Brighton & Hove Affordable Housing Viability Study

Local planning authorities need to produce an up-to-date evidence base to inform the development of local plan policies. This affordable housing viability study will be used to set realistic policy requirements for development contributions as part of our review of affordable housing and other policies for our forthcoming City Plan 2041. 

Consultants Dixon Searle Partnership (DSP) were appointed in July 2024 to undertake an Affordable Housing Viability Study for Brighton & Hove City Council. Affordable housing means housing for sale or rent for those whose needs are not met by the housing market. 

This can include:

• social rent 
• affordable rent 
• discounted market sales housing
• other affordable routes to home ownership

This study reviewed the viability of a range of market-led development sites in the city. 

It provides advice on the:

• percentage of affordable housing the council can request for different types and sizes of development as part of standard and specialist forms of market housing
• tenure (rented or ownership) mix that the council can seek for affordable housing

The final report was delivered January 2025.

The consultants carried out this study through:

• a review of the existing national and council evidence base to understand which policies may add cost to development and their estimated impact on site viability 
• in-depth research into the City’s property market between July and September 2024
• a stakeholder consultation in Autumn 2024 with affordable housing providers and local planning agents
• discussions with the council to agree what types of development to test in the study
• appraisal modelling consistent with the Government’s National Planning Policy Framework and Planning Practice Guidance on Viability
• analysis of results to clearly understand ways forward for future planning policy 

Analysis of our Housing Market

A wide range of sensitivity tests were carried out reflecting recent and current market values, and an assessment of potential impact of prices rising or falling over time using information from reputable sources such as The Royal Institution of Chartered Surveyors (RICS). This helps to consider the long-term overview required by the proposed city plan 2041. 

Other components

Dwelling sizes are based on the Nationally Described Space Standard as adopted by the City Plan. 

Dwelling mix principles are based on the council’s Strategic Housing Market Assessment 2023.

Build Costs are based on Build Cost Information Service following the approach recommended by government.

Future Homes Standard (FHS) 2025 has been reviewed to understand the potential viability impact of the FHS 2025 on our affordable housing and other policy requirements. At present the study findings consider the viability impact of this is likely to be relatively minimal in isolation. This needs to be further considered as part of a plan-wide viability assessment which will be required as the City Plan review moves forward.

Biodiversity Net Gain (BNG) - This study has reviewed a potential increase of the current policy requirement of 10% BNG to 20%. This increase appears viable and could be explored further as part of the City Plan review. 

Government viability guidance says that different policy requirements can be set for different development types and different locations. 

We agreed the following development types to be tested in the study with our consultants:

• residential types – houses or flats
• scheme sizes including heights
• site type - Greenfield, Previously Developed Land (PDL) 
• mixed developments including residential, E Class (business/ commercial uses) and /or community facilities
• locations – Urban Central, Urban, Suburban  

The Specialist development types agreed include:

• Build To Rent with E Class, 
• Co-Living with communal space or facilities including workspace
• Purpose Built Student Accommodation
• Retirement flats – Sheltered or Extra Care, Nursing Home 

A range of affordable housing proportions from 10% to 40% were tested on the development types above.

The study shows that development viability is different for houses and flatted developments. 

Residential values for houses

Development types which include houses have been found generally viable with our current policy of 40% affordable housing. 

Residential values for flats

The results for flatted development types indicate that our current policy approach of 40% affordable housing is unlikely to be viable. A policy approach of 20% is likely to be the maximum level of affordable housing. This is because both the build costs for flats and existing use values are high in relation to their sales values. 

Government Guidance

The Planning Practice Guidance on GOV.UK says that policy requirements for affordable housing should be set at a level which makes development deliverable without the need for further viability assessment at planning application stage. 

Study Recommendations for different types of residential development

This study recommends that our policies can set different affordable housing rates for different residential development types. 

House development can generally bear 40% of affordable housing.

Flatted developments can generally bear 20% of affordable housing.

Residential values by location

The value of properties within the city depends on where they are built. These changes in value caused by location generally reflect the zones within the Council’s Community Infrastructure Levy (CIL) Charging Schedule. Highest values are found in CIL Zone 1. CIL Zone 3 indicates the lower range of residential values. CIL Charges for new development are highest in Zone 1 and lowest in Zone 3. 

This study does not recommend a different policy approach based on geographical location because these differences are already accounted for through CIL charges on new development. 

Affordable Housing tenure type

Two tenure scenarios were considered:

1. 55% Affordable Rent; 25% First Homes; 20% Shared Ownership - our current policy
2. 75% Rented - split evenly between Affordable Rent and Social Rent; 25% Low Cost Home Ownership – which better meets our current housing needs

This study found that the preferred tenure mix did not make a significant difference to affordable housing viability.

Student accommodation

The study results suggest that there may be scope for at least some form of affordable housing contribution from student accommodation developments. This could be explored further as part of the City Plan review. 

Sheltered Retirement Housing, Extra Care housing 

The study results indicate there may be scope for an affordable housing contribution from these development types as follows: 

• Sheltered Retirement Housing 20% to 40%
• Extra Care housing 20% to 30% 

Nursing home

The study results suggest that there is currently insufficient scope to seek affordable housing contributions for this development type. 

Build To Rent

The study results suggest that the scope for an affordable housing contribution from Build To Rent schemes is in the range of 0% to 10% 

Co-living

The study results suggest that there is a wide range of potential affordable housing contributions depending on the type of co-living accommodation being provided. Even at the lower end it is likely that most co-living schemes have some capacity to support a contribution. 

This study suggests that contributions could be based on a percentage of floor area or similar. However, this might require site specific viability testing based on the proposed scheme.