Land, landowners, and the delivery of affordable homes on rural exception sites in England

Abstract

Land is a major part of the total cost of residential development, particularly in advanced economies where significant proportions of economic value resolve to land and where land for development is rationed through planning systems that seek to corral extractable value into specific locations, in support of the infrastructure investment needed to unlock development opportunity. In England, strong markets assign a high value for land allocated for housing in local plans, relative to unallocated land. In England’s rural areas, constraints on land development – for reasons of landscape and amenity protection, or to support food security – contribute to significant affordability challenges for households on lower rural wages, who may be out-competed in the housing market by adventitious purchasers, or simply by more affluent buyers bidding for a limited supply of rural homes. Planned development (on sites allocated in a local plan) may not meet the needs of lower-income groups in constrained rural housing markets. For that reason, it is necessary to support housing affordability by granting exceptional permission for development on unallocated land, and then negotiating land sales at a price that will allow a non-profit housing provider (a ‘registered provider of social housing’) to build affordable rented homes for local households in need. Development on ‘rural exception sites’ (RES) has a thirty-year history. It is an important means of supporting the development of affordable homes in smaller villages (market-led schemes on allocated sites are the norm in larger settlements, with affordable homes procured through agreement with for-profit developers). The RES approach lays bare the impact of land cost on housing affordability. Only if a sufficiently low price for land, which is well below ‘full residential’ value, can be agreed will it be viable to develop affordable homes, with rents matching local wages. Where such a price is agreed, it may be possible to build homes without cash subsidy. If the price rises, affordability may be threatened, unless public grant support is more generous or market homes on the RES can be used to mitigate a higher land cost by providing cross-subsidy for affordable homes. This monograph details research exploring the recent granting of exceptional planning permissions in England, the critical relationship with landowners, and how those landowners may be incentivized to sell land at a price that supports affordability. It analyses extant threats to the approach, and therefore the risk that a key mechanism for delivering affordable homes may be undermined by a market logic that continuously questions the efficacy of ‘non-market’ and ‘non-profit’ housing solutions in England.