Place Directorate
Regeneration and Development
Housing Development Team
Guide to Payments for
s106 Affordable Housing
“The Matrix”
2014/15
0
This document should be read in conjunction with the Affordable
Housing Practice Note (April 2014).
The Matrix provides indicative price payable to applicants/developers as “acquisition
payments” from a Registered Provider (RP) for affordable housing types currently
negotiated within S106 agreements in Bristol. This is intended to allow applicants and
developers to assess the financial impact of affordable housing contributions in advance
of making offers or acquiring land, considering land use options, or making a planning
application.
The Council’s Housing Development Team is responsible for negotiation of all affordable
housing provision to ensure that each proposal is dealt with in a consistent manner to
ensure affordability of the units provided.
Tables 1 and 2 below give indicative payments developers and applicants can expect
from RPs for social rented units to be let at Target Rents. Developers should match the
open market value of the units they propose to develop and read to the right to find the
indicative price they can expect to achieve from the RP as at 2014/15 for each unit type
and size.
Developers and applicants are strongly encouraged to speak to the West of England
Housing Delivery Panel RPs at an early stage. The actual price that could be offered by
the RP on a particular site should be checked with them before offering to purchase sites.
The prices payable by RPs can vary from site to site and depend on market and wider
economic conditions. These may go up or down depending on the conditions at the time
of the scheme proposal or delivery and will be impacted by RPs internal assessments,
level of competition and types of sites, sales stock they may be holding and unit types.
The figures therefore are a guide only to the likely price achievable and should not be
relied upon as a firm price from any one RP or group of RPs.
The Affordable Housing Practice Note is available on the Bristol City Council website
Affordable Housing pages – Information for Developers and House-builders:
www.bristol.gov.uk/page/affordable-housing-information-developers-and-housebuilders
1
Table 1
Indicative Payment Matrix for Social Rented Flats 2014/15
Open Market
Values
1 bed 2 person flats
Minimum Size 46sqm
2 bed 4 person flats
Minimum Size 62sqm
£95,000
£57,500
£105,000
£62,000
£115,000
£67,000
£71,000
£125,000
£70,000
£76,000
£130,000
£72,000
£78,000
£145,000
£80,000
£85,000
£160,000
£87,000
£93,000
£175,000
£91,000
£100,000
£185,000
£94,000
£103,000
£200,000
£99,000
£106,000
£220,000
£104,000
£111,000
£235,000
£115,000
£250,000
£119,000
Note: Values used are a range of typical new-build prices for each type found in the
Bristol market. Prices from RPs may fluctuate and could be higher or lower than the
above indicative figures.
2
Table 2
Indicative Payment Matrix for Social Rented Houses 2014/15
Open Market 2 bed 4 person House 3 bed 5 person House 4 bed 6 person House
Values
Minimum Size 76sqm
Minimum Size 86sqm
Minimum Size 110sqm
£120,000
£73,000
£125,000
£76,500
£140,000
£145,000
£86,000
£85,000
£150,000
£91,000
£160,000
£93,000
£170,000
£98,000
£101,000
£175,000
£185,000
£107,000
£112,000
£103,000
£190,000
£111,000
£205,000
£115,000
£120,000
£220,000
£118,000
£120,500
£230,000
£240,000
£128,000
£124,000
£265,000
£138,000
£280,000
£141,000
£300,000
£145,000
Note: Values used are a range of typical New-build prices for each type found in the
Bristol Market.
3
Arrangements for Intermediate Affordable Housing in 2014/15
The Matrix is generated from the NPPF definition of intermediate housing which does not
include Affordable Rent tenure. It has been prepared on the basis that no more than 25%
of gross income should be spent on housing costs (SHMA Guidance 2007) and is based
on the affordability calculation used in the Strategic Housing Market Assessment 2009 for
intermediate sale at an equity purchase of 40% of open market value with a residual rent
of 1% on the retained equity. The rent element on shared ownership homes will be no
more than 1% of retained equity. Residual rent for Shared Ownership will increase per
annum by RPI plus 0.5% to maintain affordability. All ‘affordable’ flats service charge will
be £515 (October 13 base), or lower, per annum, irrespective of total charge cost.
Indicative RP Payment for Intermediate Sale Housing
Typically a developer can expect to receive 45% of the OMV* for
intermediate units in all price ranges.
*(based on 40% equity sale and 1% residual rent.)
Note: smaller lower value units are likely to achieve lower than 45% of OMV while higher
value larger units may achieve more. In arriving at an offer price the RP also has to
include their on-costs, holding costs and sales costs.
