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Feature: Can Khan’s affordable housing targets work?

Nr9514 swandon way, wandsworth by allies and morrison
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Despite warnings that stricter targets on affordable housing will lead to fewer homes being built, early signs are that the London mayor’s tough attitude is paying dividends. Colin Marrs reports

In October, London mayor Sadiq Khan approved three new residential towers by Allies and Morrison on a former Homebase site in Wandsworth. It was the fourth time since he was elected in May 2016 that Khan has taken planning powers out of the hands of a local authority to negotiate higher affordable housing on an individual scheme – in this case increasing it from the 23 per cent originally proposed to 35 per cent. Separately, Khan last month released new London Plan housing targets which indicate that, overall, London housing schemes need to provide 65 per cent affordable housing to meet the needs of Londoners.

Such moves signal Khan’s determination to be tougher on affordable housing levels than his predecessor, Boris Johnson. But separate new planning policies introduced by the mayor aim to avoid the need for such intervention in the first place. Supplementary planning guidance (SPG) – aimed at fast-tracking schemes promising more than 35 per cent affordable housing without public subsidy – appear to be bearing early fruit. But are they set to change the way that architects approach the design of such schemes?

The new SPG aims to speed up development by removing the need for a viability assessment for schemes above the 35% affordable housing threshold. The use of viability assessments – allowing developers to submit calculations arguing for a reduction in their affordable housing obligations – burgeoned under the coalition government after the 2007 financial crash hit the development industry. However, the effect of the policy has come under increasing fire, with housing charity Shelter recently estimating that last year it led to the loss of 2,500 affordable homes in nine cities.

Deputy London mayor for housing James Murray says: ‘The policy was developed because there was a clear desire from all quarters to move on from very lengthy and protracted viability negotiations. That system wasn’t serving anyone. Developers were frustrated with the bureaucracy, and councils were tired of having a big battle over every large residential application.’

There have been situations where we have had to redesign schemes when the affordable element changed

Prior to the SPG’s introduction, negotiations on viability assessments could often continue well after a planning application was submitted. Often, this meant architects frantically reworking their schemes when final affordable housing allocations were agreed at the last minute.

‘There have been situations where we have had to redesign schemes when the affordable element changed,’ says Jo McCafferty, director at Levitt Bernstein. ‘If you do that, it has an effect on the amount of family housing, the amenities, and access,’ she says. ‘If you are certain at the outset, then you can factor those things into the design and make it easier to manage.’

Initially, some voices warned that setting a threshold of 35 per cent could lead to development drying up. But developers are warming to the new process, says Grant Leggett, head of the London office at planning consultancy Boyer. ‘The new regime provides developers with certainty,’ he says. ‘I am seeing a lot of developers that I wouldn’t have expected to say let’s just do 35 per cent and get on with things.’

The positive impact of this new certainty is set to benefit developers negotiating land purchases, says Steve Sanham, managing director at development firm HUB. ‘Historically, land prices have been agreed on the basis that there would be some kind of negotiation on affordable housing levels. To buy land had to second guess that level, and by the time you got to the planning and design conversation, most people would have paid too much money for the land.’

The capital’s larger developers, if not exactly enthusiastic about the 35 per cent threshold policy, seem willing enough to work with it. Tony Pidgley, chairman of the Berkeley Group, says: ‘If we really want to build homes for all Londoners, the private and the public sectors have got to collaborate. The reality is that most development in London involves complex, brownfield land which requires a huge amount of time, expertise and capital. But in our experience, the Mayor is open for business and prepared to fast-track sites that achieve the threshold of 35 per cent affordable housing, which has to be the priority.’

I am seeing a lot of developers that I wouldn’t have expected to say let’s just do 35 per cent and get on with things

Initial figures also indicate that the new affordable housing threshold has not discouraged developers from submitting residential applications. Figures produced on behalf of business group London First covering the first six months of 2017 show the capital’s councils are on course to receive applications for 32,000 affordable homes this year – up more than 50 per cent on 2016.

Moreover, fears that the rules could result in squeezed developers reducing overall housing numbers appear to be ill-founded – market sale home applications are also on track to rise 8.5 per cent to more than 52,000 this year. ‘Given that we are seeing above-average affordable home applications, without a reduction in market units, it would appear the mayor’s guidance is having an impact,’ says Naomi Evans, executive director of campaigns at London First.

