Medway Developer Contributions and Obligations Guide

5.1 Background

5.1.1 The One Medway Council Plan, 2024 identifies Living in Good-Quality, Affordable Homes as a key priority. The implementation of the Local Plan contributes to this priority, with a plan that reflects the needs of the communities in Medway, supporting a transition to a low- carbon future promoting affordable, energy efficient and sustainable homes. To meet this priority, a range of homes should be made available across a range of budgets. Comment

5.1.2 Medway’s Submission Draft Local Plan Policy T3: Affordable Housing states that all developments in Medway of 10 or more residential units (net) will require the delivery of affordable housing. Comment

5.2 Definition of Affordable Housing

5.2.1 The primary definition that is used to assess need, suitability, and to inform the development of requirements for affordable housing is provided within National Planning Policy Framework Annex 2: Glossary, which defines affordable housing as: Comment

5.2.2 Housing for sale or rent, for those whose needs are not met by the market (including housing that provides a subsidised route to home ownership and/or is for essential local workers); and which complies with one or more of the following definitions: Comment

1. Social Rent: meets all of the following conditions: (a) the rent is set in accordance with the government’s rent policy for Social Rent; (b) the landlord is a registered provider; and (c) it includes provisions to remain at an affordable price for future eligible households, or for the subsidy to be recycled for alternative affordable housing provision.
2. Other affordable housing for rent: meets all of the following conditions: (a) the rent is set in accordance with the government’s rent policy for Affordable Rent, or is at least 20% below local market rents (including service charges where applicable); (b) the landlord is a registered provider, except where it is included as part of a Build to Rent scheme (in which case the landlord need not be a registered provider); and (c) it includes provisions to remain at an affordable price for future eligible households, or for the subsidy to be recycled for alternative affordable housing provision. For Build to Rent schemes affordable housing for rent is expected to be the normal form of affordable housing provision (and, in this context, is known as Affordable Private Rent).
3. Discounted market sales housing is that sold at a discount of at least 20% below local market value. Eligibility is determined with regard to local incomes and local house prices. Provisions should be in place to ensure housing remains at a discount for future eligible households.
4. Other affordable routes to home ownership is housing provided for sale that provides a route to ownership for those who could not achieve home ownership through the market. It includes shared ownership, relevant equity loans, other low-cost homes for sale (at a price equivalent to at least 20% below local market value) and rent to buy (which includes a period of intermediate rent). Where public grant funding is provided, there should be provisions for the homes to remain at an affordable price for future eligible households, or for any receipts to be recycled for alternative affordable housing provision, or refunded to government or the relevant authority specified in the funding agreement.

5.3 When Affordable Housing Will Be Sought

5.3.1 All developments in Medway of 10 or more residential units (net) will require the delivery of affordable housing. Comment

5.3.2 In high value areas, including the Hoo Peninsula and suburban greenfield sites, 30% of all residential units proposed. Comment

5.3.3 In lower value areas, such as brownfield inner urban sites, 10% of all residential units proposed. Comment

5.3.4 This is set out in Section 12 ‘Findings and Recommendations’ of the Medway Viability Assessment : Comment

12.46 The greenfield sites across most of the Council area, where development is likely to be forthcoming, being the south of the area, derive a Residual Value that is above the Benchmark Land Value. The Council can be confident that these types of site are deliverable with 30% affordable housing. The greenfield in the north of the Council area, being the more rural and remote parts of the Hoo Peninsula, where little development is likely to be forthcoming, derive a Residual Value that is a little less than the Benchmark Land Value.

12.47 The sites which are modelled as high density and with taller buildings produce a Residual Value that is negative. These are only likely to be acceptable (in planning terms) in the higher value waterfront areas. Currently there are few such schemes in the planning system. The Council should be cautious about relying on such development to deliver housing under the current market conditions.

12.48 In both areas the more general brownfield development is challenging, even when modelled with 10% affordable housing. This reflects the Council’s experience on the ground, where the current affordable housing requirements are not always being met. The Council should be cautious about relying on such development to deliver housing under the current market conditions.

