Supplementary Guidance - Affordable housing

The icon Developer Contributions and Affordable Housing Supplementary Guidance [1Mb] has been produced to give advice and information to all those with an interest in affordable housing.

As agreed in principle by the Committee the accruing and use of affordable housing credits is allowed under the authority of the Executive Director (Environment) in appropriate cases to encourage delivery of affordable housing during the current economic climate. As per the Report by the Executive Director (Environment) on 17 December 2008 it was agreed that in certain circumstances developers can apply to have the period for which their credits can be held extended up to a maximum of 10 years.

Can you tell me about the Commuted Sums?

A commuted sum is a financial sum, paid by a developer to Perth & Kinross Council. It is paid in lieu of serviced land which would otherwise have been delivered to Perth & Kinross Council or to a Registered Social Landlord nominated by Perth & Kinross Council for the purposes of providing Affordable Housing.

The Commuted Sum that applies per Housing Market Area as of 01 April 2019 is as follows:

Housing Market AreasPlot Value per Unit for Private SalePlot Value per Unit for Affordable HousingCommute Sum per Unit
Highland£20,000£1,000£19,000
Kinross£20,000£1,000£19,000
Perth£29,000£1,000£28,000
Strathearn£24,000£1,000£23,000
Strathmore£16,000£1,000£15,000

In instances where the commuted sum figures as set out in the table above are disputed then this must be made in writing to Perth and Kinross Council.

Any dispute must be accompanied by valuation carried out on the same terms by means of an independent valuer.

Valuation Methodology Statement

The commuted sum payment relates to the cost of providing serviced land for affordable housing for the same housing market area. Assuming that the Housing Supply and Innovation Division of Scottish Government will make Housing Association Grant (HAG) available, then the value of the land is the difference between the affordable land plot which can be purchased using the subsidy and the value of the site for private development i.e. the commuted sum is the additional amount the housing association or local authority would have to pay over and above the affordable housing land value to obtain an alternative site.

The valuation for affordable housing is based on a residual valuation where the costs of the development are deducted from the calculated income and housing grants as per the More Homes Division Guidance Note 2018/02 and the guidance notes issued by the RICS in particular 'Valuation of Land for Affordable Housing Scotland' GN100/2013 and VIP 12 'Valuation of Development Land'.

The valuations provided assume notional house plots for the erection of a semi-detached house, within a development of ten houses, two storey, three apartment (two bedrooms), having an approximate Gross Internal Area of 85 square meters in each of the 5 Housing

The figures in the above table are on the basis of the following two tenures:

1. Unrestricted plots for private sale

2. Social rent affordable housing plot

The commuted payment is the difference between the affordable land plot value and the value of the plot for private development multiplied by the number of Affordable Housing units required.

It is calculated on the basis of the number of Affordable Housing units required x (benchmark MV of unrestricted housing plot less benchmark value of an Affordable Housing plot).

Example Calculation

Commuted sum calculation using the Jan 19 figures for a development for 18 new homes in Kinross.

The Affordable Housing requirement in Kinross is 25% = 4.5 affordable housing units. The calculation would be:

Number of Affordable Housing units required x (benchmark MV of unrestricted housing plot less benchmark value of an Affordable Housing plot).

4.5 affordable housing units x (£20,000 less £1,000) equates to:
4.5 x £19,000 = £85,500 Commuted Sum

What Commuted Sums have been collected?

An annual report is been prepared giving information on the commuted sums which have been received each year.  It also gives the details of what these sums have been spent on. The most recent report is the icon Affordable Housing Commuted Sums Annual Report 2015-16 [898Kb]; past reports are available to download from the section at the bottom of this page.

Contact details

Development Plan

Pullar House, 35 Kinnoull Street, Perth, PH1 5GD
Tel 01738 475300