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Synergies between policy tools for provision of affordable housing

Презентація "Synergies between policy tools for provision of affordable housing.
Reflection on S106 and PSLA" Агати Краузе.
Доповідь з круглого столу «Кращі практики житлової політики та можливості їх застосування в Україні», проведеного Держмолодьжитлом за підтримки Секції по житловому господарству та землекористуванню ЕЄК ООН і Програми розвитку ООН в Україні 26 квітня 2018 року.

Презентація "Synergies between policy tools for provision of affordable housing.
Reflection on S106 and PSLA" Агати Краузе.
Доповідь з круглого столу «Кращі практики житлової політики та можливості їх застосування в Україні», проведеного Держмолодьжитлом за підтримки Секції по житловому господарству та землекористуванню ЕЄК ООН і Програми розвитку ООН в Україні 26 квітня 2018 року.


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Synergies between policy tools for provision of affordable housing

  1. 1. Synergies between policy tools for provision of affordable housing. Reflection on S106 and PSLA. Dr Agata Krause Independent expert The UN expert group visit Kiev, 24-26 April 2018
  2. 2. Problem setting Dimensions of housing debates in the EU: • (Decreasing) housing affordability; (Cut in) public spending; (Decrease in) investment in social/affordable housing; Housing exclusion (withdrawal of welfare state); migration (pressures); ghettoization; Reno-(e)victions. Tangibility of housing problem in the EU: • Homelessness increasing in all EU countries (apart from Finland) (FEANTSA 2018), • Macroeconomic imbalances in functioning of housing markets –UK, SE, NL (EC, COR 2017), • Cost of inadequate housing in the EU €194 billion per year; addressing shortcomings of the housing stock €295 billion in the EU (at 2011 prices) (Eurofound 2016).
  3. 3. Housing costs in the EU Source: Feantsa (2018) Highest: BG +59%; UK 30%; LV 34% Highest: GR; BU; SK; NL; DE. Housing cost overburden rate 11,1% in 2016 (EUROSTAT).
  4. 4. Aim and objectives Aim of the presentation is to demonstrate synergies between (economic and spatial) policy ‘tools’ for provision of affordable housing. Objectives: • to identify ‘good practices’ in integration of affordable housing objectives into spatial and economic policies (and policy tools) in the EU, • to depict how selected policy tools (supporting provision of affordable housing) are applied in practice (in particular EU countries) and with what effects, • to outline relationships between objectives and outcomes of spatial and economic (policy) tools in relation to affordable housing.
  5. 5. Structure Part 1: ‘Good practice’ in integration of affordable housing objectives into spatial planning policy – Section 106 in England, • Affordable housing objectives in urban/spatial policies, • Introduction of the S106 policy tool + example of London Plan (England), financial/economic impact. Part 2. ‘Good practice’ in integration of affordable housing objectives into housing finance policy • Funding and finance for affordable housing • Presentation of the PSLA policy tool + example of Saint Priest development (Lyon, France); spatial/urban planning ‘effects’, Part 3. Summary and conclusions.
  6. 6. ‘Good practice’ in integration of affordable housing objectives into spatial planning policy – Section 106 in England
  7. 7. Housing and spatial policy • Residential development – a key component of spatial and urban policies; influences on market and place-based relationships, • Housing objectives in the EU and UN spatial and urban policies: e.g. the ‘Leipzig Charter’, ‘the Aalborg Charter’, the EU Urban Agenda; Habitat III New Urban Agenda; the EU ‘Pact of Amsterdam’, the EU and UN SDGs. • Spatial policy and land policy ‘tools’ hold a particular significance to social/affordable housing providers – e.g. land sharing; land banking/re- adjustment tools; spatial plans, (land use/zoning plans; local development plan), • Section 106 – ‘Planning obligation’ (United Kingdom/England).
