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The Contribution of Housing, Planning and Regeneration Policies to Mixed Communities in Scotland

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3 Findings

Mixed communities in the delivery of new housing

3.1 New social housing delivered by public housing grant alone is much more likely to be located in deprived neighbourhoods than social housing secured with developer contributions under Section 75 agreements.

3.2 There are two main sources of investment in new social housing in Scotland. One of these is grant from central government funds, which is allocated to developing housing associations by a tender process for the delivery of sites. The other is Section 75 agreements between private developers and local authorities, under which the developer makes a contribution of land, housing, money or infrastructure as a condition of planning permission. In practice these two sources are often combined in a single development. For example, a developer may contribute a parcel of land within a larger site, and grant funding is then used to build public housing on that land.

3.3 The importance of the planning system in delivering land for new social housing has grown. In the four years 2005/06 to 2008/09, planning permission was granted for just over 26,000 affordable dwellings. Of these, around three quarters were entirely publicly funded, with the remainder having some developer contribution 5. The proportion coming from developer contributions has increased slowly over the past four years as local authorities are making more use of planning policies to secure social housing. Between 2005 and 2009 the number of planning permissions which required contributions for affordable housing rose from 126 to 541 ( AHPC dataset). This is not explained by there being more private sector housebuilding: the number of starts remained broadly level 2005 to 2007, and fell off in 2008. Therefore it must be down to the increased willingness of local authorities to use introduce and enforce these powers.

3.4 A crucial question is how, overall, new social housing secured through these two avenues is contributing to mixed communities. It is important because affordable housing investment is a heavily funded programme which potentially affects all parts of the country. Total public funding to the Affordable Housing Investment Programme was £584m in 2007/08; developer contributions are additional to this 6. This is large relative to, for example, total central spending on physical regeneration, which is of course concentrated in particular areas.

3.5 Planning data show that new affordable housing through developer contributions is located in quite different neighbourhoods to that funded by grant. Of the wholly publicly funded units, 44% were located in the top 20% most deprived areas by the Scottish Index of Multiple Deprivation ( SIMD) 2009, compared to 9% of those with developer contributions (see Chart 3.1). The increasing use of the planning system to secure affordable housing is also increasing the amount of new social housing that is built in less deprived areas.

Chart 3.1 Planning permissions for affordable housing units 2005-2009, by SIMD 2009 deciles

Chart 3.1 Planning permissions for affordable housing units 2005-2009, by SIMD 2009 deciles

Source: Affordable Housing Planning Consents dataset

3.6 There are disadvantages to using planning records as a data source. One shortcoming is that planned dwellings may be delayed or not built at all. This could be particularly relevant recently as private developers elect not to start work on sites with planning permission until the market improves; associated affordable housing may also then not go forward. Also, housing investment managers take advantage of incidental opportunities to acquire properties for social rent that were not built for that tenure. Such properties are seen as offering good value with the proviso that they meet the somewhat higher space standards demanded for social housing.

3.7 Another way of looking at trends in the location of new social housing is through SCORE, which collates the majority (85%) of lettings of RSL housing. Each letting record shows whether the property being let is new to the social sector - normally by new build - as well as the location of the property. Chart 3.2 shows that in the past seven years, between 40% and 60% of first-time lettings of new properties were in areas in the top two deciles of deprivation. Although 2008/09 has the highest proportion in deprived areas, there is no discernible trend over time, confirming the finding from planning records that there are strong tendencies for new social housing to be located in existing deprived areas.

Chart 3.2 First-time lets of new social housing, by deprivation deciles of property location (2002/03 - 2008/09)

Chart 3.2 First-time lets of new social housing, by deprivation deciles of property location (2002/03 - 2008/09)

Source: SCORE

3.8 This indicates that Section 75 is contributing to mixed communities. Interviews with local practitioners showed that this is partly a result of where land is available and affordable for RSLs doing grant-funded development. Land in more deprived and less "desirable" locations is typically considerably cheaper than in less deprived areas in the same wider locale, enabling more efficient use of limited grant. Moreover, in built-up areas, there may be an absolute shortage of land available for development, and local authorities working in such areas are particularly keen to get on-site contributions of land or housing through Section 75. One way in which RSLs may be able to acquire land is from local authorities; local authorities sometimes have vacant sites available which adjoin areas with large amounts of existing social housing. Clearly, development of social housing on such sites will tend to place it near existing areas of same-tenure dwellings. However, this source of land for development of affordable housing may come under pressure where local authorities undertake their own development programmes again, as a small number have in recent years started to do.