5.3.5 In line with the Planning Practice Guidance, it is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage. Comment

5.3.6 When delivering affordable housing it is required to: Comment

• Be provided and retained for an affordable use in perpetuity.
• Be designed to be indistinguishable from the market housing on site.
• Be of the same size and scale as market housing.
• Avoid being visibly distinguishable as different from the wider neighbourhood and be delivered across the site where appropriate.
• Reflect the tenure mix as set out in the latest Local Housing Need Assessment
• Reflect the need for affordable accommodation for older persons and those with specialist needs, in line with tenure and size split requirements as detailed in the latest Local Housing Needs Assessment

5.3.7 S106 Agreements will require the affordable housing to be retained in perpetuity. Matters to be taken into account when affordable housing is negotiated will be: Comment

1. the suitability of the site for affordable housing development.
2. the economics of provision.
3. the proximity of local services and facilities and access to public transport.
4. the realisation of other planning objectives.
5. the need to support Medway’s regeneration agenda and to achieve a successful housing development, taking into account the appropriate mix of affordable housing types and the proportion of affordable housing and its subsequent management.

5.4 Delivering Affordable Housing

5.4.1 The affordable housing element of the housing supply can be split further into the following tenures. 20% to be Social Rent, 45% to be Affordable Rent, with the remaining 35% as Shared Ownership. Delivery of affordable housing should be on site in the first instance. If this cannot be achieved, then an alternative approach will need to be robustly justified. The local context and demographics will be a key consideration. The following delivery sequence should be followed to justify any alternative approach: Comment

• A change in the tenure mix on site to facilitate delivery.
• Delivery of the required units on a separate site.
• An agreement with a registered provider to deliver the units off site.
• Only if both on-site and off-site delivery is demonstrated with robust justification not to be achievable should consideration then be given to a financial contribution provided to the Council to the equivalent value of the onsite provision to allow for offsite delivery.

5.4.2 A viability assessment in line with national policy and guidance should be submitted to the Council to be independently verified if the affordable housing proposed does not meet that which is required. Comment

5.4.3 All forms of affordable housing will be provided on the basis of a 'local connection cascade'. The details of this cascade will be determined on a case-by-case basis, but will follow the general approach of prioritising households with an established local connection (and for social and affordable rent) in housing need to the parish or town through residence or place of work, then households from surrounding parishes in the borough, and then wider. This will be secured by a Section 106 agreement. Comment

5.5 Who Can Deliver Affordable Housing?

5.5.1 Affordable Housing Providers - Medway Council does not want to adopt restrictive practices, which could preclude innovation and competition between potential providers of affordable housing. The most effective way of delivering the requirement, however, is widely considered to be by engaging a Registered Provider of social housing or be a Homes England Investment Partner. Comment

5.5.2 It is recommended that the skills and experiences of Registered Providers be used at an early stage of the design process. Design and management issues in relation to affordable housing are far better resolved at this stage. Registered Providers will also be able to advise on the financial implications of the affordable housing requirement. Comment

5.5.3 Contact details for those Registered Provider partners that have a demonstrable track record of delivery and management within Medway can be provided on request. The Council retains its right not to support the disposal of affordable units to RPs that do not have the management abilities and local knowledge to effectively manage new affordable housing in Medway. Comment

5.6 Registered Providers and Investment Partners

5.6.1 The Council does not prescribe the affordable housing providers that developers use to deliver affordable housing, nor does it have a restrictive list of partner affordable housing providers eligible to operate in the area. To ensure prospective partners are competent and committed to affordable housing delivery and management in Medway they are required to either be a Registered Provider or have Homes England Investment Partner status. Registered Providers are bodies registered with Homes England as a social landlord pursuant to the provisions of the Housing and Regeneration Act 2008. Comment

