The impact affordable housing has on the structure of land deals seems to be changing as the value attributed to affordable housing is becoming increasingly harder to predict.
As with any market, land deals are dictated by the law of supply and demand. And when it comes to the affordable housing element of that deal, the relationship between the quantities of affordable tenures coming forward in consented planning permissions and the appetite from housing associations has shifted.
A recent saturation of shared ownership units (previously the preferable tenure due to the lesser reduction from market value) has meant for many housing associations, the desire for affordable rent is at its greatest. This not only has an impact on developers’ bids and consequentially some disappointed landowners (whom have likely worked hard to maximise shared ownership product in their planning permissions), but is evident in the planning process too.
Cascade clauses are traditionally used to cover a variety of scenarios within a contract. Given the new found value and attraction to affordable rent, the flexibility they bring in Section 106 Agreements to the use of different tenures has been a rescuer to many land deals.
Noting this cyclical trend, how long I wonder, will affordable rent reign top of the tenures before the balance is regained by shared ownership or indeed other tenures yet available to the housing market?
Investors eyeing secure, long-term returns with inflation-linked income are keen to snap up affordable rental housing, including shared ownership tenures.