Affordable Housing Debate

A very interesting discussion is happening within the Planning Panel at present on the way forward for affordable housing delivery under the section 106 agreement.

I am sure many of you know that I live in a shared ownership house in Wadebridge and have been banging the drum for affordable housing in North Cornwall for almost three years now. In the last year of NCDC we actually built more affordable houses than ever before, partly because of the housing boom and partly(I would like to hope) because of some of the measures that myself and like minded colleagues took to drive up % on major developments.

The discussion centres around the % of affordable houses sort from the developer and the deliverable price of those houses. My understanding is the officers use a formula to work out the finances for the 106. The scheme must be deliverable at that price set.

So, for example 1, a developer comes to the council for a housing development for 20 houses. I will use the old NCDC figure of 50% affordable housing. The old NCDC price for a 3 bedroom house was 125,000.
Sum up
10 affordable 3 bedroom houses at 125,000 each.-1.25 million, build cost 80k per unit, profit per unit 45k. Total profit for the developer minus land costs £450,000

Example two, same principle, 20 houses are being constructed. This time the 106 agreement states 33% affordable housing. Because the % is down the developer can deliver the affordable houses at a discounted price. This time the 3 bedroom house costs 80,000.
Sum up
6 affordable 3 bedroom houses at 80,000 each. The other 4 units are sold at 125,000-£980,000 build costs 80k, profit per unit 6x0 plus 4x45k. Total profit for the developer minus land costs £180,000.

So you see my problem. Do we deliver more affordable houses in % terms at a higher price or less affordable houses in % terms at a reduced cost. I have to say at the moment my feeling is delivering a smaller number of houses at a discount would be more beneficial. Especially in light of the current squeeze on lending.

I'm sorry for the detail in this post but for obvious reasons this is vital for Cornwall.

I welcome your views.