Sadiq Khan has promised that new privately funded schemes providing more than 35 per cent affordable housing will be fast-tracked through the planning system
The mayor of London spelled out his vision to boost the number of affordable homes ‘from the low of just 13 per cent given permission’ under his predecessor Boris Johnson in a new Supplementary Planning Guidance (SPG).
The new document sets a higher bar for publicly backed developments in London – half the new homes built on public land in London will have to be affordable to benefit from faster planning permission.
The move goes some way towards meeting a pledge made in Khan’s manifesto last year, which said he wanted to ‘set a target for 50 per cent of all new homes in London to be genuinely affordable’.
Published yesterday (16 August), the latest GLA guidance also demands that construction on all new housing should begin ’within two years of planning permission being granted’ or else developers face detailed scrutiny of the scheme’s financial modelling.
Khan also said that any developments under construction that did not meet the minimum affordability thresholds would also face further scrutiny, with financial details in the application being published online and ‘a share of any unexpected profits being reinvested in more affordable housing’.
City Hall officials have now written to all London councils urging them to make use of the mayor’s expert viability team if developers try to reduce affordable housing levels after planning permission has been granted.
While the mayor has no formal powers to overturn a local council’s decision, Khan added that he was pushing for more powers to intervene after the issue came to a head in June, when developers put forward ‘wholly unacceptable’ plans to nearly halve the amount of affordable housing at Battersea Power Station (see AJ 23.06.17).
New guidance at a glance
- fast-track planning for private developers providing more than 35 per cent affordable homes on schemes
- fast-track planning for schemes on publicly owned land when 50 per cent affordable homes is provided
- all new housing to start on site within two years of planning permission or face detailed financial scrutiny
Khan, said: ‘The housing crisis is the biggest challenge facing Londoners today with too many people – particularly the younger generation – being priced out of our city, unable to afford a home.
’I’ve been honest with Londoners from the start – we can’t turn things round overnight. But we’re working hard to tackle the issue every day and we’ve already agreed to put £1.7 billion of the investment that I secured from Government into 50,000 new and genuinely affordable homes to rent and buy. This investment will work hand-in-hand with the new approach for developers that I’m introducing today, which will allow them to benefit from a fast track through the planning system if they offer more affordable housing and get building quickly.
I’m determined we don’t have a repeat of what happened at Battersea Power Station
He added: ’I’m determined to ensure we don’t have a repeat of what happened at Battersea Power Station, with developers unacceptably reducing the number of affordable homes on site after planning permission was granted. That’s why I’ve written to all councils offering City Hall’s expertise in robustly scrutinising applications to ensure we see the new and genuinely affordable homes built that Londoners desperately need.’
Responding to the new guidance, Simon Child, director at Child Graddon Lewis, said: ‘The Mayor’s continued proactive approach to providing more affordable housing is very welcome, particularly as a realistic way to work with the private sector.
’The criteria set out in this proposal should not only encourage the private sector to deliver this housing more quickly, but create greater certainty in the whole process. In turn, this should result in less speculation around, and in the creation of, unrealistic land values; which have been the source of so many failed viability studies, delaying the construction of – and reducing the number of – affordable homes.’
Anthony Thistleton from Waugh Thistleton Architects
’It is encouraging to see the Mayor taking a positive step towards unlocking social housing. Currently developers are incentivised to game the system, using specialist consultants to construct viability studies that force down their provision of affordable housing. We welcome extra help for local authorities in challenging these studies and the aim for a standardised approach. Moreover, offering incentives to provide a decent minimum threshold should start to change the current culture of avoidance.
’Offering incentives to provide a decent minimum threshold should start to change the current culture of avoidance’
’Maintaining a balance of affordable housing is essential, not only for the families that are in need of housing but for the vibrancy, diversity and sustainability of our city. We would encourage the development community to get behind this change in culture, committing to these minimum thresholds as a standard.’
