The Committee received a report on the degree to which deferred payment mechanisms had led to financial contributions towards affordable housing in cases where a policy-compliant level of affordable housing could not be provided. A list of legal agreements with financial contributions was attached at Appendix 1 together with any contributions made through a deferred payment mechanism.

The report explained that deferred payment mechanisms were a standard tool, used by local authorities and accepted by the industry in cases where a development could show that the viability assessment demonstrated to officer satisfaction that a development would not be viable if a policy compliant (for example 30% for developments of ten dwellings or more) level of affordable housing was provided, either through dwellings on site or a financial contribution. These mechanisms used a later viability calculation to assess whether sale values had increased or build costs decreased leading to an increase in actual profit that could be shared between the developer and the Council in the form of an off-site financial contribution.

Since 2012, 55 planning permissions had been granted in Reading with a deferred affordable housing mechanism in one form or another. Of these, nine agreements had made a payment under the review mechanism, with all but one below the maximum cap value specified in the agreement. A further four agreements had reached the relevant trigger point, but no payment had resulted from the submitted information (two were currently being audited to confirm this). The remaining agreements had either expired from a planning permission perspective or had yet to reach the relevant trigger point for assessment.  Early in the reporting period, the offsite contribution had been generally closer to policy compliance, but more recently there had been an increased number of agreements with a reduced contribution or no initial off-site contribution at all.

The deferred payment mechanisms had generated £5.5m over this period, including £3.5m from Kennet Island and £1.6m from Kings Point (now Verto), which were permissions from 2012 and 2015 respectively.  Over the same period offsite financial contributions had in total secured £31m and delivered £16m from 346 agreements, so deferred payment mechanisms represented a small but important part of the overall financial contributions.

Resolved –  That the report be noted.