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01/11/2017

Legal loophole results in loss of affordable homes, says Shelter

Words: Laura Edgar
Viability assessments / iStock-635969404

New research has suggested that developers are using a legal loophole to avoid building affordable homes across England.

Using Freedom of Information laws, charity Shelter considered viability assessments and how they reduced the number of homes built in 11 local authorities in nine English cities.

According to the research, when the loophole has been used in the last year, 2,500 (79 per cent) of affordable homes were lost from the number required by council policies.

Developers use viability assessments to show what can be delivered in terms of affordable housing without taking their profits below 20 per cent.

Shelter said this means that many developers don’t face a penalty for over-paying for land because they can recover the costs by reducing their commitments to building new affordable homes.

The study looked at Birmingham, Brent, Bristol, Cambridge, Leeds, Leicester, Manchester, Newcastle, Oxford, Southwark, and Kensington and Chelsea.

Manchester, Birmingham and London were the worst-affected cities.

Given the 79 per cent loss covers just these nine cities, the charity added that when the whole country is taken into account, the figure is “likely far higher”.

In addition, viability is used “most frequently” on larger developments. Indeed, the study says assessments were used in 44 per cent of the sites analysed, which Shelter noted are generally managed by volume housebuilders.

Polly Neate, chief executive at Shelter, said: “What this research reveals is the scale at which developers are able to use legal loopholes to protect their profits and dramatically reduce the numbers of affordable homes available for people.

“Through Freedom of Information powers, Shelter has been able to reveal the extent to which affordable homes are required in local plans, only to be dropped by developers.”

Neate has urged the government to change national planning laws to close the legal loophole to “get the country building homes that are genuinely affordable for people on middle and low incomes to rent or buy”.


Read more:

Appeal: Inspector rejects developer's 20% profit requirement


Image credit | iStock

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