Section 75 payment and land contributions

3.9 A growing proportion of Section 75 contributions are being made as commuted payments rather than in kind, as completed dwellings. Local authorities are more likely to accept commuted payments in lieu of affordable dwellings on development sites which are located in less deprived areas. This reduces the contribution of Section 75 to providing new social housing in non-deprived areas, and so to mixed communities.

3.10 Local authorities have discretion not only in whether they levy Section 75 payments, but also in negotiating the form of the contributions with developers. Developers may satisfy their obligations by providing completed dwellings as affordable housing, as shown in the charts above. However, they may instead make payments in cash to be used for affordable housing elsewhere in the district ("commuted payments"), or contribute land. The land contributed may be part of the development site, or come from the developer's land bank somewhere else in the district; in either case, the expectation is that grant funding will be used to erect affordable housing on the contributed land. These different kinds of contributions have different implications for mixed communities. Contributions of dwellings mean that the new affordable housing will be close to new private housing, and likely in a non-deprived area. Commuted payments are likely to be used to fund social housing in the more deprived locations typical of public-funded projects. Where the contribution is land the implications are hard to assess.

3.11 Given this, it is significant to find that a falling proportion of contributions are being made as on-site provision of affordable housing (Table 3.1). This table shows the Section 75 contributions assessed for all private housing development sites outside the most severely deprived areas in the bottom two deciles. In 2005/06 fewer than a half the sites had only commuted payments or, much less often, land contributions; the majority of agreements involved on-site provision of affordable housing. In the two most recent years, with much greater activity overall, fewer than a quarter still included contributions of units. This trend may to some degree be undermining the contribution of Section 75 to mixed communities in Scotland.

Table 3.1 Private housing sites in non-deprived areas (3rd to 10th SIMD deciles) where a developer contribution to affordable housing has been made (2005-2009)

Sites in non-deprived areas with developer contribution to affordable housing

Of those sites, those with no units contributed, only land or payments

% with no units

2005/06

120

53

44%

2006/07

244

156

64%

2007/08

480

366

76%

2008/09

525

399

76%

Source: Affordable Housing Planning Consents dataset. Note that figures are numbers of sites, not dwellings.

3.12 The implications of this are clearer when one looks at the location of development sites which are permitted to make contributions of commuted payments or land rather than on-site dwellings (Chart 3.3). The bulk of planning proposals assessed for Section 75 contributions fall in the middling deprivation deciles - but these developments in non-deprived areas are less likely to include affordable housing on the site. Local authorities are permitted to assess for each site whether it is reasonable and viable to expect on-site affordable housing as the contribution; this assessment is negative much more often where the private housing is proposed in less deprived neighbourhoods.

Chart 3.3 Private developer sites where a developer contribution to affordable housing has been made by SIMD deciles (2005-2009). Showing separately those with dwellings contributions and those with other contributions.

Chart 3.3 Private developer sites where a developer contribution to affordable housing has been made by SIMD deciles (2005-2009)

Source: Affordable Housing Planning Consents dataset.

How much affordable housing is secured through the planning system?

3.13 There are large differences between local authorities in how much affordable housing they secure through the planning system. Areas with greater demand for housing are able to seek larger contributions from developers, but this does not explain all of the variations between authorities.

3.14 The above findings suggest that affordable housing secured with the assistance of Section 75 agreements is more likely to be located in less deprived areas. Local planning authorities have the power to set out their expectations for Section 75 agreements in their local plans, and planners working in local authorities have discretion in the negotiation of each planning application. There is wide variation in how Section 75 is being used in practice, relative to the benchmark of 25%. In recent years, a small number of local authorities have secured over half their planned affordable housing through developer contributions rather than public grant (Chart 3.4). These authorities are mostly in areas with high housing demand and high house prices. Where housing demand is high, developers are able to make larger contributions of land, housing and shared infrastructure while still having a financially viable development. Other authorities have not sought any affordable housing through the planning system. Chart 3.4 shows that there is a strong positive relationship between house prices, an indicator of housing demand, and the proportion of affordable housing that is secured through Section 75. Nonetheless, there is considerable additional variation between authorities.

