Mid Sussex new District Plan needs more ambitious affordable housing target

How much profit do you have to allow strategic developers to incentivise them to build enough affordable and social homes to meet local need? That is the question facing the Planning Inspectorate examiner of Mid Sussex District Council’s proposed new District Plan, currently.

Mid Sussex prides itself on being a rural district.  It has much uniquely wonderful countryside and rural villages and towns.  But living there is expensive, and far too many local people – people we need to staff our local shops and keep our small businesses alive and well – struggle to afford the cost of buying or renting homes where they want to live.  There is a significant shortage of affordable and social housing in our towns, and especially in our rural areas, as rental and purchase costs remain too high for far too many people.  The evidence lies in the District’s growing housing waiting list.

Note also the conclusion of a recent comprehensive report by English Rural Housing Association[1]: “With rural house prices reaching 8.8 times local earnings–compared to 7.6 times in urban areas – and only 9% of rural homes classified as affordable versus 19% in urban areas, rural England confronts an affordability gap that has created waiting lists requiring 89 years to clear at current construction rates”

“Affordable” is a loaded term when it comes to housing.  With house prices and rents on a forever upwards escalator, the proportion of many people’s income spent on their home (mortgage, rent, local taxes, upkeep etc) makes a struggle for many people.  But “affordable” has a particular meaning and definition in planning-speak. In (overly) simplistic terms it means homes for purchase at a discount to market rates or, more usually for social or other subsidised rent; and it is in that latter meaning that I use the term affordable in this article.

It also means that it is new housing that is less profitable for developers to build.  Without a mixture of stick and carrot the private sector would simply not build affordable housing.  The stick comes in the form of local planning policy requirements that require a set proportion (30% in Mid Sussex’s case) of new homes to be delivered on a given site to be affordable ones, as a condition of the grant of planning permission to develop that site.  The carrot is, in effect, a promise to the developer that the required affordable proportion will be set at a level which should enable the developer to generate a decent baseline profit on the development as a whole.  That level is known as the viability level.

A planning authority must therefore strike a balance in setting the percentage of new homes that must be affordable between, on the one hand, providing a sufficient incentive to developers to want to build the new homes that Mid Sussex needs and, on the other, maximising the number of new affordable and social housing to meet ever growing local need.  Set the percentage too high, and the developers will walk away from building; set it too low and the developers make extra profit by not building enough affordable homes.

It is against this background that CPRE Sussex has been looking at the proposal in Mid Sussex’s proposed new District Plan to maintain its existing policy of requiring 30% of new homes on sites for 10+ houses (or for 6+ homes on sites within the High Weald) to be bult as affordable homes.  We have come to the view that this policy has the balance wrong between getting needed new affordable homes built and developer incentive: the policy is unjustifiably skewed in favour of developers.

The level of need for new affordable housing in Mid Sussex is growing, and growing at an ever-faster rate.  The policy of requiring 30% of new homes to be affordable – Mid Sussex’s current requirement as well as their proposed future one – isn’t working because the backlog of people being unable to find suitable social or affordable homes to rent or to buy is increasing.  There are nearly 2,400 on Mid Sussex District Council’s housing waiting list (up from 1,881 in 2021).

Looking forward, Mid Sussex District Council itself estimates a requirement to build 694 new social and affordable homes every year to meet future need.  74% of those in need can only afford to pay a social rent, even with Housing Benefit/Local Housing Allowance support. These people are unable to buy or rent privately with incomes well below the local median of £42,400p.a.

Under its draft new Plan, the Council proposes setting an annual housing target of 1,088 new homes of all kinds.  A 30% affordables target would deliver no more than 326 new affordable homes a year, i.e. well under half the ongoing affordable housing need (never mind the backlog!), and with no assurance that they would be of the type that would meet the particular social rental home priority.

Would it be viable for the policy to require a higher percentage of social and affordable housing to narrow the gap between need and delivery; or would that disincentivise developers to the extent that they would lose interest in developing their sites at all.

The Council has not done that calculation.  At CPRE Sussex, we have, using the Council’s own numbers.  And, whilst we acknowledge the balancing act between carrot and stick, we think that the Council can definitely afford to be more demanding.  Let’s look at the numbers.

If we look across the board at the greenfield sites to be allocated in the new Plan for development (worryingly, all but two of the sites will be greenfield sites), the Council will be setting the viability for these developments  at a level that should allow the developers to make a baseline profit of just over 16%; or, in money terms, an aggregate baseline profit of £418m (to build 6,287 homes).  Not too many businesses get a baked in 16% profit margin!

But the effect of requiring just 30% of this housing to be built and sold as affordable homes is to generate additional profits for the developers of a minimum of a further £242m.  So the question is how much, if any, of that excess profit is necessary to keep the developers incentivised to build out their sites; or should they be required by the Council to burn up some or all of that excess profit in building more affordable homes to meet a demand that already significantly outstrips supply.  It is disturbing that the Council does not appear to have addressed the options of being more demanding.

There is a balancing act for the Council to perform, but the need is great.  In the face of that need, we don’t think that the Council’s 30% affordables policy gets the balance right.  If, for example, a 40% affordables requirement across the board were set, the Plan could deliver an extra 2,066 affordable houses.

It is illuminating that other Sussex authorities have set, or are planning to set affordables targets of around 40% or, in some cases, more. Mid Sussex District Council is out of line with its neighbours.

Based on Mid Sussex District Council’s own figures, we calculate that over the new Plan’s 19 year life their proposed 30% affordables housing policy would leave 6,200 local households in unsuitable accommodation, and developers with conservatively calculated excess profits of at least £242m as a matter of policy choice. At CPRE Sussex we say that’s the wrong choice.

Mid Sussex’s new District Plan is coming up for its public examination, where its soundness is tested by an independent Planning Inspector.  CPRE Sussex will be arguing before the Inspector that, in the face of considerable social need, the Council needs to set a higher affordable and social homes building policy if its Plan is to be sound.

[1]   English Rural Housing Association Report: “England’s Rural Housing Crisis: A Comprehensive Analysis” July 2025:  https://englishrural.org.uk/englands-rural-housing-crisis-a-comprehensive-analysis/