Affordable Housing Supplementary Planning Document

Chapter 7: Alternative Contribution

Alternative Contribution through an Alternative Location

7.1 In the first instance where a reduced on-site provision is not possible to overcome demonstrable viability issues, the Council may consider alternative options as a contribution towards the provision of affordable accommodation in the City.

7.2 This includes identification of suitable sites within a reasonable distance of the development site to accommodate affordable housing and is also referred to as “off-site” provision. This off-site delivery via an alternative site however must in a location with the same, or greater need, for affordable housing as the original development site. This is to ensure that delivery of affordable housing can adequately meet the needs of the City’s communities.

7.3 Delivery of affordable housing on an alternative site should be of the same number and cost of delivery of affordable housing on the development site. Furthermore, the mix must be in accordance with the requirements of Policy H6, if market housing is to be delivered alongside on the alternative site, to ensure the realisation of healthy and mixed communities.

7.4 The alternative site must benefit from the same advantages and access to amenities and services for potential occupants as the original development site. Applicants may be required to demonstrate consideration of other potential alternative sites and that they have broadly similar characteristics and sustainability credentials.

7.5 The Council may accept purchase of housing units in the City by the applicant to be made available on an Affordable/Social Rent basis. This should replace any on-site affordable housing provision, where an alternative site is not achievable. The purchase of units as an alternative option should be equal to, in number and cost, as the delivery of on-site affordable housing. This is to ensure that there is no material difference, or loss between on-site delivery and the alternative options considered.

7.6 Consideration of alternative locations to provide affordable housing in replacement of on-site delivery, will on a site by site and proposal by proposal basis. It is recognised that a “one size fits all” approach is not appropriate and would not reflect the needs of the City at that particular time. The consideration will be negotiated between representatives of the Council and the applicants.

7.7 Furthermore, it is recognised that the delivery of off-site affordable housing provision may result in a material benefit to the developer. This is because the original development site, will deliver a mix of 100% market dwellings. As such, the Council will seek an increased proportion of affordable units on an alternative site as off-site provision, to off-set the resultant increase in market dwellings on the original development site. This will be equal to an additional 25%. A worked example is shown below for clarity:

Worked proposal example of 100 dwellings for on-site and off-site affordable housing provision

1.     On-site provision

2.     Off-site provision


Market Dwelling

Affordable Housing Requirement

Total Dwellings

1.     On-site provision

75 (on-site)

25 (on-site)


2.     Off-site provision

100 (on-site)

31 (off-site)


7.8 The examples in the table above demonstrate how the Council will seek an enhanced provision of affordable housing where it has been agreed with the Council that on-site delivery is not viable.

7.9 Example 1 in the table establishes a development of 100 dwellings that is compliant with the provisions of Policy H6, a split between 75 market dwellings and 25 affordable units. This reflects the 25% affordable housing requirement of Policy H6.

7.10 Example 2 demonstrates the arrangement where no affordable housing is delivered on-site, but rather delivered through an alternative mechanism off-site.

7.11 As can be seen, the Council will seek an increased off-site provision to counterbalance the resulting increase of the market housing numbers that would be achieved on-site. This will be through 25% uplift on the original 25% proportion of affordable housing that is required at Policy H6:

  • Total market dwellings delivered on-site: 100
  • 25% proportion of total on-site market units as affordable housing requirement: 25
  • Implementing the additional 25% uplift to the affordable housing figure: 6.25
  • Total off-site affordable provision: 31 (rounded to nearest unit)

Alternative Contribution as a Commuted Sum

7.12 In the case where a suitable, alternative location to deliver affordable housing cannot be identified, the Council will consider alternative contribution by way of a commuted sum paid to the Council. This will be on the basis where alternative delivery opportunities have been clearly and demonstrably exhausted.

7.13 Where the Council accepts a submitted viability assessment which demonstrates that reduced on-site provision of affordable housing as an option to achieve a deliverable scheme, and a suitable alternative location cannot be achieved, a commuted sum may be considered.

7.14 This alternative contribution in most cases will take the form of a financial payment to Coventry City Council secured via a Section 106 Agreement. This payment will be equal in amount to the costs of on-site affordable housing provision and will be utilised by the Council to achieve affordable housing through different means in the City.

7.15 Similarly, to off-site physical delivery, the receipt of commuted sums should reflect the material benefit to the developer of not providing any on-site affordable. The commuted sum paid to the Council should reflect this difference and, therefore, it should not be just the net worth of the delivery of on-site affordable units, but should reflect the increased proportion of market dwellings delivered as result of the agreed alternative contribution. This will take into account the viability assessment and will be agreed through detailed arrangements within a Section 106 Agreement.

7.16 The Council will retain the commuted sums on deposit for a period of up to 5 years and if the sum is not used, the amounts will be repaid to the applicant, inclusive of interest. This is implemented in the same process as all other financial Section 106 planning obligations.

7.17 The reason for seeking an alternative contribution is to ensure that any development that would otherwise be required to provide affordable housing under Policy H6 fairly contributes towards the provision of affordable housing in the City, irrespective of viability status. This ensures that the needs of the city can be met and that all citizens of Coventry are able to access truly affordable homes.

7.18 It is the objective of the Council that through commuted sums, development coming forward in Coventry, in cases of poor viability, will maintain delivery of affordable housing to meet the needs of the City.

7.19 In circumstances where management arrangements cannot be agreed with a Registered Provider for on-site affordable housing, particularly on affordable products managed by providers, a commuted sum may be accepted as an alternative. However, the Council will insist on strong and demonstrable evidence that an agreement has not been reached between the applicant and a registered provider. This can be in any form of evidence but should be independently verifiable.

7.20 In some cases, alternative disposal of affordable housing may be considered on a case by case basis.

7.21 The formula for calculating the commuted sum is;

A – B = C


A is the Open Market Value of the affordable unit not being delivered on-site. This value must be demonstrated by the developer via relevant, recent local examples supported by an independent valuation from a RICS accredited professional

B is the value that a Registered Provider would purchase the unit for, on the basis of it being an affordable unit. The developer should demonstrate this value with written evidence from at least two recognised RPs. If this is not available, the Council will take an average of recent RP transactions of similar units.

C is the commuted sum as it is the difference between A and B, and is considered the cost of developing that affordable unit elsewhere.