Developer contributions scheme rejected
A report commissioned by the Department for Social Development and the Department of the Environment finds the proposed scheme to compel private developers to contribute towards the building of social houses unviable in the current economic climate.
A recently published report, commissioned by the Department for Social Development and the Department of the Environment has rejected the introduction of a developer support scheme in Northern Ireland. Developer contributions are a means of providing additional numbers of social and affordable housing units, often alongside new owner-occupied housing, in mixed income communities.
Across Northern Ireland a need for 2,000 or more affordable housing units per year has been identified but at present fewer than 15 developers are building more than 20 units per year. The report concludes that due to the nature of Northern Ireland’s housing market, the introduction of such a scheme is likely to have an adverse impact on the housing market.
At present, Northern Ireland is the only region in the United Kingdom that does not have a developer contribution scheme in place. Despite this rejection the report acknowledges that such a scheme could be of benefit in Belfast where the housing market is at its strongest.
The report recommends that in areas where developer contributions are valid, thresholds should be put in place as part of a locally defined policy. It also advises DSD to establish a working group of interested organisations to provide guidance on viability issues and a support team with the right skills to provide direct guidance on viability matters.
Speaking following the publication of the report, Social Development Minister, Lord Morrow MLA stated it will help frame ongoing discussions with key stakeholders on wider housing market issues. Environment Minister Mark H Durkan MLA also welcomed the research and stated that his department would continue to do all it can to ensure the planning system supports the supply of social and affordable housing.
Ultimately, the introduction and success of such development schemes depend on market conditions. With many of Northern Ireland’s housing developments built by small scale firms in a fragile and slowly recovering market, there is concern that the introduction of a developer contribution scheme could make development unviable as small developers struggle to raise the capital required to contribute to these schemes. To combat this concern, a site size threshold has been proposed but there are fears that if this policy was implemented, schemes that would have met the threshold may be redesigned to remain below the threshold, decreasing the number of new affordable housing being built in Northern Ireland.
The report also raises the possibility that the introduction of development incentives may boost the market’s recovery. Incentives such as the Help to Buy scheme or short term loan provisions as found in the rest of the UK could be used to encourage both the demand and supply of new developments and are believed to be partly responsible for the success of mixed tenure developments across the rest of the UK.
