Removals Harrogate – The Economic Downturn


Removals Harrogate – The Economic Downturn

 

Harrogate BC

The problem

In Harrogate Borough Council, a scheme has been taken forward in the current climate by fixing the mix and tenure split of affordable housing provision but determining the proportion of affordable housing to be secured by reference to an agreed scale linked to the values to be achieved through sales of the open market dwellings.

The Council has been unable to confirm the financial viability of any level or mix of affordable housing in the current housing market as current conditions are unlikely still to be in place when the completed units come to the market and it would be unreasonable to fix a level of affordable housing dictated by the current slump in values when, at point of sale, it is reasonable to expect that the market will have recovered.

What did they do?

An agreement has now been reached whereby a formula for dealing with the financial viability issue at the reserved matters stage has been established, that provides as much certainty as possible, while still maintaining sufficient flexibility to take account of uncertainty regarding house values and their impact on financial viability in the future.

The extent to which the development can contribute to affordable housing is directly related to four key variables:

  • The price achieved for open market housing:
  • The price that is received for the affordable housing
  • The tenure split: as social rented housing normally requires a much greater level of subsidy than intermediate housing.
  • Development Costs

The Outcome

The housing mix and tenure split have been fixed but the prices to be paid for the affordable housing, and the amount of it, will be determined by an agreed scale determined by open market values.

A realistic expectation for open market values per sq ft has been established. This delivers 50% affordable housing. If the value increases, the price paid for the affordable housing will decrease. If the value decreases, the proportion of affordable housing reduces at an agreed rate.

In this way the development will be financially viable regardless of the value of the open market housing, and it will also make as full a contribution to affordable housing as it is able, given the value of the open market housing.


Harrogate Borough Council

The Council has been unable to confirm the financial viability of any level or mix of affordable housing in the current housing market as current conditions are unlikely still to be in place when the completed units come to the market and it would be unreasonable to fix a level of affordable housing dictated by the current slump in values when, at point of sale, it is reasonable to expect that the market will have recovered.

Article by Harrogate Borough Council

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