5.6.2 Investment partners are those organisations that have successfully qualified for investment partner status by completing Homes England’s qualification questionnaire and having been selected; this selection having taken into account the applicants’ technical ability (based on the technical standards described in the former Housing Corporation’s Design and Quality Strategy and Design and Quality Standards), financial capacity and good standing. Comment

5.6.3 This will enable the Council to make an informed decision on the ability of the organisation to deliver and manage affordable housing whilst ensuring all interested organisations have a fair and equal opportunity to demonstrate how they will operate. Comment

5.6.4 Specialist housing providers who are unable to fulfil all the criteria may still be considered but the Council reserves the right to demand additional information. Comment

5.7 Medway Council Eligibility Criteria

5.7.1 All affordable housing providers wishing to operate in Medway will be expected to be able to fulfil all of the following criteria. They must: Comment

1. Be a body registered with Homes England (HE) as a social landlord pursuant to the provisions of the Housing and Regeneration Act 2008 or any other body or company approved by Homes England for receipt of social housing grant or other financial support and approved by the Council.
2. Enter into a nominations agreement with the Council for the homes to be delivered.
3. Enter into a Local Lettings Plan (LLP) with the Council for the homes to be delivered.
4. Be a member of Kent HomeChoice and agree that all lettings will go through the Kent choice-based lettings system.
5. Have due regard to the Tenancy Strategy of the council when formulating policies relating to:
   • the kinds of tenancies they grant
   • the circumstances in which they will grant a tenancy of a particular kind
   • where they grant tenancies for a term, the length of the term and
   • the circumstances in which they will grant a further tenancy on the coming to an end of an existing tenancy.
6. Have an office within Medway or be able to demonstrate that adequate management arrangements have been put in place for the management of the stock in the area.
7. Be willing to actively engage as a key stakeholder in the development of policies and strategies developed by the council where invited to do so.
8. Consider the use of Modern Methods of Construction (MMC) for all new developments (where practicably possible).
9. Use all reasonable endeavours to make developments meet the current Secure by Design standard, and where suitable the additional provisions for specialist provision (unless otherwise agreed by Homes England and the Council).
10. Comply with the standards set out in Fact Sheet No. 6 – Design Principles for Extra Care Housing (3rd edition – Housing Learning and Improvement Network) or any subsequent design standards that may be adopted by the Council where extra care units are to be delivered.
11. Deliver a range of unit types, tenures and sizes as identified by local need and suitable to the location.
12. Work with the council’s Occupational Therapists (OTs) from the initial unit design stage through to the occupation of units. This will better enable units that can be designed for clients with specialist needs to be accommodated and delivered at minimal cost to all parties. OTs can also assist with the identification of clients with specialist accommodation needs ensuring such units are ready for occupation on completion or relets thus minimising void times.
13. Deliver a minimum 95% of all new affordable dwellings as M4(2) standard and 5% as M4(3) wheelchair adaptable housing as set out within Approved Document M under the Building Regulations 2010. Where it can be demonstrated to the council’s satisfaction that a site cannot deliver wheelchair-adaptable dwellings an exemption will need to be sought.
14. Ensure that their practices are compliant with the council’s duties towards equalities. As public bodies, local authorities are required to meet Public Sector Equality Duties (PSEDs), which are set out under Section 149 of the Equality Act 2010. Further information on PSED can be found on the Equality and Human Rights Commission website.

These duties include the need to consider how we: Comment

• eliminate unlawful discrimination, harassment and victimisation;
• advance equality of opportunities; and
• foster good relations

15. Respond in a timely manner to requests by the Council for qualitative and quantitative information – including quarterly information on voids, re-lets, tenure conversions, decent homes standards, rent levels, starts on site and completion numbers.
16. Be willing to meet quarterly with officers of the Housing Services Team to discuss the organisation’s development plan.
17. Agree to provide training to Council staff on relevant affordable housing standards and issues, which are of clear benefit to the enabling function of the Council and affordable housing providers.
18. Provide information on customer satisfaction levels to the Council on a scheme-by-scheme basis. Be willing to arrange site visits for the Council’s staff both prior to and on completion of schemes. The aim of this is to assist with developing Local Lettings Plans and to better ensure the properties are correctly advertised on the Kent HomeChoice system.