  8. 8. ‘Planning obligation’ – Section 106 Functioning of ‘planning obligation’ in 2016/17, in England: • Town and Country Planning Act of 1990 (S106); the Planning Act 2008 (introduction CIL), • Put forward by local planning authorities; addresses a developer that applies for planning permission (approval to build), • Used to ‘secure funding towards mitigating the social and environmental effects of development’ (MHCLG 2018), • Variety of developer ‘contributions’: e.g. for open space; transport and travel; community development; education; affordable housing Section 106 for affordable housing: • Obliges developer him to deliver a certain % (minimum) of affordable housing within a residential complex of 10 or more dwellings, • Concerns residential and non-residential premises in various ways, • Different targets across locations + considered on case-by-case basis.
  9. 9. Example London Plan in 2014 – section 106 Affordable housing requirement on commercial development in London Plan in 2014 • For new commercial development with net increase of 500m2 to make a financial contribution towards the off-site provision of affordable housing, - £20 per m2 of additional floorspace. Affordable housing requirement on residential development • For new residential developments of 10 or more units of housing - 30% of the total number of units proposed in kind, on-site; or – in financial contribution of a rate equivalent of 60% of the number of units off-site in kind or via financial contribution.
  10. 10. Economic implications of S106 in England (2018) Table 3.7 indicates that developer contributions for ‘affordable rent’ (tenure) was the highest (over 1.6bln GBP) against other types of tenure (e.g. social rent); and that developer contribution in London was the greatest (over 1.2bln GBP) in comparison to other regions.Source: MHCLG 2018 Table 3.3 demonstrates that real value of developer contribution for affordable housing was over 4bln GBP in 2016/2017.
  11. 11. Parish Development Developer / Owner Start Date Term (Years) Total Amount Total Spent Balance Brightlingsea Former James and Stone Shipyard - Car Parks B'sea Hampstead Homes (London) Ltd 30/09/2009 10 153,574.57 151,486.83 2,087.74 Brightlingsea Former Astralux Site Red Barn Road, B'Sea NEEB Holdings 04/05/2015 10 42,786.07 0.00 42,786.07 Weeley Barleyfields, Thorpe Road Weeley Rose Builders 06/03/2017 10 65,126.51 0.00 65,126.51 Clacton Site off Abigail Gardens Holland Road Clacton Fisher Jones Greenwood LLP 25/02/2014 5 89,991.86 0.00 89,991.86 351,479.01 151,486.83 199,992.18 Economic implications of S106 in Tendring District Council, England Source: Spending of income from S106 in 3rd quarter of 2017, Tendring District Council (2018)
  12. 12. Impact of S106 in terms of economic benefits Although in order to fully understand impact of Section 106, one should also consider a range of issues (e.g. number of permissions given, various ways municipalities apply the policy, efficiency of functioning of planning system; negotiation skills at local level),… …the example of S106 demonstrates that spatial planning tools can be used to ‘mobilise’ private finance, to increase supply of affordable housing, and that this is happening … • via in-kind ‘compensation’ (developer building affordable housing, which entails offsetting public investment costs and generates savings) or by directly generating new income streams for affordable housing in public budgets. Therefore, fulfilling spatial planning objectives – to enable affordable housing development in cities, can contribute to fulfilling economic objectives – to increase funding for affordable housing.
  13. 13. ‘Good practice’ in integration of affordable housing objectives into housing finance policy – PSLA in France.
  14. 14. Affordable housing – funding and finance • Housing is not EU competency but investment in decent quality and affordable housing is indirectly supported via e.g. Cohesion Funds, EFSI, Structural Funds, • State support for affordable housing is bounded with the State Aid rules in the EU (Competition Policy), • ‘Correction’ of housing market dynamics by the State – the roles of supply-side and demand-side subsidies and other mechanisms (VAT discounts on construction of affordable housing; tax benefits for first- time buyers; low-rate VAT and property tax exemption; preferential loans), • PSLA – affordable loan in France.
  15. 15. PSLA in France Functioning of PSLA in France: • Loi n° 84-595 du 12 juillet 1984 définissant la location-accession à la propriété immobilière; Loi n° 83-657 du 20 juillet 1983 relative au développement de certaines activités d'économie sociale, • Financial mechanism, type ‘location-accession’, used by COOP' HLM (Cooperative HLM), limited profit companies founded in 1906, specialising in affordable homeownership production,/construction (400,000 housing units in 100 years). Key premises: • Right to acquire a ‘preferential loan’ to purchase affordable rental apartment in new- built housing; bounded with income ceilings for tenants in affordable housing stock, • Advantages: allows benefitting from rental period 1-4 years prior purchase; elasticity (testing the apartments; ‘improvement pathway within social housing stock), • Complemented by 3 types of guarantees (buy back and relocation guarantees; resale insurance).
