Static supply of rural affordable homes shows need for fresh ideas

12 January 2017

Supply of new affordable homes across the countryside has remained static as local authorities continue to ignore the potential of Rural Exception Sites, says the CLA.

Rural Exception Sites are a key means of providing affordable homes in rural areas. But the CLA which represents landowners, farmers and rural businesses says government data published today (12 January) shows that only 1,020 affordable properties were built in England on these sites over the past year, exposing a three-year low and highlighting the need for fresh ideas to solve the acute shortage of rural housing.

Rural Exception Sitesare small patches of agricultural land outside a village boundary that would not otherwise get planning permission for housing. Under the scheme, a landowner provides land at below market value on the basis the land is used to build affordable homes for local people.

CLA President Ross Murray said: “A core planning principle in the National Planning Policy Framework is the aim to support thriving rural communities. These latest figures clearly demonstrate this is not being achieved. Rural Exception Sites are designed to provide much needed affordable homes for the local community in perpetuity and should be used to their maximum potential. A three-year low in building rates is bad news for rural communities struggling with the cost of housing but unsurprising when coupled with the uncertainty caused by the Housing and Planning Act and the Government’s extension of the Right to Buy to housing association tenants.

“The figures also highlight large discrepancies between how local authorities are using Rural Exception Sites. Housing need is widespread but Cornwall Council has provided nearly one fifth of all affordable housing on these sites over the past five years while others have provided none at all.”

Mr Murray added the capacity of landowners to help develop the homes rural communities need is an untapped resource and that CLA proposals to increase supply carry little or no actual cost to the taxpayer.

He said: “Landowners have strong multi-generational ties to their communities and are often local employers. They wish to sustain that community for future generations, and long-term investment in affordable housing is an excellent way of doing this. However, there is not enough proactive engagement by local councils with landowners or incentives to bring sites forward.”

To help increase the supply of affordable homes across the countryside the CLA called on the Government to:

Introduce Permitted Development Rights to build affordable homes to rent on Rural Exception Sites

Rural landowners have provided land for 8520 affordable houses on rural exception sites since 2010. To encourage more, the Government should introduce Permitted Development Rights for constructing affordable housing for rent on these sites to speed up delivery and reduce the significant and often disproportionate upfront development costs.

Allow a small number of market value houses for sale on Rural Exception Sites to incentivise landowners

To make the building of affordable homes on Rural Exception Sites more attractive to landowners, the Government should allow a small number of market value homes for sale to be built on them. Currently, market housing is only permitted in strict circumstances where the money raised from their sale is fundamental to make the development viable. Permitting a slight increase in market housing would likely result in more sites coming forward.

Exempt properties provided as affordable homes from liability for Inheritance Tax

Where a landowner owns affordable rented housing, the value of this housing should be conditionally exempt from inheritance tax until the housing is sold on the open market. Not only would this encourage landowners to convert existing properties and provide new stock, but it would provide an incentive to make sure properties stay affordable through the generations.

Exempt the value of land sold for affordable homes from Capital Gains Tax

The Government could encourage the release of more land at a discount for affordable housing by exempting the value of land sold for affordable homes from Capital Gains Tax. This should also apply for 100% affordable housing or for Section106 mixed market and affordable housing sites in which the affordable housing contribution is 20% above the requirement set out in the local plan.

Click here to view the CLA’s table of comparison for the number of affordable homes built by local authority from 2011 to 2016 which shows only 1,020 affordable properties were built on Rural Exception Sites, the lowest figure since 2012-13.

Click here to view the latest statistics in full from the Department for Communities and Local Government on local authority housing statistics data returns for 2015 to 2016 (tab ‘I’).

Click here to read the Core Planning Principles contained within the National Planning Policy Framework (page 5, para.17)