Chart 3.4 Local Authorities, percentage of units of planned affordable housing 2005-09 secured through developer contributions, by 2007 median house price

Chart 3.4 Local Authorities, percentage of units of planned affordable housing 2005-09 secured through developer contributions, by 2007 median house price

Source: Affordable Housing Planning Consents dataset, prices from Registers of Scotland via Scottish
Neighbourhood Statistics

3.15 The interviews found that many local authorities prescribe a percentage of affordable housing contributions in their planning policies. Where local authorities include multiple areas or settlements with varying housing demand, percentages may be specified separately to reflect housing demand and need. Some local authorities where housing demand is weaker, or which have enough social rented stock to meet need, do not prescribe a percentage of affordable housing. This can be because local authorities are keen to encourage any private housing development within their boundaries, where it might take place on brownfield sites. Overly onerous Section 75 requirements risk pushing housebuilders to develop sites in adjoining authorities instead, possibly on greenfield sites. Other authorities do not prescribe affordable housing contributions because they wish to retain flexibility in negotiating for the provision of other kinds of infrastructure within the planning process. Authorities also vary in how much land, historically, they owned; those that own more may prefer to get funding to build housing on their own sites, rather than depend on Section 75 for the dwellings themselves.

Intermediate housing

3.16 Only in some areas is there need for forms of intermediate housing, such as mid-market rent, shared equity and other types of low-cost home-ownership. The current role of intermediate tenures in mixed communities remains to be researched.

3.17 Intermediate housing of various forms has been developed in many areas, and may play a part in overall neighbourhood tenure mix. Where market prices are high, intermediate housing may enable more middle-income households to live in new developments. Some local authorities also build small amounts of intermediate housing near to existing social housing in order to test and demonstrate the demand for owner-occupied housing in that area. Research was commissioned on this type of tenure diversification in the late 1990s, and a 2001 report includes numerous case studies 7. However, in many parts of Scotland, the gap between open market prices and social rents is relatively small and so the scope for intermediate housing is limited. No clear picture of the current contribution of intermediate housing to mixed communities emerged from the practitioner interviews for this study. Further analysis of Scottish Government administrative data on properties purchased with LIFT subsidy may provide additional insight into how current intermediate housing policies are contributing to mixed communities.

Mixed communities in regeneration

3.18 Mixed tenure development is being used both on principle and as a practical financing tool in regeneration areas, mainly in larger urban areas. It is hard to get a national picture of the use of mixed tenure in regeneration from currently available data sources.

3.19 There are high-profile initiatives such as the Urban Regeneration Companies which are undertaking major physical and social regeneration of deprived areas in Scotland. Local authorities are also undertaking their own renewal efforts in deprived neighbourhoods, very frequently those with much social housing. Local practitioners interviewed noted that the selection of renewal areas stems firstly from housing management concerns, such as meeting targets for housing improvement, and low demand and high turnover for certain types of dwelling in unpopular areas. Deprivation indicators may be an additional tool for selection, but they are not the starting point; mixed-tenure housing regeneration is not being undertaken solely to address concentrations of poverty.

3.20 In the relatively small number of projects examined, mixed tenure is an objective in the regeneration, reflecting a desire to have a more socially mixed population in the regenerated neighbourhood. It is also a practical mechanism to offset the cost of regeneration where sales of land for private development raise funds for replacing cleared affordable housing or undertaking other physical improvements. This kind of physical and housing regeneration may be linked to people-based programmes for existing residents. For example, in Maryhill in Glasgow, training in hard and soft landscaping is being funded for local residents, linked to the physical enhancements of the waterside areas which are part of the current regeneration work.

3.21 While local initiatives such as the Transformational Regeneration Areas in Glasgow are well described, it is hard to quantify the extent of this kind of mixed-tenure regeneration nationally. Planning and housing statistics record demolitions, private development and new affordable housing separately, and there are difficulties in geo-referencing some of these data. The Single Outcome Agreement for reporting means that spatial differences within local authorities are not normally nationally recorded. Instead, authorities tend now to report summary figures for deprivation indicators and the achievements of regeneration projects. This somewhat inhibits the ability to understand and compare neighbourhood-level trends and outcomes outside of nationally collated statistics.

