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London boroughs consider 'flat-rate' 35% affordable housing policy

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Rumours that the Greater London Authority is set to outline a 35 per cent flat affordable housing requirement on private-sector housing schemes have met with a mixed response from the industry

On Friday (29 July) incoming deputy mayor for planning Jules Pipe was quoted saying that City Hall and boroughs in the capital were in discussions over the target – a move that could potentially spell the end for viability assessments.

While both the Greater London Authority and Pipe played down the story, some in the sector say the idea should be seriously considered.

Martyn Evans, former creative director at developer Cathedral Group, said: ‘This is an extremely good idea.

‘It would introduce certainty into the system. It would reduce the need for viability assessments, saving developers and councils money.’

Mike Kiely, president of the Planning Officers Society, also welcomed the idea, saying: ‘The way viability is being assessed by the Planning Inspectorate at the moment means developers are confident they can pay more for land and get away with having to provide less affordable housing.’

But he said that some housebuilders would be happy to have more certainty if it meant the price they were paying for land was reduced.

However, Claire Bennie, housing consultant and former development director at housing association Peabody, said introducing the rule would mean that a lot of land already in housebuilders’ hands would become worth less than the price paid, leading to a short-term freeze in development on those sites.

She said: ‘It may potentially make some big regeneration schemes in low-value areas more difficult, but this type of scheme tends to have bespoke arrangements anyway.’

Some marginal schemes could be killed off, tipping them back to other land uses, said David Birkbeck, chief executive of Design for Homes.

Birkbeck argued that any new scheme would need to be flexible to allow councils to reduce their requirement for affordable housing if they wanted to gain other benefits, such as social infrastructure.

‘I also think it will be resisted by those boroughs currently seeking higher or lower affordable shares,’ he said. ‘But the percentage share at 35 per cent would work in most places.’

One housebuilder, who did not want to be named, said that unless different classes of affordable housing were fixed, viability assessments would still be required.

A statement from the Home Builders Federation said: ‘We await full details of how such a tariff would operate before we respond to any consultation.

‘A fixed percentage would provide certainty and remove the cost and delays caused by the current viability assessment process. However, while ultimately it would be factored into land values, we need to ensure that the specified level does not make the provision of certain types of housing in certain areas unviable and so lead to an overall reduction of much-needed supply.’

A spokesperson for the mayor said that councils are currently being consulted on supplementary planning guidance. However, any changes to affordable housing requirements would have to be done through a change to the London Plan, which could take up to four years.

Comments:

Sally Lewis of Stitch

’[This fixed 35 per cent rate] would enable developers to bid on a level playing field with a major element of risk and negotiation removed.

’It would also help embed design quality with all tenures of a development designed together cohesively from the outset. We find it quite difficult to design truly integrated schemes when our clients don’t commit to levels of affordable housing until the viability bargaining position is established. This also affects design quality as the construction budget is often responsive to required levels of affordable housing. In my view this uncertainty wastes a lot of time and creative effort. This tends to be more of an issue in private developer projects on private land.

’Most of our projects are for local authorities or developers working in association with councils to regenerate estates where in most cases existing affordable housing is being reprovided.

’It would be interesting to know if the target of 35 per cent is for uplift only or if it includes reprovision. If it is the former, I suspect it may be quite challenging to deliver.’

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