Ask an Architect: What is an Affordable Housing Contribution?

Wednesday, August 20, 2014

Many of our Richmond clients are concerned by Affordable Housing Contributions, and with good reason: they can add tens to hundreds of thousands of pounds to your development, even if you’re a self builder after no more than a family home.

After recent questions about what an Affordable Housing Contribution is and whether it can be reduced, we thought it made the perfect topic for this edition of Ask an Architect.

Local authorities in the London boroughs require that a portion of domestic developments fall under what can be considered affordable housing. This ensures that those who are on a lower wage don’t find themselves priced out of the city by nothing but luxury homes going up.

Developers can meet this quota by including a certain number of affordable homes within their development, building them elsewhere or simply paying a fee that the council can put towards an affordable housing fund. It’s that last option that’s known as an Affordable Housing Contribution.

Like the Community Infrastructure Levy I discussed last week, the Affordable Housing Contribution was originally only intended to apply to commercial developers profiting from their builds. This is still largely the case, with most boroughs only asking multi-unit developments to make the contribution.

The exception is Richmond, where even single unit developments are required to make an Affordable Housing Contribution. This has resulted in Affordable Housing Contributions taking a bite out of a self builder’s budget as high as 10%.

Any plans to demolish an existing dwelling, any new builds and some extensions are required to make an Affordable Housing Contribution before work can start on site. The maximum amount of this contribution is determined by a commuted sum calculation, which uses various aspects of the proposed build to calculate the final fee.

With many self builders relying on financing to fund their developments, the pain of having to pay a substantial flat fee before a single brick is laid can force them to halt or rethink their plans.

The solution to this costly problem is to present the council with a thorough, well reasoned argument that presents a more convincing and realistic figure than the cold maths of the commuted sum calculation.

Compiling a case robust enough to sway the hearts and minds of a planning department requires the assistance of an experienced and renowned architect. By using off plan valuations from an agent and a detailed cost estimate from a quantity surveyor, your architect can show that the cost of the site, the build, professional fees, VAT and anything else you may need to prove that the proposed Affordable Housing Contribution is non-viable.

Richmond also happens to be a borough that requires new builds not just to meet but exceed building regulations. They’re more lenient to builds that display an exceptional level of quality that improve to housing stock of the area, especially if it comes from an architect they are familiar with and can trust to see ambitious plans safely through to completion.

Once they’ve viewed the case the council will then use a independent assessor to verify the claims and if all goes to plan the Affordable Housing Contribution will be significantly reduced.

We’ve compiled such cases for a number of our clients, carving tens to hundreds of thousands of pounds from their costs.

Recently, one of our Richmond clients was struck with a bill of £110,000 on their 5,000 square foot new build in Barnes. We argued that as the client would be living in the property, the significant sum they were investing into it and the level of quality they were trying to attain, that there wasn’t enough profit in the development to justify such a high Affordable Housing Contribution.

Thanks to the detail of our case and our good rapport with the planning department, we were able to cut the bill over two thirds down to a much more manageable £35,000, letting us fulfil our client’s dreams without compromise.

If you have any questions of your own, send them to [email protected] with the title “Ask an Architect” and they could be featured right here in our blog.

By Oliver Brown