3.22 It is worth noting that these regeneration efforts follow an established tradition of mixed-tenure approaches to neighbourhood and estate renewal in Scotland. Many of these interventions have been subject to extensive evaluation 8. A review of this literature was not part of this research, but it should be noted that there is a substantial amount of published information available on practices, policies and outcomes of mixed-tenure regeneration 9.

Cross subsidy as a funding source for regeneration

3.23 Cross-subsidy from building housing for sale is rarely, if ever, enough alone to meet the whole cost of major regeneration projects. Deprived urban areas often need considerable investment in infrastructure, and local authorities are using a range of funding sources to fund this.

3.24 While cross-subsidy from mixed-tenure development can support regeneration, it is typically not available to meet up-front infrastructure costs, and is vulnerable to market conditions. Investment is often needed to address the problems that have contributed to the decline of deprived neighbourhoods, such as inaccessibility, limited facilities and a degraded public realm. Without this kind of up-front investment, there may be no viable private development opportunity. Mixed tenure regeneration therefore almost always depends on there being funds available to do non-housing investment. Furthermore, as with new housebuilding, creating attractive neighbourhoods with a high degree of integration across tenures may require more expenditure and expertise than mono-tenure development.

3.25 Local authorities are deploying a range of funding sources to carry out infrastructure work. Aside from the major bulk grants, prudential borrowing and European funds, specialist Scottish Government regeneration funding streams include the Vacant and Derelict Land Fund and the Town Centre Regeneration Fund. These are being used, for example, to improve road layouts, enhance the physical environment, and carry out surveys or decontamination of brownfield land. Even so, the availability of public funding for major infrastructure constrains housing regeneration.

3.26 Aside from special funds, mainstream investment in health and education facilities can be co-ordinated with housing regeneration. The research found, for example, agreements to co-fund a new health centre within a regeneration area. This kind of mainstream investment obviously does not itself change the residential mix of an area, but may play a role in attracting better-off households to areas that have been seen as less desirable, as well as improving service provision for existing residents.

Implications of the housing market downturn for mixed communities in housing and regeneration

3.27 The weakness of the housing market has severely curtailed private development activity. This has reduced delivery of affordable housing through Section 75 agreements, and has caused adjustments to the phasing and tenure structure of mixed developments.

Chart 3.5 New housing starts by sector, four-quarter rolling totals

Chart 3.5 New housing starts by sector, four-quarter rolling totals

Source: Scottish Government Housing Statistics

3.28 The fall in prices and volume of private house sales since 2008 has had a severe effect upon the amount of private housebuilding activity (Chart 3.5). Developers are unwilling to start new sites or push ahead with sites underway whilst there is a risk of being unable to sell the completed units.

3.29 This has several implications for mixed communities. Firstly, the delivery of affordable housing through the planning system is limited; local authorities with a large number of planned units may see completion of only very few. In regeneration sites, grant may be used to increase the number of units for social rent in current phases in order to have some development activity going ahead. This can reduce developers' risk, retain skilled labour, and increase residents' confidence in regeneration. However, it can also mean that the proportion of affordable housing in the final development will be greater than planned, or that the planned timing and distribution of tenures on a site has to change. This implies that in some cases, there is a shift in the kind of mix that will finally be achieved away from the original vision.

Spatial planning and the design of mixed communities

3.30 The majority of parties involved in developing mixed-tenure housing prefer to have affordable and private housing mixed on a relatively coarse grain, with separate blocks or streets for different tenures. Ensuring visual similarity between affordable and private housing in the same development is widely seen as important, but there are considerable obstacles to achieving this.

3.31 How finely mixed or "pepper-potted" housing needs to be depends on how mixed communities are thought to be beneficial. Benefits that rely on social interaction might imply a need for relatively fine-grained mixing, whereas those that stem from having a more mixed population in a wider area do not. Interviewees stated that it is simpler to develop a smaller number of larger plots within a whole site, and RSLs prefer to manage clusters of social rented dwellings. Further, the times when public housing grant is available often do not coincide with when private developers wish to start work, so neither party wishes to tie affordable and market housing development too closely.

