Презентація "Synergies between policy tools for provision of affordable housing. Reflection on S106 and PSLA" Агати Краузе. Доповідь з круглого столу «Кращі практики житлової політики та можливості їх застосування в Україні», проведеного Держмолодьжитлом за підтримки Секції по житловому господарству та землекористуванню ЕЄК ООН і Програми розвитку ООН в Україні 26 квітня 2018 року.

1. Synergies between policy tools for provision of affordable
housing.
Reflection on S106 and PSLA. Dr Agata Krause
Independent expert
The UN expert group visit
Kiev, 24-26 April 2018

2. Problem setting
Dimensions of housing debates in the EU:
• (Decreasing) housing affordability; (Cut in) public spending; (Decrease in) investment
in social/affordable housing; Housing exclusion (withdrawal of welfare state);
migration (pressures); ghettoization; Reno-(e)victions.
Tangibility of housing problem in the EU:
• Homelessness increasing in all EU countries (apart from Finland) (FEANTSA 2018),
• Macroeconomic imbalances in functioning of housing markets –UK, SE, NL (EC, COR
2017),
• Cost of inadequate housing in the EU €194 billion per year; addressing shortcomings
of the housing stock €295 billion in the EU (at 2011 prices) (Eurofound 2016).

3. Housing costs in the EU
Source: Feantsa (2018)
Highest: BG +59%;
UK 30%; LV 34%
Highest:
GR; BU; SK;
NL; DE.
Housing cost overburden rate
11,1% in 2016 (EUROSTAT).

4. Aim and objectives
Aim of the presentation is to demonstrate synergies between (economic
and spatial) policy ‘tools’ for provision of affordable housing.
Objectives:
• to identify ‘good practices’ in integration of affordable housing
objectives into spatial and economic policies (and policy tools) in the
EU,
• to depict how selected policy tools (supporting provision of affordable
housing) are applied in practice (in particular EU countries) and with
what effects,
• to outline relationships between objectives and outcomes of spatial and
economic (policy) tools in relation to affordable housing.

5. Structure
Part 1: ‘Good practice’ in integration of affordable housing objectives into spatial
planning policy – Section 106 in England,
• Affordable housing objectives in urban/spatial policies,
• Introduction of the S106 policy tool + example of London Plan (England),
financial/economic impact.
Part 2. ‘Good practice’ in integration of affordable housing objectives into housing
finance policy
• Funding and finance for affordable housing
• Presentation of the PSLA policy tool + example of Saint Priest development (Lyon,
France); spatial/urban planning ‘effects’,
Part 3. Summary and conclusions.

6. ‘Good practice’ in integration of
affordable housing objectives into
spatial planning policy – Section 106 in
England

7. Housing and spatial policy
• Residential development – a key component of spatial and urban
policies; influences on market and place-based relationships,
• Housing objectives in the EU and UN spatial and urban policies: e.g.
the ‘Leipzig Charter’, ‘the Aalborg Charter’, the EU Urban Agenda;
Habitat III New Urban Agenda; the EU ‘Pact of Amsterdam’, the EU
and UN SDGs.
• Spatial policy and land policy ‘tools’ hold a particular significance to
social/affordable housing providers – e.g. land sharing; land banking/re-
adjustment tools; spatial plans, (land use/zoning plans; local
development plan),
• Section 106 – ‘Planning obligation’ (United Kingdom/England).

8. ‘Planning obligation’ – Section 106
Functioning of ‘planning obligation’ in 2016/17, in England:
• Town and Country Planning Act of 1990 (S106); the Planning Act 2008 (introduction CIL),
• Put forward by local planning authorities; addresses a developer that applies for planning
permission (approval to build),
• Used to ‘secure funding towards mitigating the social and environmental effects of
development’ (MHCLG 2018),
• Variety of developer ‘contributions’: e.g. for open space; transport and travel; community
development; education; affordable housing
Section 106 for affordable housing:
• Obliges developer him to deliver a certain % (minimum) of affordable housing within a
residential complex of 10 or more dwellings,
• Concerns residential and non-residential premises in various ways,
• Different targets across locations + considered on case-by-case basis.

