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Developers in planning push ahead of mayoral election

Zac Goldsmith Sadiq Khan London mayoral election 2016
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London developers are rushing through plans for new homes before the mayoral election in May amid fears a new mayor will impose stricter rules on viability assessments

The AJ’s sister publication Construction News understands that at least six clients are pushing to get planning applications through the system to avoid schemes coming under new policies.

These could include stricter requirements to reveal profits on individual schemes and less flexible affordable housing targets.

A lawyer acting for five of the clients, which collectively have developments totalling 3,000 units, said he was advising them to act quickly.

’The view we’re taking is that it’s better to get the deal done now, because after May you may be in a position where the GLA tells everyone to stop the deals [because] we’re going to have a new structure on viability assessments.’

His comments came after the London Assembly planning committee this month accused developers of using ‘the dark art of viability assessments” and abusing the planning system “to the detriment of local communities’.

In an open letter to the mayor, the committee called on Boris Johnson to introduce supplementary planning guidance (SPG) on viability assessments in London that could force developers to share information deemed ’commercially confidential’.

This information could include land costs, borrowing costs, build costs or the profit made on schemes.

The lawyer said increased transparency on build costs could have a major impact on contractors and their supply chains.

’Previously, developers would force up profit margins by pushing contractors and subcontractors harder on their own prices,’ he said.

’Then all of a sudden viability assessments reveal how developers are running their books and contractors would have a very clear view on what they were bidding against in the marketplace’’”

The Greater London Authority said it would be publishing a housing SPG, including a section on viability, “in due course”.

Another lawyer said she was acting for a client trying to push through a London scheme of several hundred units before the election, also because of policy uncertainty.

She said the level of affordable housing that developers may have to deliver was a continuing risk for firms.

Both Labour candidate Sadiq Khan and Tory rival Zac Goldsmith have pledged to deliver more affordable homes across the capital as the housing crisis deepens.

Some boroughs have already begun to turn up the pressure on developers that claim they are unable to deliver certain levels of affordable housing due to viability.

Greenwich is the latest council to introduce changes to policy that will force developers to submit a viability assessment along with their planning application if their initial plans claim they are unable to meet the borough’s 35 per cent affordable housing quota.

This will be published along with other planning documents once the application is validated.

Greenwich cabinet member for regeneration and transport Danny Thorpe said: ’The whole issue of a lack of affordable housing has brought the of issue of viability front and centre, particularly as there is no affordable housing grant. The big issue is that people want to understand more about this process and see more transparency, and that has been the main driver.’

A number of other London councils are also taking steps to increase transparency.

Islington introduced a supplementary planning document on development viability in January, allowing it to scrutinise viability appraisals when the affordable housing target has not been met.

Southwark Council drafted a supplementary planning document on development viability, the consultation on which closed on 16 February.

Speaking to Construction News, Labour MP for Westminster North Karen Buck said there was “much haste [for developers] to get to [planning] committees” before the pre-election purdah period begins at the end of March.

The MP said she believed this had been the case on Berkeley Group’s West End Green project and Sellar Property Group’s Paddington Place scheme.

The latter was forced to go back to the drawing board and reduce the height of the tower in the wake of local opposition.

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