  16. 16. Income ceilings for PSLA Source: Le guide du prêt social location-accession (PSLA) 2018 (p. 26)
  17. 17. ‘Saint Priest’ of the RSH (RHÔNE SAÔNE HABITAT) Access to affordable homeownership: • This residence includes 50 units in secured accession from T2 to T5: 10 T2 / 25 T3 / 12 T4 / 3 T5. Benefit from exceptional conditions: • Price in VAT reduced to 5.5% under conditions of resources • New Zero Rate Loan • Resale insurance, repurchase guarante e; relocation guarantee • Prime Plan 3A of the Métropole de Lyon.
  18. 18. Impact of the PSLA • Functioning of PSLA bounded with effective financial governance for affordable housing – strong relationships between banks, social/affordable housing institutions, tenants and municipalities, • Small scale but becoming increasingly more important: • Production of homeownership via PSLA: 46,700 housing units (2004–2015), 4,600 per year; HLM accounts for 80% of operations – 3736 approx. per year. • Sharp increase in total PSLA loan sales between 2011 and 2015 (6,700 – 8,100). Source: The Cour des Comptes Rapport, PSLA (2016, p. 51).
  19. 19. Impact of PSLA in terms of urban planning Although it is complex to track socio-spatial ‘effects’ of economic policies (and there is much more policy impact research that needs to be done) it is important to note that… … via PSLA, the HLM-developer (supported by municipalities) takes decision about location of new construction for affordable homeownership in space and through that it can address socio-spatial polarisation ‘effects’ (exclusive housing development in ‘hot’ real estates markets) Also, re-purchase guarantee accompanying PSLA allows e.g. • retaining social housing stock in the areas of high demand/high price areas, therefore securing social mix objectives (as above); resell of social housing on commercial markets and re-invest in the areas of higher demand and/or of critical importance for development of cities. Economic/financial ‘tools’, used to decrease the costs of homeownership, allow effective and ‘smart’ management of social housing stock in a particular area; therefore it can influence on ‘social mix’ effects and contribute to greater socio-spatial inclusiveness of cities.
  20. 20. Summary Based on the examples of S106 and PSLA, this presentation not only… • outlined ‘good practices’ in implementation of affordable housing objectives into economic and spatial policies… • but also indicated relevant ‘synergy effects’ between economic and spatial planning objectives and outcomes; In particular, that… • A spatial planning tool designed to enable construction of affordable housing in cities, can bring about economic benefits for social/affordable housing providers, • A financial tool designed to decrease costs of homeownership, can be use as a ‘smart planning tool’: to manage demand for affordable housing in space.
  21. 21. Conclusions By now, there is no doubt that access to decent and affordable housing in pre-requisite for sustainable development, economic recovery and social integration. Solutions to ‘housing crisis’ can be found in various policy areas (in social, economic, environmental policy areas) and there is a value-added to developing ‘smart’=integrated approaches to affordable housing as ‘synergy effects’. The objectives and the effects of policies can be mutually reinforcing. As I tried to demonstrate, it is possible to make a business case for investment in affordable housing by looking at spin-offs effects across (various) policy areas. At the same time, however, policies can generate ‘trade-offs’ with regard to housing. There is a need to invest more and faster into affordable housing in Europe (and find balance between public and private interests), but there is a need to do so not only by looking ‘outside’, for potential of policy transfer, but also by looking ‘within’, and to better understand complex dynamics of policy and practice for affordable housing.
  22. 22. Thank you Contact: Dr Agata Krause +32 478 82 61 64

