How does affordable housing work?

[cjard]

I've been looking at affordable housing stipulations by my local council, on sites of 15 or more houses. The policy is that, since the economic downturn, 40% of the houses on a site must be affordable. Let's say I am Mr Barratt and I build a hundred houses on a site..

Do I literally have to give 40 of them, lock stock and barrel, for free to a Registered Social Landlord / transfer them to a part of my business that operates as an RSL?
Or do I sell them to an RSL at 75% of the current market rate, thereby getting 75% for myself, giving away 25% and then then RSL will sell them on to Joe ***** at 75% of market rate and collect rent on the other 25%?

 

[DevilDamo]

The Council would normally offer two options... either offer a percentage of AH units or pay an AH contribution. The latter is normally the only option when you're erecting new units and it's impossible to provide AH units. I had this in providing an additional 3-bed attached unit under Woking Borough Council. The contribution they originally requested was £35k. We had this reduced by 50%. But it could still make the project unviable.

 

[cjard]

That kinda didn't answer my question (sorry).. Does the developer sell the houses to the council at the lower market rate, essentially giving away 25% of the market value of the house to the council, or does he give the house to the council, accepting a punch on the nose of whatever each unit costs to build multiplied by the number of units given away?

 

[DevilDamo]

Oh my apologies. I haven't been involved in the process post construction. Why not speak to your LPA as I'd be interested to know too?