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16/08/2017

Khan releases finalised supplementary planning guidance

Words: Laura Edgar
Sadiq Khan / Steve Punter

Mayor of London Sadiq Khan has announced that half the homes built on public land in London will have to be affordable if they are to benefit from faster planning permission.

The measure features in Khan’s new supplementary planning guidance.

Affordable Housing and Viability Supplementary Planning Guidance sets out his approach to increasing the level of affordable housing while simultaneously increasing the speed with which decision are made using the planning system.

A consultation on proposals, which were developed following discussions with the housing industry and council, was published in November last year.

The finalised approach will allow developers of private land a fast-track route through the planning process without taking part in “costly and protracted viability negotiations that have become the norm for London”, if they meet a minimum of 35 per cent affordable housing without public funding.

According to the guidance, all developments need to be under way within two years of received planning permission. If they are not, they face detailed scrutiny of the financial modelling behind the plans. Likewise, should developments not meet the required level of affordable housing they will face further scrutiny as they near completion, and the development’s financial details will be published for the public to see.

City Hall officials have written to all of the capital’s councils to ask them to make use of the mayor’s viability team if a developer attempts to reduce the number of affordable homes once planning permission has been granted.

Khan said: "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.”

The guidance also lays out a pathway for Build to Rent through the planning system. Its key principles includes recognition that all Build to Rent developments need to stay under single management and will therefore “encourage affordable homes on the development to be delivered as discounted market rent (preferably at London Living Rent levels), managed by the Build to Rent provider” and delivered without grant.

Build to Rent developments should be a development, or a block within a development, of at least 50 units and be held under a covenant for at least 15 years. Tenants or prospective tenants should not be charged upfront fees.


Reaction:

Johnny Caddick, managing director at property developer Moda Living, which focuses on the private rent sector, said: “Delivering homes that are both high-quality and affordable to ordinary Londoners is a key challenge the capital faces, and so the Greater London Authority’s (GLA) embrace of discount market rent is a welcome step forward and a real boost for the build-to-rent sector.”

Discount market rent, he said, can be fully integrated into build-to-rent development, which eliminates the need “for much-hated ‘poor doors’ while ensuring all residents get access to the same amenities regardless of incomes, allowing for genuine mixed communities to emerge inside buildings”.

Russell Pedley, co-founder and director at Assael Architecture, also welcomed the offer of discount market rent as an affordable housing option, not just for investors and developers but for renters too, particularly those on low incomes.

“However, the GLA could have been bolder and reformed space standards. Current regulations do not consider today’s increasingly digitalised and ‘asset-lite’ society, and by thinking creatively around how we use space we can deliver more affordable homes without compromising on living standards."

Will Waller, Market Intelligence lead at Arcadis, said: “Anything that makes sure more homes are built has to be welcomed. That said however, the risk is that these constraints could actually see fewer affordable homes being built within the suggested timescales.

“Ultimately, we know we can’t tackle the housing crisis by doing what we have always done. But the big question is whether the Mayor’s proposals could, in the end, increase the costs involved in building properties to the point where it’s no longer feasible.

“Costs of construction are at a historic high, driven by a lack of skilled workers, weak currency and high levels of demand. With house prices approaching a standstill and the economy slowing down, this is only going to get worse.“

Shabana Anwar, partner at Bircham Dyson Bell, applauded Khan’s attempts to ensure that the minimum affordable housing thresholds are met and welcomed the clarity on viability appraisals. However, he said the guidance could have  “the unintended consequence of reducing overall housing delivery and amount of affordable housing, thereby exasperating the housing crisis”.

“If the approach advocated in the guidance is followed, it will make it difficult for developers to revise their initial affordable housing calculations to reflect the change in market conditions and economic circumstances. This could result in housing schemes not being bought forward or those that have got consent, being abandoned,” Anwar explained.


The supplementary planning guidance can be found on the GLA website.

Image credit | Steve Punter

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