Planning guidance

1.1 This is the 2024 annual update of the Affordable Housing benchmark prices. This methodology is the same based on earnings data with adjustment to account for households on benefits. The main stages of the methodology are:    

• Ascertaining lower quartile and lower decile earnings
• Translating individual earnings to household earnings
• Applying affordability criteria
• Translating affordability into square metre benchmarks

Step 1 – lower quartile and decile earnings

1.2 The earnings figures were taken from the Annual Survey of Hours and Earnings (ASHE) which are published annually and can be easily and quickly inserted into our methodology to update the benchmarks when needed. Figures are for a combination of full time and part time (75% Full Time and 25% Part Time earnings on a 3 year average to dampen volatility of annual change in PT earnings) male and female earnings of individuals resident in Leeds and are provided as quartiles and deciles.    

Step 2 – household earnings

1.3 The ASHE source only provides earnings data for individuals, not households and no alternative regular reliable free data sources for household earnings could be identified. Therefore, the methodology translates individual earnings into household earnings. Data from the Office of National Statistics 2015 was used to understand the distribution of different sizes and types of household in Leeds. Using the earnings of individuals enabled the earnings profiles of typical single and family households to be generated. It should be noted that the earnings of childless “couple” households has deliberately not been factored into single households because this would have the effect of exaggerating the benchmark prices for flats, making them unaffordable for many single households.    

Step 3 – affordability criteria

1.4 Affordability will be different depending on whether affordable dwellings will be sold to a registered provider or rented directly in developments of private rented sector (PRS) dwellings. Sale dwellings are subject to standard mortgage multiplier maximums whereby single households are typically able to borrow 3 x gross salary and family households are typically able to borrow 2.5 x gross salary. A 5% deposit is then added onto those figures. For rental dwellings it is assumed that rents payable should not exceed 25% of gross earnings to be regarded as affordable (Leeds SHMA (2011) assumes that a household is considered able to afford market housing in cases where the rent payable would constitute no more than 25% of their gross household income).    

Step 4 – square metre benchmarks

1.5 The practice of requesting, negotiating and agreeing affordable housing with developers is helped by having benchmarks in a £/sqm form. It takes away the complexity of setting a multitude of different benchmarks for different dwelling sizes and it offers developers ability to quantify the cost of affordable housing in Leeds before they buy land. Some assumptions have to be made to translate affordability benchmarks into a £/sqm form. Generally speaking it is expected that single person households would be suited to living in 1 or 2 bedroom dwellings and therefore it would be appropriate to use single household affordability to calculate a square metre figure for apartments. Likewise, given that family households are thought to be suited to living in dwellings of 3 or more bedrooms it would be appropriate to use family household affordability to calculate a square metre figure for houses. With reference to the nationally described space standards it is assumed that a 48 square meter dwelling would provide a reasonable proxy for apartments of a high density city centre character, 55 square metres for suburban apartments, whilst an 85 square meter dwelling would provide a reasonable proxy for houses.    

1.6 The benchmarks calculations are as follows:    

Houses for sale

Sale benchmarks

Apartments for sale

Sale benchmarks

Rental

1.7 In terms of build for sale development the methodology included in this update details the Benchmark Transfer Prices (BTP) to be used to ensure compliance with Policy H5 affordability standards, with Registered Providers complying with the tenure requirements as per s106 agreements. Should a developer secure an offer from a Registered Provider to acquire properties at above the BTP, the Council will allow for overpayment to be made but only on the basis that the Planning Policy requirements in Policy H5 and the provisions of the s106 agreement continue to apply and are met in full, except any specified benchmark transfer prices which are exceeded. Written confirmation of this will be required from the Registered Provider partner.    

Appendix 3

Affordable housing benchmark prices and rents in Leeds for 2024/25

Table 1 below sets out the prices that the City Council would normally expect developers to dispose of affordable dwellings to Registered Providers, subject to the provisions of para 1.7. They are derived from the mortgage payments that low earning households in Leeds would be able to afford. They translate the affordability standards set out in Policy H5 of the Core Strategy into benchmarks that can be applied in practice achieving consistency between different developments. It is expected that Registered Providers will pass on the affordability to occupiers subject to reasonable administration costs.    

Table 1: Affordable Sale Prices

Table 2 below sets out affordable rent benchmarks. These apply in situations where a Private Rented Scheme Provider and the City Council have agreed that affordable housing provision will be provided on-site, or in buildings off-site. Management companies responsible for administering the rental of dwellings would be expected to rent the affordable dwellings at rents that accord with the benchmarks subject to arrangements agreed with the City Council.    

Table 2: Affordable Rents for PRS Schemes

The benchmarks apply to the gross internal floorspace of dwellings.    

1.0 Purpose:

1.1 Policy H5 of the Core Strategy sets the principle that new affordable housing in Leeds should be made affordable enough for households on lower quartile and lower decile earnings. Affordable Benchmark Transfer Prices (BTPs) set the price that housing developers sell affordable homes to Registered Providers (RPs). The annual Affordable Housing Benchmarks set this price based on income figures. This can be found here: Planning framework.  

1.2 The method of calculating BTPs starts with Leeds earnings figures from the Annual Survey of Hours and Earnings (ASHE) and calculates what price of dwelling and rents could be afforded by households on lower quartile and lower decile earnings in Leeds.  This then produces an affordable value of the property based on a £/sqm basis.  BTPs are updated each year in May when new ASHE data is published.    