3.32 The importance of achieving visual integration of affordable and private housing within sites is widely acknowledged. Many respondents could think of bad examples where the social housing was markedly different in appearance and segregated on one part of a development. However, the mechanisms for ensuring tenure integration are not as clear, and there are pressures against it. Developers and, increasingly, RSLs use their own standard house types in the interests of efficiency, which may not look alike. Each sector has requirements - for example, space standards for social housing, or garages and en-suite bathrooms for market housing - that the other sector may not wish or be able to afford to meet. The somewhat subjective nature of spatial and visual integration of tenures mean that it is hard to get an overall picture of actual outcomes and progress from the small number of interviews conducted.

Links between housing and planning policies

3.33 Mixed tenure is frequently seen as an important component of more broadly 'sustainable' communities. However, housing policies on tenure mix are not always explicitly linked to planning policies on dwelling types, densities, transport and the public realm.

3.34 Mixed communities are linked in policy to broader efforts to develop more sustainable neighbourhoods and communities. Sustainable communities, such as the exemplars in the Scottish Sustainable Communities Initiative, seek to address a wide range of concerns including the ecological impact of housing and transport, quality of open space and public realm, mixture of uses, and appropriate densities and mixes of dwelling types. These concerns are also being taken forward in local policies. Some councils are beginning to implement quite specific guidelines in these areas. For example, some are looking to require that, where possible, developments include larger accommodation. This need for this type of guidance stems from a perceived over-provision of smaller units in recent developments in some areas. In the private sector, of course, there is no guarantee that larger dwellings will necessarily become occupied by families. However, their inclusion in a site does mean that it potentially can meet the housing needs of a wider variety of household types, including, for example, households with children.

3.35 There are not always formal links between these kind of policies on sustainable communities and affordable housing policies. For example, the need for certain types of dwellings in the affordable sector may be part of an authority's housing policy, requirements for affordable housing contributions may be part of planning policy, then guidance on the public realm and dwelling mix in the private sector may be a separate document in planning policy. This follows from the functional organisation of most local authorities. In practice, planning and housing staff typically co-operate; for example, planners may defer to housing strategy officers in the negotiation of the specific types of dwellings to be sought in affordable housing contributions under Section 75. However, the separation of spatial planning and affordable housing policies may mean that consideration of the management of mixed-tenure areas, or how households of different backgrounds make use of shared and public space are addressed only after a site has been completed.

Housing management and housing allocation

3.36 There is no evidence that disadvantaged households, such as the homeless, are more likely to be allocated social housing in the most disadvantaged areas.

3.37 Across the whole of the affordable housing stock, there is a risk that households in the greatest need are allocated and accept less desirable dwellings, possibly in more deprived areas. If more deprived households are disproportionately allocated housing in more deprived areas, this would have a negative contribution to mixed communities, by increasing the spatial concentration of disadvantage. Housing management policies of course prohibit preferential allocation, but SCORE records provide the opportunity to test whether the RSL housing system as a whole is over-allocating deprived households to deprived areas. Seven years of SCORE records were tested to see what proportion of homeless and non-homeless households were let properties in more disadvantaged areas. Coming from homelessness is used as an indicator for relatively greater deprivation among the whole tenant population. Chart 3.6 shows that whilst, in fact, a slightly smaller proportion of homeless households were given tenancies in properties located in the 10% most deprived neighbourhoods, the differences overall are negligible.

Chart 3.6 RSL lettings to non-homeless and homeless (including statutory) households by SIMD 2009 deciles of property, 2002/03 - 2008/09

Chart 3.6 RSL lettings to non-homeless and homeless (including statutory) households by SIMD 2009 deciles of property, 2002/03 - 2008/09

Source: SCORE

3.38 The research did not look in detail at personal housing subsidies such as Housing Benefit in relation to mixed communities. In theory, personal housing subsidies may assist lower-income households to live in more affluent areas. However, the subsidy follows the tenant, and caps apply, so there may be at present only a limited role for Housing Benefit. It was however noted that in some authorities there have been efforts when housing people in the private sector with the aid of housing benefit that the properties are drawn from across a mix of areas, rather than being concentrated in the most deprived (and often cheapest) neighbourhoods.