5.8 Affordable Housing Tenure Mix

5.8.1 The social rented stock in Medway at 13.6% is low relative to the national average of 17.1% and does not provide adequate turnover to meet the scale of need identified. The scale of need could justify the whole allocation for affordable housing being used as social or affordable rented units, but a balanced approach is now the core of the strategy in Medway, and this approach will be pursued. Comment

5.8.2 The Council’s preferred options are for mixed tenure schemes of social or affordable rented and intermediate tenures (usually shared ownership). It is accepted that for smaller sites there may be reasons for not mixing tenures. Therefore, where there are to be 10 or less affordable housing units provided in a scheme the Council may accept that the units can be of a single tenure. This will be determined by the Housing Services Team on a site-by- site basis based on local needs. Comment

5.8.3 Where the number of affordable units to be provided is greater than 10, a tenure mix of 20% Social Rent and 45% Affordable Rent and 35% intermediate affordable housing (of which Shared Ownership is the preferred option) will be sought. Comment

5.8.4 The Council maps the location of affordable housing by tenure and size of units, and in the interests of creating sustainable communities reserves the right to seek different tenure mixes where this improves the mix of tenures locally. Comment

5.9 Affordable Housing Size Mix

5.9.1 In terms of the size mix of affordable unit on a site, the Council will generally seek to achieve the approximate following mix, where practically feasible. The Local Housing Needs Assessment, 2025 provides evidence for the following mix: Comment

• 19.2% 1-bedroom properties
• 21.7% 2-bedroom properties
• 24.1% 3-bedroom properties
• 34.9% 4-bedroom+ properties

5.9.2 The Housing Services Team recognises that Medway contains a wide range of development sites, and not all sites will be capable of delivering the full range of unit sizes. Some sites may be unsuitable for houses and others unsuitable for apartments or bungalows. Where this is the case the Housing Services Team will expect the affordable element to be representative of the total size mix to be delivered on any given scheme. The above breakdown of both housing tenure and size is to be regarded only as a guide. The exact percentages for each site will be determined following discussions between the Housing Services Team, Development Management and the developer prior to the drafting of a S106 Agreement. Comment

5.10 Design and Layout

5.10.1 In accordance with government guidelines on sustainability, the Council favours a mix of housing types and tenures on developments. The Council expects affordable housing to be so designed that it cannot be easily distinguished from market housing however in some circumstances some differences may be accepted. The developer and affordable housing provider are advised to work together to ensure that the affordable housing forms an integral part of the overall development. Comment

5.10.2 Developers will need to satisfy the Council that the mix of unit types will address the housing need that has been identified in the area and that the standard of construction is suitable. Comment

5.10.3 Internal space standards should, as a minimum, comply with any current council or Homes England guidance (whichever is larger). The following table gives indicative space standards for selected dwelling types based on the current nationally described space standard Comment

Table 3: Comment

5.10.4 The Council requires developers as a minimum to adhere to the provisions of the Technical Housing Standards as set out in Nationally Described Space Standard, published by Government in 2015. As such compliance will be a consideration in the grant of planning permission and will apply to all proposals involving new units of accommodation, including affordable units. Comment

5.10.5 Specific advice on individual sites should be sought at an early stage from the Housing Services Team. Comment

5.10.6 On sites that are large enough for there to be a choice of location for the affordable housing, the opportunity should be taken to locate it near bus routes and local facilities if these are available. Comment

5.10.7 It is expected that developers will take part in a Considerate Contractor scheme, and where possible seek to use local contractors and suppliers whilst promoting training and career advancement opportunities. Comment

5.11 Affordable Housing Plan for S106 Sites

5.11.1 As part of S106 obligations developers will be required to provide an Affordable Housing Plan (AHP). See below for items that should be incorporated within the AHP. The AHP will need to be approved in writing by the Housing Services Team prior to the commencement of any development. For larger sites broken down by phases the AHP will need to be agreed for each phase before development can commence. Comment