McCafferty argues that having earlier certainty on affordable housing levels also helps the design community achieve higher-quality outcomes. ‘I think it means architects can work more closely with clients to really understand their briefs and design projects in the best possible way,’ she says. ‘It clarifies the brief and means you have longer to work through really good design.’

The new encouragement for higher affordable levels within schemes is helping fuel the emergence of a new, community-focused design sensibility, says Dipa Joshi, director at Assael and mayoral design advocate. ‘The desire to properly mix different tenures in development has overtaken sustainability as a driver,’ she says. ‘It is about building communities, rather than buildings; connecting properties with public spaces that encourage activities and events.’

‘The new policy seems to be more about fixing the headline level of affordable,’ says Sally Lewis, director at Stitch Architects. ‘However, there is actually more flexibility on what type of housing is provided within the overall percentage. Whereas two years ago, you would always look at 65 per cent of the affordable housing provision being for rent, the mix is less strictly defined than it was.’

The mix of affordable housing types can have profound effects on how schemes are designed, Stitch says. ‘Generally speaking, shared ownership is more happily mixed with market housing. It is practical to provide affordable homes for rent in a separate block.’

The practice of providing such housing with separate entrances and building cores has received a bad press – with the affordable blocks often dubbed ‘poor doors’. But Stitch says that the practice can make management by a registered social landlord easier and lead to lower service charges.

The mayor has not introduced the 35 per cent threshold in isolation. It was accompanied by funding criteria introducing two new rent levels: London Affordable Rent, for low income families, and London Living Rent, for medium incomes. The move was intended to tackle the current scepticism with which many view the current definition of ‘affordable’ (which includes homes with rent levels of up to 80 per cent of the market rate). Stitch hopes that the forthcoming London Plan revision will provide further clarity on how much of each type of housing should be provided in housing schemes.

Khan hopes to boost overall percentage of affordable housing delivered in the capital to higher than 35 per cent by directing Greater London Authority subsidies to schemes that propose a minimum of 40 per cent affordable. In addition, the GLA will work with a number of ‘strategic partners’ to deliver schemes with more than 60 per cent affordable housing. Residential proposals on public land will be expected to deliver at least 50 per cent affordable housing to benefit from the fast track route.

As planning permissions are valid for three years, it will be some time before we can gauge the effect of this policy on housing delivery

The latter aim may provide challenging, according to Peter Murray, chairman at New London Architecture. ‘Transport for London is a very big landowner and very cognisant of the new target,’ he says. ‘Their problem is making the returns on these developments that will pay for new infrastructure and freeze travel costs as well as delivering a high level of affordable housing.’

Of course, planning applications do not always turn into completed development, and it is too early to conclude that Khan’s policies will necessarily lead to a step change in affordable housing delivery. Almost half the homes granted permission by Johnson in 2012 were never built, and Smith muses whether that ‘attrition rate’ – still at 33 per cent for homes approved in 2013 – could rise if developers are straining their business cases to meet the 35 per cent threshold.

‘As planning permissions are valid for three years, it will be some time before we can gauge the effect of this policy on housing delivery,’ she warns.

Whatever, the final outcome, architects are set to play a big role in delivering the mayor’s aims, according to Murray. Inevitably, the new approach is likely to require higher density development in areas of outer London that have traditionally resisted such schemes.

‘There is a big need for different typologies – not just high rise – to achieve these densities,’ Murray says. ‘We have an incredible amount of talent, and this is a chance for the architectural community to show how we can create high density, mixed tenure communities.’

Sadiq Khan/Mill Hill

Mill hill rideway dmfk

In October, Sadiq Khan managed to increase the amount of affordable housing from 92 homes (20 per cent of the total) to 185 (40 per cent) on the dMFK and Hawkins\Brown-designed development of the former National Institute for Medical Research in Mill Hill.

Comment

Jonathan Emery, managing director of property Europe at Lendlease

’We recognise the need to increase the delivery of affordable housing in London and welcome the new guidance from the mayor.

’We believe the guidance, particularly being allowed to progress without a viability study if developers deliver 35% on-site affordable and social housing, could speed up not only the planning process, but also wider housing development.

’As always, when new guidance is introduced we continue to work with our local authority partners and other stakeholders to ensure we develop the best possible scheme for any given site.’

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