1.3 The Core Strategy Selective Review (2019)(CSSR) updated Policy H5 Affordable Housing and related supporting text.   It re-confirmed the approach of using BTPs relating to low household earnings but used new terminology to spell out that affordable housing provision in Leeds was focussing on those in greatest need and what tenures should be provided:    

• 40% affordable housing for Intermediate or equivalent affordable tenures 
• 60% affordable housing for Social Rented or equivalent affordable tenures 

1.4 CSSR supporting text at 5.2.14 states (underlined below for emphasis):  

2.0 2024/25 Update:

2.1 This update relates to homes being transferred to Registered Providers only and does not apply to the benchmark rents used for rental accommodation within the Build to Rent market as set out in Table 2 in the Benchmark Transfer Update 2024/25.  

2.2 The update provides the following wording:  

2.3 If a developer proposes to deviate from the BTP set out in the 2024/25 update the Council should be notified. The Developer is required to ensure that s106 tenure requirements (as per Policy H5 and detailed in section 1 above) are still met and the RP partner provides written confirmation to this effect. (This can be part of the Affordable Housing Fulfilment Plan submission if this is included within the s106 agreement for the site).  

2.4 A full review of Benchmark Transfer Price requirements will be included as part of Local Plan 2040 review.  

1.1 This is the 2023 annual update of the Affordable Housing benchmark prices. This methodology is the same based on earnings data with adjustment to account for households on benefits. The main stages of the methodology are:                    

• Ascertaining lower quartile and lower decile earnings
• Translating individual earnings to household earnings
• Applying affordability criteria
• Translating affordability into square metre benchmarks

Step 1 – lower quartile and decile earnings

1.2 The earnings figures were taken from the Annual Survey of Hours and Earnings (ASHE)[1] which are published annually and can be easily and quickly inserted into our methodology to update the benchmarks when needed. Figures are for a combination of full time and part time[2] male and female earnings of individuals resident in Leeds and are provided as quartiles and deciles.                    

Step 2 – household earnings

1.3 The ASHE source only provides earnings data for individuals, not households and no alternative regular reliable free data sources for household earnings could be identified. Therefore, the methodology translates individual earnings into household earnings. Data from the Office of National Statistics 2015[3] was used to understand the distribution of different sizes and types of household in Leeds. Using the earnings of individuals enabled the earnings profiles of typical single and family households to be generated. It should be noted that the earnings of childless “couple” households has deliberately not been factored into single households because this would have the effect of exaggerating the benchmark prices for flats, making them unaffordable for many single households.                    

Step 3 – affordability criteria

1.4 Affordability will be different depending on whether affordable dwellings will be sold to a registered provider or rented directly in developments of private rented sector (PRS) dwellings. Sale dwellings are subject to standard mortgage multiplier maximums whereby single households are typically able to borrow 3 x gross salary and family households are typically able to borrow 2.5 x gross salary. A 5% deposit is then added onto those figures. For rental dwellings it is assumed that rents payable should not exceed 25% of gross earnings to be regarded as affordable.[4]                    

Step 4 – square metre benchmarks

1.5 The practice of requesting, negotiating and agreeing affordable housing with developers is helped by having benchmarks in a £/sqm form. It takes away the complexity of setting a multitude of different benchmarks for different dwelling sizes and it offers developers ability to quantify the cost of affordable housing in Leeds before they buy land. Some assumptions have to be made to translate affordability benchmarks into a £/sqm form. Generally speaking it is expected that single person households would be suited to living in 1 or 2 bedroom dwellings and therefore it would be appropriate to use single household affordability to calculate a square metre figure for apartments. Likewise, given that family households are thought to be suited to living in dwellings of 3 or more bedrooms it would be appropriate to use family household affordability to calculate a square metre figure for houses. With reference to the nationally described space standards it is assumed that a 48 square metre dwelling would provide a reasonable proxy for apartments of a high density city centre character, 55 square metres for suburban apartments, whilst an 85 square metre dwelling would provide a reasonable proxy for houses.                    

The benchmarks calculations are as follows:

Houses for sale

Apartments for sale

Rental

Appendix 3

Affordable housing benchmark prices and rents in Leeds for 2022/23

Table 1 below sets out the prices that the City Council would normally expect developers to dispose of affordable dwellings to Registered Providers. They are derived from the mortgage payments that low earning households in Leeds would be able to afford. They translate the affordability standards set out in Policy H5 of the Core Strategy into benchmarks that can be applied in practice achieving consistency between different developments. It is expected that Registered Providers will pass on the affordability to occupiers subject to reasonable administration costs.

Table 1: Affordable Sale Prices                            

Table 2 below sets out affordable rent benchmarks. These apply in situations where a Private Rented Scheme Provider and the City Council have agreed that affordable housing provision will be provided on-site, or in buildings off-site. Management companies responsible for administering the rental of dwellings would be expected to rent the affordable dwellings at rents that accord with the benchmarks subject to arrangements agreed with the City Council.                        

Table 2: Affordable Rents for PRS Schemes                            

The benchmarks apply to the gross internal floorspace of dwellings.

Where greenspace is to be provided off-site, the following elements will be considered, and a calculation generated to provide a “Total Greenspace Requirement” that will be agreed through S106:      

1. Consideration of any provision of onsite greenspace
2. Cost of appropriately laying out the required area of greenspace (using the costs above)
3. Costs for 10 year maintenance (both works and inspections)
4. Costs, where appropriate, of providing a children’s play area (this can include an on-site maintenance sum or an off-site contribution)
5. Professional fees for design and costing work