5.11.2 The AHP should illustrate/include the following Comment

• Meet the minimum target for affordable housing, provided across the entire site including gardens and any associated buildings such as garages.
• The size (sqm), number of bedrooms and housing type of each affordable property.
• Clearly labelled associated parking for the affordable units.
• Tenure of the affordable housing – normally 20% Social Rented, 45% Affordable Rented and 35% intermediate (Shared Ownership being the preference) - to be shown in different colours on a layout plan (or floor plans in the case of flats).
• Where more than one type of intermediate product is being delivered these will need to be distinguishable via the use of different colours.
• Which of the affordable homes are being delivered to M4(2) standard or as M4(3) wheelchair adaptable homes.
• Which of the affordable homes are specialist units (extra care, sheltered, learning disability etc) where applicable.
• Written evidence that the scheme has been assessed and meets the required design and quality standards.

5.12 Phasing

5.12.1 The affordable housing provision to be made on a site should be an integral part of the development. Where a development is to be provided in phases, it may also be appropriate for the affordable housing element to be phased. Comment

5.13 Sustainable Integrated Communities

5.13.1 On sites where an element of affordable housing is required, it should be provided on the site. This supports the creation of balanced sustainable communities. Normally the affordable housing element of a site should be of a similar size and character to the market housing on the site unless this does not reflect the local need. Comment

5.13.2 The Council believes that to create integrated communities the affordable homes should be indistinguishable from the market housing and distributed throughout the development. However, the Council considers clusters of affordable housing to be more practical than excessive ‘pepper-potting’ and where it is demonstrated to be essential to ensure high standards of estate management and maintenance, larger clusters of affordable housing will be permitted. Comment

5.13.3 On larger sites, the Council will negotiate a phased release of affordable housing to ensure a better distribution of tenure mix. This will be secured by way of the S106 Agreement that will include appropriate triggers to link the occupation of open market units to the delivery of the affordable housing. Comment

5.14 Building to Meet Housing Need

5.14.1 New schemes must meet the proven housing needs in Medway. The Council undertakes regular needs analysis based on its housing register, housing needs surveys and/or strategic housing market assessments to establish the housing needs of Medway. Comment

5.14.2 It is recognised that several housing sub-markets operate within Medway and the tenure mix sought may vary to reflect local need and existing supply within any given locality. Comment

5.14.3 The Medway housing register indicates a significant requirement for properties that are fully wheelchair-adapted or suitable for clients with mobility problems. All suitable affordable housing schemes are to include a minimum 5% of homes that are M4(3) wheelchair adaptable homes. Comment

5.15 Affordability

5.15.1 The Council will insist that intermediate housing products are affordable to local people in housing need before agreeing to their inclusion within an affordable housing scheme. The Council collects data on local incomes and house prices/market rents to establish the income levels required to access the local housing market. This will be used to assess the affordability of intermediate products based on mortgage and rental costs equating to no more than 30% of the average gross income of households unable to access the open market. Comment

5.15.2 Where service charges are to be charged, they should be reasonable so as not to render the units unaffordable once added to the rents. Comment

5.16 Funding for Affordable Housing

5.16.1 The cost of providing affordable housing should be accounted for in the land purchase price. The Council does not accept situations where developers purchase land with the assumption that the requirements for affordable housing will be reduced in order to ensure financial viability. Comment

5.17 Site Viability and Abnormal Development Costs

5.17.1 The Council recognises that requiring developers to allow part of their site to be used for non-market housing will result in a cost. In order to offset these costs, developers will be expected to take the requirement into account in negotiating realistic land values with site owners. Comment

5.17.2 Other planning related requirements such as education, community facilities, children’s play areas etc. will likewise be treated as known costs. Comment

