17 June 2011
Revised draft Island Plan (March 2011)
Policy H3: Affordable housing
Prime purpose
1. This policy is intended to provide most of the affordable housing needed in the Island by requiring all new private residential developments, which provide six or more homes, to include either a proportion of affordable homes as part of the development or to make a commensurate cash contribution for the construction of affordable homes elsewhere by the States or other appropriate bodies.
2. The principles of the draft policy H3 originated in a proposition (P.33/2008) brought by the Deputy of Grouville. The States Assembly adopted the proposition on the 2nd April 2008, by a substantial majority (41-4), regarding the provision of affordable housing in the following terms:
“To request the Minister for Planning and Environment to bring forward a policy that requires planning applications of over a certain size to provide a percentage of their build for social need whether that be social rented, first time buyer, retirement, sheltered housing or a mix, whichever is most appropriate for the site”
Guiding principles
3. Engagement
The Minister for Planning and Environment acknowledges the need to engage with the construction industry and other relevant stakeholders in the property market to ensure that any contribution to the provision of affordable housing by the private development sector is set at a level which ensures the continued viability of the industry sector and its active participation in providing private housing in the Island.
4. Balance
The Minister seeks to balance the need to increase the provision of affordable homes with the maintenance of a viable development industry in Jersey.
5. Phased introduction and expansion
The Minister recognises the need for a transitional period to allow the property market and construction industry to absorb the proposed changes, particularly in respect of sites which have been acquired before the policy is established. The Minister is also cognisant of the current depressed nature of the housing market and the need for a phased introduction and incremental expansion of the policy that is sensitive to the prevailing economic climate.
6. Transparency
The Minister also recognises the need for a mechanism to calculate the required affordable housing contribution which is entirely transparent and simple to both understand and operate, and has structured the operation of this policy accordingly.
Policy operation
7. The policy requires a charge equivalent to 12.5% (rising to 20% over a period of 5 years) of the gross development value of a development to be applied to all new private residential schemes of six or more units of residential accommodation.
8. For the purpose of calculating the affordable housing element of a proposed residential development, gross development value shall be calculated by multiplying the actual gross development area (of the private housing element) and a notional development value per square metre (NDV). This value is referred to as the notional gross development value (NGDV)
9. The notional development value per square metre (NDV) shall be a figure set by the Minister for Planning and Environment and reviewed annually, following initial and, thereafter, continued consultation with property professionals, the construction industry and construction professionals. Stakeholders and other interested parties will be invited to make formal representation and participate fully in the discussions to set the notional development value.
10. The NDV will initially be set at a level which recognises the industry’s need for a transitional period to adjust site values and profit expectations, but will, over an appropriate period of time, rise to reflect average development sale values.
11. In addition to the NDV the Minister will also set a notional discount to market values for Homebuy2 type housing units.
12. The Jersey Homebuy scheme is currently being reviewed following a review by the Public Accounts Committee (PAC). This will result in the Homebuy2 scheme which will be based upon a form of intermediate housing, allowing the purchase of property at an initial discounted value. The Homebuy2 scheme will need to be endorsed by the States Assembly.
13. The required contribution to affordable housing from a specific development will be derived by applying the relevant percentage (initially 12.5%) to the notional gross development value.
14. There will be some sites due to their smaller size where only a financial contribution will be trigged. In those circumstances the developer will be required to deliver the whole of the affordable housing contribution as a cash sum, to be held in a separate fund by Treasury for the provision of affordable housing on other sites.
15. On larger sites, an on site provision of affordable housing will normally be required. This affordable housing will be an appropriate number of Homebuy2 or social rented properties (or combination thereof).
16. The provision of affordable homes on an alternative site by the developer must be agreed with the Minister and will normally only be justified where; a developer has demonstrated, to the Minister’s satisfaction, that the exceptional circumstances of a site render it unsuitable for affordable housing; and, where the alternative site is available, suitable and has all necessary permissions.
17. It shall be at the discretion of the Minister as to what proportion of Homebuy2 type housing units or social rented units (equating to the value of the affordable housing contribution) are delivered on the proposed site or any alternative site proposed by the developer.
18. The developer will also, where applicable, be required to make a cash contribution equivalent to any difference between the sum allocated for the provision of Homebuy2 type units or social rented units and the total affordable housing contribution for the development.
19. The Minister may at his (or her) sole discretion use the commuted sums payable in respect of affordable housing for any combination of social rented or Homebuy type housing.
20. The provision of affordable homes through this policy will be delivered through the use of legally-binding planning obligation agreements.
Exceptions
21. The Minister reserves the right to reduce the contribution to affordable housing at any time where exceptional site specific or general market conditions would render a proposal unviable.
Department of the Environment
16 June 2011
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