Simon Henley, director Henley Halebrown
‘Incentives to create affordable housing are welcome and should include a vision for affordable housing that breeds a sense of solidarity among its inhabitants.
’Affordable housing needs to be integrated as an essential part of the working city and something that has a civic identity and quality of its very own; rather than just a lesser version of the top end developments that fuel the property market.’
Sarah Bevan, director, Turley
‘It is encouraging that the GLA has listened to the development industry and sought to make the threshold approach genuinely faster and easier if a scheme achieves the minimum 35 per cent affordable housing provision. The fact they have abandoned the previously proposed “light touch” approach and replaced it with the fast track route whereby no viability information is required at application stage should provide greater incentivisation for developers to hit the 35 per cent threshold. On the face of it, this will appeal to a lot more applicants and it should genuinely speed up the planning process, but obviously this is dependent upon the boroughs signing up to the threshold approach and, while the GLA assert that most of them have, clearly there are some that will likely ignore it, particularly where their local plan policies may be in conflict and on schemes below 150 units that are not referable to the mayor.
On the face of it, this will appeal to a lot more applicants
‘Another positive outcome of the GLA’s consultation with the development industry is that the draft SPG previously made an explicit statement that a scheme would have to deliver at least 35 per cent affordable housing and also meet all other policy requirements in order to follow the threshold approach, whereas the wording in the adopted SPG is more pragmatic to reflect the fact that complex schemes in London rarely meet all policy requirements, and instead are a careful balance of planning issues to the satisfaction of all negotiating parties.
’The greatest area of concern, that the development industry will be watching with interest, is the increased use of review mechanisms in S106 legal agreements. It is clear that the mayor is very keen on using this tool with the aim of augmenting affordable housing delivery in line with any uplift in developer profit. To incentivise delivery, the SPG states that both fast track and viability tested schemes should be subject to an early review if an agreed level of progress on implementing the permission has not been reached after two years of the permission being granted. In addition, Viability tested schemes will be subject to a late review, generally when 75 per cent of homes are sold, and also on larger developments that will be built out over a number of phases the SPG encourages mid-term reviews which are triggered prior to the implementation of phases.
‘While the aspiration of maximising delivery is fully understood, this aspect of the SPG risks increasing the cost of finance on any projects which will be subject to a review mechanism, so this could have negative effects on delivery as well as positives.’
Heinz Richardson, board Director at Jestico + Whiles
’Speeding up development and increasing the supply of truly affordable homes is a pressing issue. Sadiq Khan’s SPG is therefore very welcome. As always, the devil is in the detail and the speed at which this can be rolled out. The two year time limit on starting development following planning approval is a good target but naming and shaming may not have the desired effect.
The two year time limit is a good target, but naming and shaming may not have the desired effect
‘It will be interesting to see how the local councils respond to this challenge. Achieving at least 50 per cent affordable homes for schemes built on public land should not even be questionable and perhaps a maximum of only 35 per cent private homes may be a more equitable target.’
Jasmine Whitbread, chief executive, London First, the business group behind the Fifty Thousand Homes campaign
’The shortage of homes at all levels is a critical issue for London and the mayor is right to focus on public land and making the planning process faster. The mayor, local boroughs and developers must now work together to understand why so many planning permissions fall by the wayside – almost one in three in 2016 – and start to unblock the hold-up. Otherwise, we risk shutting the door on our house-building ambition.’
James Greenaway, associate director at BuckleyGrayYeoman
’The planning system has come under increasing pressure over the last ten years to deliver more housing but with fewer resources which has led to delays in decision making. We often see S106/viability negotiations taking longer than the actual planning design approval process.
’Any intervention which speeds up the planning process and allows the focus to return to addressing the housing crisis is greatly welcomed.’
Craig Casci, senior partner and founder GRID Architects
’If affordable is not affordable what does it matter what the percentage is? Firstly we need true affordability. There should never be back tracking once the percentage is agreed.’