5.18 The ‘Planning Gain’ Requirement

5.18.1 When negotiating on sites with a requirement for affordable housing, the contribution that the Council will seek from the developer is the provision of the affordable housing land fully serviced to the site boundary for free. Comment

5.18.2 Serviced land covers provision to the site boundary of all services (electricity, gas, water, sewerage, telephone, lighting etc) necessary for development. It also covers connection costs, demolition costs, infrastructure (roads, footpaths, boundary walls etc), decontamination, archaeological costs and site clearance where applicable. Services must be provided to the edge of the land and there must be no legal, physical or financial barrier (i.e. unencumbered access) to the serviced the land for the builder constructing the affordable housing. Comment

5.18.3 In cases where the developer is to build the affordable homes rather than just transfer the land for free, the Council will expect the planning gain to be demonstrated by the cost that the developer charges the affordable housing provider for the built units. The price should reflect build costs (rather than the value of the dwellings) and exclude the value of the clean serviced land. Comment

5.18.4 The Council follows an “open book” approach to valuations and development economics on affordable housing schemes where developers present schemes that do not meet the requirements of the affordable housing policy. In these cases, the applicants should be prepared to discuss the various cost components of their schemes with the Council, and will be required to meet the costs of an independent assessment of these costs commissioned by the Council. Comment

5.19 Supported Housing

5.19.1 The Council regularly undertakes detailed needs analysis on the housing requirement of older and vulnerable client groups. The council will on occasions seek to negotiate an element of supported housing as part of the affordable requirements. Comment

5.19.2 This reflects the government’s objectives to provide high quality, value for money housing and support services to vulnerable people. Details on the identified requirement for affordable supported housing can be obtained by contacting the Housing Services Team. Comment

5.20 Equality Guidance

5.20.1 Medway Council recommends that all affordable housing providers wishing to operate in Medway ensure that their practices are compliant with the Homes England Guidance . It is aimed at eliminating discrimination and promoting equality through the people affordable housing providers employ in the delivery of services to the community. Comment

5.20.2 Affordable housing providers should observe and act upon the Equality for Human Rights Commission’s code on housing and associated guidance. Comment

5.20.3 The Council also encourages affordable housing providers to give due regard to guidance produced by HLIN Viewpoint71 “Building in Inclusive Design: A modern housing perspective” in the delivery of their schemes. Comment

5.21 Mortgagee–in–Possession Clauses

5.21.1 The Council will make provision in S106 Agreements for mortgagees in possession to be exempted from covenants to use land only for affordable housing and from occupancy restrictions linked to the development of the affordable homes. Comment

5.22 Pre-application Discussions

5.22.1 Negotiations where affordable housing is involved often require considerable input. Contact should be made with the Council at the earliest opportunity and well in advance of any planning application being submitted. Negotiation must be concluded before the Council decides on the planning applications or schemes will be recommended for refusal. Comment

5.23 Registered Providers Already Operating in Medway

5.23.1 Medway Council operates a flexible approach to partnership working and does not maintain a list of preferred Registered Providers. However, a number of Registered Providers have been developing and managing affordable stock in Medway for a long period of time which has enabled them to develop a better understanding of need and operating procedures in Medway. Comment

5.23.2 Where a developer is seeking to deliver affordable units or deliver the units in partnership with a Registered Provider not currently operating in Medway it is advised that the Housing Services Team be contacted at the earliest opportunity. Comment

5.23.3 This is advised to ensure the organisation delivering the affordable units is fully aware of the housing need requirements of Medway and the necessary standards are achieved in terms of both build and management. Medway Council will only seek to work with organisations that can demonstrate a long- term commitment to affordable housing delivery and management in line with the Council’s strategies and objectives. Comment

5.23.4 A list of Registered Providers currently operating in Medway can be obtained from the Housing Services Team. Comment

5.24 Policy/Evidence Base

National Planning Policy Framework: annex 2 Comment

Medway Local Housing Needs Assessment, 2025 Comment

Housing Association Guide to Disability Equality Schemes and Action Plans Comment