Affordable housing: AH:ETA RIP?

Abstract

Of all the legislation rushed into force in the dying days of the last Labour government, the Affordable Housing: Enabling Territorial Authorities Act 2008 (AH:ETA) is perhaps the most obviously flawed. The purpose of the AH:ETA is to “enable a territorial authority, in consultation with its community, to require persons doing development to facilitate the provision of affordable housing”. In essence, developers could be required to provide for affordable housing directly within a development or indirectly via land or a monetary contribution to the authority. Arguably any legislation that seeks to force the provision of a social good from a business whose purpose is profit, without revealing any apparent benefit to that business or providing a guarantee of incentives or compensation, is built upon questionable foundations. Clever developers, avoiding the burden, will simply pass the costs onto the other properties in any development and thus the average price of housing will not reduce. Alternatively, the AH:ETA will operate as a disincentive to development, exacerbating supply problems and again stimulating price competition.