HCA 'good practice note' aims to support the economic viability of new developments through investment and planning obligations

The HCA’s approach to co-ordinating investment decisions with planning policy obligations to help unlock many more developments across the country, is set out in a Good Practice Note published today by the HCA.

The publication, HCA investment and planning obligations: responding to the downturn has been produced for staff and partners of the national housing and regeneration agency. Based on existing policy guidance it suggests recommendations for maintaining more affordable housing from planning permissions and associated S106 obligations alongside HCA investment, in the current housing market downturn.

Working with Local Planning Authorities through the HCA’s Single Conversation – a place-based approach to investment – the Agency will support housing and regeneration priorities for an area by investing in ways that unlock schemes that are currently unviable, using public investment alongside private investment, to help make best possible use of developer contributions through planning permissions and planning obligations.

The purpose of the document is to set out the approach the HCA will take to help local authorities meet immediate housing need and ensure that when the upturn begins, a recovering market is not hampered by a proliferation of lapsed consents, or delays due to a glut of re-applications.

David Curtis, regional director for Yorkshire and the Humber at the Homes and Communities Agency, chair of the group who have produced the guidance, explained: 'The viability of many housing schemes has decreased in the downturn, as a result of falling land values and house prices. By being as flexible as possible with our funding and encouraging local planning authorities to be flexible with timings for private sector contribution and planning obligations, we can help to unlock more affordable homes by making sure schemes can regain their viability.'

The HCA’s preferred option is to defer planning obligations on phased developments so that the majority of them are carried out on later phases, once the viability of those phases has been considered and the market starts to recover.

Other options for local authorities to consider include adjustment of the affordable housing tenure mix as in some instances increasing the proportion of affordable housing linked to HCA investment can improve cash-flow and help make a development viable again; granting planning consent for an initial period longer than three years; or extending the life of existing consents..

The document reiterates the HCA’s commitment to flexibility and an acknowledgement that this may include higher levels of investment in the short-term. However it cautions that a lack of financial viability alone will not mean simply replacing S016 requirements with HCA funding, and emphasises that flexibility will be on a ‘something for something’ basis, with the HCA seeking a higher level of affordable housing, or a financial return on it’s investment.

It concludes that a collaborative approach is essential to success, including:

Transparency – using planning tools which all parties agree are fair and accurate, and a single viability model;
Clarity on drivers – with each party understanding what the other seeks to achieve from the scheme;
Clarity on returns – with visibility on what each partner expects to take away from the scheme; and
Risk and reward share – to ensure an equitable deal.

David Curtis added: 'The effective co-ordination of public and private investment, alongside developer contributions as a result of planning permissions is a key focus of our Single Conversation. The HCA will work with partners to test the viability on schemes that remain a priority across the country and will identify where the approaches to flexibility can be used to maximum effect in terms of value for money for the public purse, a quick response to progressing development work and to ensure the homes are in the right place, for the right people at the right time.'