4
Table 3
Indicative Payment Matrix for Affordable Rented Flats 2014/15
Open Market Affordable
Rents (OMR) Rent
(80% of OMR)
Per month
1 bed 2 person flats
Minimum Size 46sqm
Indicative Price Payable
£500
£400
£59,000
£550
£440
£71,000
£600
£480
£81,000
£631
£505*
£84,000
Or above
(LHA level)
2 bed 4 person flats
Minimum Size 62sqm
Indicative Price Payable
£600
£480
£86,000
£675
£540
£97,000
£725
£580
£108,000
£789
£631*
£113,000
Or above
(LHA level)
Notes:
*LHA level for 2014/5 is £116.55 per week for 1 bed. For a 2 bed its is £145.69.
Assumed 52 week year calculations as LHA.
(some RPs use 52.18 week calculations.)
All Affordable Rents are inclusive of service charges. The price payable will be subject to
RP scheme assessment and the level of service charge it has to include to obtain a net
rent.
5
Table 4
Indicative Payment Matrix for Affordable Rented Houses 2014/15
Open Market
Rents (OMR)
Per month
Affordable Rent
(80% of OMR)
Indicative Price Payable
£650
£520
£104,000
£700
£560
£114,000
£750
£600
£123,000
£789
Or above
£631*
(LHA level)
£128,000
2 bed 4 person House
Minimum Size 76sqm
3 bed 5 person House
Minimum Size 86sqm
£700
£560
£114,000
£775
£620
£129,000
£850
£680
£140,000
£917
Or above
£733*
(LHA level)
£154,000
4 bed 6 person House
Minimum Size 110sqm
£850
£680
£140,000
£950
£760
£160,000
£1050
£840
£180,000
£1150
£920
£196,000
£1226
Or above
£981*
(LHA level)
£210,000
Notes:
*LHA level for 2014/5 is £116.55 per week for 2 bed, £169.20 for a 3 bed and £226.31 for
a 4 bed.
All Affordable Rents are inclusive of service charges.
The price payable will be subject to RP scheme assessment and the level of service
charge it has to include to obtain a net rent.
Assumed 52 week year calculations as LHA.
(some RPs use 52.18 week calculations.)
6
Financial Contributions
The circumstances where financial contributions will be accepted and how they are
calculated are set out below:
Financial Contributions for Smaller Sites
Site allocations and Development Management Policies Policy DM3: Affordable Housing
Provision: Smaller Sites makes provision for a financial contribution on smaller sites of 10
to 14 dwellings where the number of affordable units to be delivered is limited. The
financial contribution is calculated as if the unit is to be provided on site. The amount will
equate to the difference between the market value of the unit and the amount a
Registered Provider would pay for that unit based on the ‘Summary of Requirements’ for
that site and the ‘Indicative Payment Matrix’ amounts for different affordable housing
types set out below. This amount is then multiplied by the number of units sought (whole
or fraction) based on the target percentage sought. An example calculation is provided at
Fig. 3 below.
Sample calculation of financial contribution
Affordable Housing:
Target Level
14 unit scheme – Bristol Inner West
14 x 20% = 2.8 units
Affordable Housing:
Summary of Requirements
Social Rent – Family units
(3 bed 5 person House)
Calculation
= Market Value (minus) RP Payment (multiplied by) no. of units
= £240,000 - £124,000 x 2.8
= £324,800
Other off-site contributions (Commuted Sums)
Core Strategy policy BCS17: Affordable Housing Provision expects affordable housing
to be provided on site for developments of 15 dwellings or more. However, off-site
contributions in a particular locality may be appropriate in exceptional circumstances, for
example:
•
•
Where a site is unable to offer housing that meets the requirements of a
Neighbourhood Plan or Supplementary Planning Document (e.g. SPD10
requirement for family houses in St Paul’s);
Where the Council has an overriding need to safeguard or provide affordable
housing elsewhere in the city to meet other strategic housing objectives or
Neighbourhood Plans.
The initial assessment of the appropriate percentage of housing required on the subject
site determines the overall developer contribution available for off-site provision. The
calculation of the commuted sum is the same as for financial contributions for smaller
sites (see above). the units if they were to be delivered on site.
The Matrix is available on the Bristol City Council website Affordable Housing pages,
under Information for Developers and House-builders.
www.bristol.gov.uk/page/affordable-housing-information-developers-and-housebuilders
7
Enabling Fees
An Enabling Fee (subject to review) will be incurred by all providers on each affordable
housing unit delivered. These fees are designed to help with the provision of affordable
housing in the city, assisting with the financial, legal, social, economic and environmental
objectives required to secure and maximise affordable housing delivery and additional
services.
A fee of £530 per unit will apply from 1 October 2013 (and increase annually by
RPI).
The fee is paid to the Council on commencement of development, entering a building
contractor purchase agreement or at start on site by all affordable housing providers, rechargeable directly or indirectly by the organisation retaining ownership of the affordable
housing unit.
The fee applies to all affordable housing units (ie including social rent, Affordable Rent,
Intermediate Rent and other intermediate affordable housing units,
reprovision/remodelling, extra care housing, rural housing, 100% affordable housing
sites, mixed tenure sites and those procured through s106 negotiations and delivered
either with or without public subsidy).
8