9. Example London Plan in 2014 – section 106
Affordable housing requirement on commercial development in London
Plan in 2014
• For new commercial development with net increase of 500m2 to make a
financial contribution towards the off-site provision of affordable
housing, - £20 per m2 of additional floorspace.
Affordable housing requirement on residential development
• For new residential developments of 10 or more units of housing - 30%
of the total number of units proposed in kind, on-site; or – in financial
contribution of a rate equivalent of 60% of the number of units off-site
in kind or via financial contribution.

10. Economic implications of S106 in England (2018)
Table 3.7 indicates that developer contributions for
‘affordable rent’ (tenure) was the highest (over 1.6bln
GBP) against other types of tenure (e.g. social rent);
and that developer contribution in London was the
greatest (over 1.2bln GBP) in comparison to other
regions.Source: MHCLG 2018
Table 3.3 demonstrates that real value of
developer contribution for affordable
housing was over 4bln GBP in 2016/2017.

11. Parish Development Developer / Owner
Start
Date
Term
(Years)
Total
Amount
Total
Spent Balance
Brightlingsea
Former James and Stone
Shipyard - Car Parks B'sea
Hampstead Homes
(London) Ltd
30/09/2009 10 153,574.57 151,486.83 2,087.74
Brightlingsea
Former Astralux Site
Red Barn Road, B'Sea
NEEB Holdings 04/05/2015 10 42,786.07 0.00 42,786.07
Weeley
Barleyfields, Thorpe Road
Weeley
Rose Builders 06/03/2017 10 65,126.51 0.00 65,126.51
Clacton
Site off Abigail Gardens
Holland Road
Clacton
Fisher Jones
Greenwood LLP
25/02/2014 5 89,991.86 0.00 89,991.86
351,479.01 151,486.83 199,992.18
Economic implications of S106 in Tendring District Council, England
Source: Spending of income from S106 in 3rd quarter of
2017, Tendring District Council (2018)

12. Impact of S106 in terms of economic benefits
Although in order to fully understand impact of Section 106, one should
also consider a range of issues (e.g. number of permissions given, various
ways municipalities apply the policy, efficiency of functioning of planning
system; negotiation skills at local level),…
…the example of S106 demonstrates that spatial planning tools can be
used to ‘mobilise’ private finance, to increase supply of affordable
housing, and that this is happening …
• via in-kind ‘compensation’ (developer building affordable housing, which
entails offsetting public investment costs and generates savings) or by
directly generating new income streams for affordable housing in public
budgets.
Therefore, fulfilling spatial planning objectives – to enable affordable
housing development in cities, can contribute to fulfilling economic
objectives – to increase funding for affordable housing.

13. ‘Good practice’ in integration of
affordable housing objectives into
housing finance policy – PSLA in
France.

14. Affordable housing – funding and finance
• Housing is not EU competency but investment in decent quality and
affordable housing is indirectly supported via e.g. Cohesion Funds,
EFSI, Structural Funds,
• State support for affordable housing is bounded with the State Aid
rules in the EU (Competition Policy),
• ‘Correction’ of housing market dynamics by the State – the roles of
supply-side and demand-side subsidies and other mechanisms (VAT
discounts on construction of affordable housing; tax benefits for first-
time buyers; low-rate VAT and property tax exemption; preferential
loans),
• PSLA – affordable loan in France.

15. PSLA in France
Functioning of PSLA in France:
• Loi n° 84-595 du 12 juillet 1984 définissant la location-accession à la propriété
immobilière; Loi n° 83-657 du 20 juillet 1983 relative au développement de certaines
activités d'économie sociale,
• Financial mechanism, type ‘location-accession’, used by COOP' HLM (Cooperative
HLM), limited profit companies founded in 1906, specialising in affordable
homeownership production,/construction (400,000 housing units in 100 years).
Key premises:
• Right to acquire a ‘preferential loan’ to purchase affordable rental apartment in new-
built housing; bounded with income ceilings for tenants in affordable housing stock,
• Advantages: allows benefitting from rental period 1-4 years prior purchase; elasticity
(testing the apartments; ‘improvement pathway within social housing stock),
• Complemented by 3 types of guarantees (buy back and relocation guarantees; resale
insurance).