Notas del editor

  • Welcome
    Who am :
    former researcher in the fields of sustainable development, urban planning, housing, also from policy transfer perspective.
    Worked with policy-makers (municipalities) and practitioners, providing advise on affordable housing. Collaborated with EU Institution, UN, EIB and CEB.

    Today I will talk about (title). One may say that it is a complex title and that it also includes acronyms, but the only thing I will do is that I will make a case for using ‘tools’ from various kinds of policy domains in order to increase provision of affordable housing and that this can lead to some interesting economic and spatial effects.

    Conclusion: addressing housing affordability from the perspective of spatial planning and economic policies can bring about certain interesting, positive synergy effects. These synergy effects can be used to legitimate policy change.
  • By now there is no doubt that we are facing housing crisis in Europe. Although many can disagree about the extend of, I would like to point out that in the EU we are discussing (name)

    This housing problem, hidden under many terms, materialises in very tangible way (numbers)

    The cost of people living in inadequate housing in the EU Member States is hitting economies to the tune of nearly €194 billion per year, a new report from Eurofound states. The cost of addressing the shortcomings of the housing stock would be in the region of €295 billion (in 2011 prices).

    United Kingdom: ‘Take further steps to boost supply in the housing sector, including by implementing the reforms of the national planning policy framework.’
    Sweden: ‘Address the rise in household debt by adjusting fiscal incentives, in particular by gradually limiting the tax deductibility of mortgage interest payments or by increasing recurrent property taxes, and by increasing the pace of mortgage amortisation.  To alleviate the structural under-supply of housing, foster competition in the construction sector, streamline the planning and appeals procedures for construction and revise the rent-setting system to allow more market-oriented rent levels.’
    Netherlands: ‘Accelerate the decrease in mortgage interest tax deductibility so that tax incentives to invest in unproductive assets are reduced.  Provide for a more market-oriented pricing mechanism in the rental market and further relate rents to household income in the social housing sector.’
    Housing-related recommendations should be seen within the wider framework of the CSRs, e.g. France to decrease public spending overall which could impact on financing e.g. housing allowances Ireland: to finalise durable restructuring solutions for a vast majority of mortgages in arrears.
  • % Percentage of the population living in a household where total housing costs (net of housing allowances) represent more than 40% of the total disposable household income (net of housing allowances).
  • Housing is not EU competency but over years, especially recently, the European Union and UN have introduced a range of initiatives dedicated to sustainable urban development of cities and regions, including provision of affordable housing – there is a momentum for housing. References to affordable housing objectives can be found in (name). This is naturally putting aside the roles of specific programs.

    Spatial planning policy together with land management policies can offer a range of ‘tools’ that directly influence on housing provision. In this presentation, however, I will focus on (name) and the next slide will demonstrate you why.

    The UN’s Habitat Programme has promoted socially and environmentally sustainable human settlements for approx. almost forty years, this is putting aside specific programs, such as the United Nations’ Environment Programme (focuses on and assists in implementation of environmental policies)

    Spatial planning offers a range of ‘tools’ that have a direct implication on housing. The main tool of spatial planning is a ‘local plan’, which notably establishes (with national variations to this broadly outlined model): (i) areas where construction is currently permitted (and conditions upon which construction is permitted); (ii) future development areas; (iii) agricultural areas; and (iv) protected, due to historical heritage or ecological value, areas13. Practically consisting of a map and a description, it establishes a range of obligations that households, developers and other entities have to comply with, if they want to introduce changes in space (e.g. propose a new development). These obligations concern qualities (characteristics) and quantities of desired/permitted development such as cubature, position of a building on a plot.
  • The environment that prevails is set by two pieces of legislation. The 1990 Town and Country Planning Act provides Local Planning Authorities with the right to negotiate obligatory contributions - hence ‘planning obligations’ - with developers on a case-by-case basis. More recently the S106 system has been supplemented by the Community Infrastructure levy (CIL), which was introduced through the Planning Act 2008 and brought into effect through the CIL regulations of 2010.

