requirement entirely as one and two bedroom flats will be challenged whatever the percentage. Explain any departure from the evidence with a reason specific to the site, such as a flatted block where family housing would have no private amenity space.

Size standards apply to the affordable units as they do to the market ones. State the gross internal area and the bed space count for each unit type against the nationally described space standard where the authority has adopted it, and against the registered provider's own requirements, which are sometimes more demanding on storage and circulation.

Distribution is the third element. Authorities expect affordable homes dispersed across a layout rather than grouped in a single block, with the same external materials and the same standard of amenity space and parking as the market units. Show it on a plan, cluster sizes stated, and explain the clustering where management considerations require it, which for apartment blocks with a single core they often do. Accessibility standards across the mix are worth setting out too, and access and inclusion in an equalities impact assessment covers how that evidence is presented.

Transfer values and registered provider interest

This is the section most statements leave thin, and it is the section that determines whether the offer is deliverable.

A transfer value is the price the registered provider pays the developer for the completed affordable units. It is expressed per unit or per square metre and it is a fraction of open market value, with the fraction differing sharply by tenure: social rent transfers lowest, affordable rent higher, shared ownership higher again because the provider recovers equity sales.

Three things make the figure credible:

1. Evidence of actual interest. A letter of intent or an expression of interest from a registered provider operating in the authority's area, naming the tenures and the broad terms, is worth more than any amount of assertion.
2. A stated basis. Say whether the value is a percentage of open market value, a fixed sum per unit, or a figure derived from the provider's own appraisal, and say whether it is inclusive or exclusive of grant.
3. Consistency with the viability case. If a viability appraisal supports a reduced offer, the transfer values in that appraisal and in the statement must be the same numbers.

Where no provider has been identified, say so plainly and set out the marketing undertaken. An offer with no provider interest and a transfer value above what providers in the area pay is the commonest reason an affordable housing package unravels after permission.

First Homes and discounted market products

First Homes carry their own mechanics and they are not simply a discounted market unit.

The discount is at least 30 per cent against open market value, secured in perpetuity by a planning obligation and a restriction so that each subsequent sale applies the same discount. There are price caps after discount, with a lower cap outside London and a higher one within it, and authorities may apply local eligibility criteria on income and local connection. The units are sold rather than transferred to a provider, so there is no registered provider involvement and no transfer value in the usual sense.

The statement needs to show how the discount will be secured, how eligibility will be verified at each sale, and what happens if a unit does not sell to a qualifying buyer within a defined marketing period. That last point is where obligations are usually negotiated hardest, because a developer wants a fallback and an authority wants the unit to stay affordable.

Phasing and occupation triggers

Delivery triggers are what turn an offer into housing, and they belong in the statement rather than being left to the solicitors.

Express them against market completions rather than against dates. A common structure ties the affordable units in each phase to a percentage of market units occupied in that phase, so that affordable delivery cannot be deferred to the end. Include a longstop so the obligation does not fail if the market units stall, and state when the units must be practically complete and available for transfer rather than only built.

Where the scheme is phased, set out the affordable provision phase by phase, with the cumulative percentage shown. An authority will check whether the overall percentage is met even if the first phase is market heavy, and a table showing the running total answers that before it is asked. Utility capacity can constrain phasing more than anything else, as utilities capacity evidence for a residential scheme explains.

Securing the package in the obligation

Write the statement so that each element maps to a clause. The schedule of units becomes an appendix to the agreement. The tenure split becomes a definition. The transfer values become a formula or a fixed sum with an index. The triggers become covenants.

Three drafting points save time. Define the affordable units by plot number and unit type rather than by description, so a later layout change requires a deed of variation rather than an argument. Include a mortgagee exclusion clause, because registered providers and their lenders will require one. And agree the mechanism for substituting a unit of equivalent size and tenure, since layouts change between outline and reserved matters.

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