16. Income ceilings for PSLA
Source: Le guide du prêt social location-accession (PSLA) 2018 (p. 26)

17. ‘Saint Priest’ of the RSH (RHÔNE SAÔNE
HABITAT)
Access to affordable homeownership:
• This residence includes 50 units
in secured accession from T2 to T5: 10
T2 / 25 T3 / 12 T4 / 3 T5.
Benefit from exceptional conditions:
• Price in VAT reduced to 5.5% under
conditions of resources
• New Zero Rate Loan
• Resale insurance, repurchase guarante
e; relocation guarantee
• Prime Plan 3A of the Métropole de
Lyon.

18. Impact of the PSLA
• Functioning of PSLA bounded with effective financial governance for affordable
housing – strong relationships between banks, social/affordable housing institutions,
tenants and municipalities,
• Small scale but becoming increasingly more important:
• Production of homeownership via PSLA: 46,700 housing units (2004–2015), 4,600
per year; HLM accounts for 80% of operations – 3736 approx. per year.
• Sharp increase in total PSLA loan sales between 2011 and 2015 (6,700 – 8,100).
Source: The Cour des Comptes Rapport, PSLA (2016, p. 51).

19. Impact of PSLA in terms of urban planning
Although it is complex to track socio-spatial ‘effects’ of economic policies (and there is
much more policy impact research that needs to be done) it is important to note that…
… via PSLA, the HLM-developer (supported by municipalities) takes decision about
location of new construction for affordable homeownership in space and through that it
can address socio-spatial polarisation ‘effects’ (exclusive housing development in ‘hot’
real estates markets)
Also, re-purchase guarantee accompanying PSLA allows e.g.
• retaining social housing stock in the areas of high demand/high price areas,
therefore securing social mix objectives (as above); resell of social housing on
commercial markets and re-invest in the areas of higher demand and/or of critical
importance for development of cities.
Economic/financial ‘tools’, used to decrease the costs of homeownership, allow effective
and ‘smart’ management of social housing stock in a particular area; therefore it can
influence on ‘social mix’ effects and contribute to greater socio-spatial inclusiveness of
cities.

20. Summary
Based on the examples of S106 and PSLA, this presentation not only…
• outlined ‘good practices’ in implementation of affordable housing
objectives into economic and spatial policies…
• but also indicated relevant ‘synergy effects’ between economic and
spatial planning objectives and outcomes;
In particular, that…
• A spatial planning tool designed to enable construction of affordable
housing in cities, can bring about economic benefits for social/affordable
housing providers,
• A financial tool designed to decrease costs of homeownership, can be
use as a ‘smart planning tool’: to manage demand for affordable
housing in space.

21. Conclusions
By now, there is no doubt that access to decent and affordable housing in pre-requisite
for sustainable development, economic recovery and social integration.
Solutions to ‘housing crisis’ can be found in various policy areas (in social, economic,
environmental policy areas) and there is a value-added to developing ‘smart’=integrated
approaches to affordable housing as ‘synergy effects’.
The objectives and the effects of policies can be mutually reinforcing. As I tried to
demonstrate, it is possible to make a business case for investment in affordable housing
by looking at spin-offs effects across (various) policy areas. At the same time, however,
policies can generate ‘trade-offs’ with regard to housing.
There is a need to invest more and faster into affordable housing in Europe (and find
balance between public and private interests), but there is a need to do so not only by
looking ‘outside’, for potential of policy transfer, but also by looking ‘within’, and to
better understand complex dynamics of policy and practice for affordable housing.

22. Thank you
Contact:
Dr Agata Krause
agataaleksandrakrause@gmail.com
+32 478 82 61 64