    About CIL – Community Infrastructure Levy I will mention about developer contribution in terms of various types of tenure.


    Furthermore, in 2011, the government introduced the Community Infrastructure Levy (CIL) which is a charge established by local planning authorities ‘designed to raise funds for infrastructure needed generally as a result of an increase in development in an area’25 (e.g. to be paid by a developer in case he does not propose a development of a public infrastructure within an investment scheme)26. Charities are exempt from it in case they provide affordable housing schemes within proposed development. CIL is non-negotiable;

    CIL is a locally determined fixed charge on development which usually takes a relative form, such as ‘£X per square metre of new development’.

    This study examines the use of developer contributions in England during the financial year 2016/17. Developer’s contribution during financial year 2016 and 2017 in England.
    For both, planning obligation and CIL

    ‘There has been an increase in the aggregate value of planning obligations agreed and CIL levied since 2011/12, up 61% from £3.7bn to £6.0bn in 2016/17 (50% after adjusting for inflation). However, this is in the context of an increase in the number of dwellings given planning permission in 2016-17 compared to 2011-12, which, all other things equal, would be expected to result in an increase in the value of planning obligations and CIL levied’ (The Incidence, Value and Delivery of Planning Obligations and Community Infrastructure Levy in England in 2016-17, p. 7).
    P 7-8 There has been significant growth in the value of affordable housing in both absolute terms and as a proportion of the total value of planning obligations agreed and CIL levied. Affordable housing contributions have grown as a proportion of total planning obligations, from 53% in 2007/8 and 62% in 2011/12 to 68% in 2016/17. 8 There are, however, significant regional variations in the value of affordable housing obligations.

    Examples of the case of London

    2014 To address this policy approach, the City Corporation requires new commercial development, where there is a net increase of 500m2 or more Gross Internal Area, to make a financial contribution towards the off-site provision of affordable housing, either elsewhere in the City, or within reasonable travel distance of the City. The financial contribution will be sought at a rate of £20 per m2 of additional floorspace.

    Affordable housing requirement on residential development
    The City’s development plan (Policy CS21), seeks affordable housing contributions from new residential developments, which have the potential for 10 or more units of housing, at a rate of: • 30% of the total number of units proposed where the affordable housing is to be provided on-site; or 7 Planning Obligations SPD, June 2014 • exceptionally, a rate equivalent to 60% of the number of units on the application site, where the units are to be provided off-site or through a financial contribution. 27. The presumption in policy is that affordable housing should be provided on-site.
  • Source:
  • So planning obligation works, it generates income.
  • Financial results of application of planning obligation. Balance sheet demonstrating income and spending
  • I already mentioned about the need to correct housing market mechanisms – CSR
    Strong relationship with dynamics on financial markets, especially with regard to borrowing.
  • a resale insurance protecting against any discount of his property for 10 years
    a guarantee to buy your home, under conditions, at a price known in advance, for 15 years
    a rehousing guarantee in the social rental park for 15 years

    Check whether this comes from Source: Le guide du prêt social location-accession (PSLA) 2018 (p. 26)?


    MINISTÈRE DU LOGEMENT ET DE L'HABITAT DURABLE Evaluation du Prêt social de location-accession Rapport n° 010800-01 établi par Jean-Louis HELARY et Pascaline TARDIVON

  • HLM works strongly with municipalities: PSLA supports municipalities in implementation of planning policies, especially their quest to mitigate negative effects of socio-spatial polarisation (Loi Solidarité et renouvellement urbain (The Solidarity and Urban Renewal Act, which assumes 30% of social rent quota for operations above 12 dwellings),
    Role of HLM in defining urban life is acknowledged in national policy (Agenda Hlm 2015 – 2018)
  • multifaceted problem that requires integrated approach

    They are not large numbers proportionately – the scale of phenomenon is not large, but it is growing