Dorset’s affordable housing crisis?

Dorset CPRE conference criticises government targets, calling for 1,300 homes a year and increased investment in social rent to meet local needs

The provision of affordable housing has been a major campaign issue for all political parties. Soaring house prices, the cost-of-living crisis and wages that have failed to rise in line with inflation have exacerbated an already dire situation. In 2021, figures released by the Department for Levelling Up, Housing and Communities showed that 10,525 households were waiting for an affordable social house here in Dorset – and the true figure is likely to be much higher. At the same time, the average price paid for a first home in Dorset has risen to a staggering £282,000.

Dorset CPRE believes strongly that the delivery of housing that addresses the county’s real needs requires careful consideration. To help fully understand the issues that face Dorset, and investigate potential solutions, Dorset CPRE organised a free online conference on Thursday 20th homes are needed here in Dorset, how many are needed and who will pay for them?

June, with presentations from both national and local experts in affordable housing. The conference was chaired by Lord Richard Best – a life peer and cross bencher in the House of Lords, Lord Best has been a prominent national figure in housing and planning-related organisations. The conference was introduced by Dorset CPRE president and former BBC chief news correspondent, Kate Adie.

About 90 people attended the conference, including many parish, town and Dorset councillors, as well as housebuilders, landowners and CPRE members.

How many and who’s paying?

Mike Allen from Dorset CPRE set the scene for the conference from a Dorset CPRE perspective. He asked three questions: what provider Abri facilitated the £8 million affordable development at Hazelbury Bryan intended to increase the supply of homes and thus make them more affordable.

He began by looking at the evidence for how many new homes are really needed in Dorset. The 2021 draft local plan allocated land for new homes in Dorset over the next 17 years, using the Government’s Standard Method (SM) for assessing housing need.

This is a crude formula to identify the minimum number of homes to be planned for, using projected household growth and affordability. This showed a need for 1,900 new homes per annum in Dorset – a 40% increase on current rates. A huge negative response to the draft plan caused DC to pause. People didn’t want the Green Belt encroachment or the scale of greenfield development.

They said the infrastructure wouldn’t cope and they foresaw that the new homes would be unaffordable for locals. DC has delayed the local plan process.

Is planning really the issue?

But does the SM really measure actual housing need in Dorset? Mike explained that in 2021 DC commissioned consultants Iceni to assess local housing need. They found that shrinkage in the natural population is more than offset by net in-migration, mainly of older people, with a growth of about 2,000 people a year.

Incomers bring equity to house purchases, and pay up to 12 times local incomes – because they can. This growth pattern distorts the natural population structure of the county.

Using the Standard Method of calculation, Iceni found that net inward migration would need to double, leading to an even bigger distortion of the age profile, with big knock-on effects on health and care services.

The consultants concluded, not surprisingly, that it was more likely that the industry would not build so many extra homes because developers wouldn’t find enough extra customers. The Standard Method of calculating housing need is

So is building land in short supply in Dorset? DC tells us that at present there are more than 13,000 plots in Dorset with planning permission –about ten years’ supply of current demand. There is evidently no appetite in the industry for building at a greater rate. Market development is constrained, either by lack of skilled labour or the sales market, but evidently NOT by planning or lack of permissioned land. Adding 40% more is pointless.

Mike Allen concluded that the idea of increasing house supply to improve affordability is neither proven nor a basis for sound planning in Dorset.

The way forward

Dorset CPRE believes that the way forward is two-fold: First, we should drop the affordability uplift in the Standard Method, resulting in a reduced – but still sufficient – housing target for Dorset of about 1,300 homes per annum. That is consistent with completions in recent years. Pressure on Green Belt, precious green spaces, historic towns and villages – and on roads and services – would be relived greatly, and it would also be more in line with Dorset’s climate emergency policy. Secondly, we should set an ambitious target to build truly

Rural Matters

affordable homes, and should be prepared to subsidise them. Affordability is a problem mainly for those who rent. Dorset Council receives more than 500 requests for help with housing every month. Employers say that the local economy is held back by the lack of truly affordable rented homes. Iceni’s Housing Needs Assessment identified a need for 577 social rent homes per annum. But social rent homes – available at 50 or 60% of market rent – by definition require subsidy. So-called viability calculations, undertaken for the Dorset local plan, suggest that the market can provide about 20% of new homes as social rent. A house target of 1,300 per annum would provide about 260 social rent homes. The rest would need to be subsidised in some other way.

Benefits of social rent

The Centre for Economics and Business Research, working for Shelter and the National Housing Federation, published a report in February 2024 showing the cost-benefit of building 90,000 social rent homes nationally. They calculated that the long-term benefits far outweighed the initial costs, by more than £50bn, suggesting that each new social rent home would generate a long-term economic benefit of £570,000. Subsidising new social rent homes would bring a handsome return for both society and the economy.

of £570,000

Viability data shows there are potential savings to be made in the cost of social rent homes

– as much as half the price of those homes which are built speculatively. The high price of land can be reduced using compulsory purchase, and the high profit that developers expect (to cover their risk) can also be reduced by using a development corporation. Of course, no one thinks today that social rent housing should be concentrated alone in large estates. At scale, the preference is for mixed housing, blending owned and rented, designed to be tenure blind. Clever planning is needed. But small-scale, well-designed developments in urban and rural areas could be mainly social rent, and will contribute to solving the problem of so many key workers being unable to afford homes in rural areas.

So what IS needed?

Dorset CPRE believes about 1,300 new homes a year would be sensible demographically in Dorset, and would be more sustainable than the Standard Method. Within that, affordability should be addressed directly by a strong target of 577 social rent homes per annum. A third of these might be financed by speculative development sites, but the rest would require extra subsidy. The lack of social rent homes is expensive to society – in Local Housing Allowance, poor health, children’s low educational attainment and more... investment is worthwhile. The new government needs to invest in social housing.

The CPRE’s 2023 report, Unravelling A Crisis: The State of Rural Affordable Housing in England made some key findings:

• The definition of affordable housing in national planning policy – usually ‘homes let out at 80% or less of market rent’ – does not enable the delivery of genuinely affordable homes. Rural social-rented (usually 50 to 60% of market rent) delivery has plummeted with just 3,282 delivered in 2021/22, while general ‘affordable’ housing delivery had increased, with 25,294 homes delivered. It is more viable for developers to deliver affordable housing rather than the social rent homes that are so desperately needed.

• Rural social housing waiting lists have risen since 2020 in all but two regions in England. It would take 89 years to clear the social housing waiting list under the current build rate.

• Rural homelessness has increased by 20% since 2020/21 and 40% since 2018/19.

• Up to half of all parish councils in rural England are not covered by Section157 regulations, which prevent resale of affordable housing units at market prices or as second homes.

• Rural Exception Site policy is being used to deliver housing in line with locally-assessed need. Such sites are usually located on the edge of existing rural settlements, facilitating the provision of affordable homes for local residents, while ensuring the preservation of the character of the community. However its impact is limited to a relatively few areas of the country and it is not clear whether the mechanism is a particularly effective means of providing social housing.

• The current mechanism for securing affordable housing in new developments is via planning agreements, where developers can negotiate down the proportion of affordable homes delivered due to viability concerns. The proposed infrastructure levy regime may lead to an increase in affordable housing delivery – contribution will be non-negotiable, and should therefore be factored into the cost of the development from the outset

• Changes of use from office space to residential conversions under permitted development rights are delivering limited numbers of affordable homes, or poor quality.

CPRE Recommendations

Following this, CPRE set out the following recommendations:

• Government must redefine the term ‘affordable housing’ so that the costs of new affordable homes are directly linked to average local incomes. Where homes are not linked to average local incomes they should not be classed as affordable, as this obscures the type of housing that is being delivered.

• Hope Value, which factors in what land could be worth if, hypothetically, planning permission had been granted to build properties, should be reformed to increase the viability of social housing provision and enable Local Authorities (LA) to deliver additional social rented homes.

• National minimum requirements for affordable housing should be increased, with specific targets set for social rented homes. Government should show greater support for rural communities, using neighbourhood plans and rural exception sites to deliver affordable housing on the edge of villages in line with locally assessed need. This includes making grant funding available and aligning planning policy with funding to enable social rented housing to come forward on such sites.

• Both government and local authorities must show greater support for community-led development, where it meets a local need.

• Government should more forcefully advise and support local planning authorities and the Planning Inspectorate to reject developments that do not live up to the design standards set out in both the National Model Design Code and Guide, and other relevant local design policy and guidance. Introduce a second home and short term lets register, with planning controls to regulate the provision of short term lets and powers to levy extra council tax on second homes.

• Extend restrictions on resale of affordable housing to all parishes with below 3,000 population, as well as larger rural towns where there is particular pressure on the housing stock, so that these houses continue to be used by local workers and not as second homes or holiday lets.