Mayor’s Affordable Housing and Viability SPG Picture 1

HTA Planning's Briefing Note

Final Mayor’s Affordable Housing and Viability SPG Published

The final Affordable Housing and Viability SPG (August 2017) was published yesterday (16.08.17). The SPG aims to:

  • to increase the amount of affordable housing delivered through the planning system;
  • embed the requirement for affordable housing into land values; and
  • make the viability process more consistent and transparent.

It also aims to ensure development appraisals are robustly and consistently scrutinised to speed up the planning process for schemes which deliver more affordable homes.

This note sets out a summary of the key implications that will arise from the SPG. Through this and other tools the Mayor is making clear his aim to incentivise delivery of a minimum amount of affordable housing on schemes, with clear and attractive incentives to motivate developers to do so.

We highlight the key differences compared to the draft SPG, published in December 2016, which provides insights into the Mayor’s attitude towards the feedback received from the industry with respect to the issues within it.

The SPG does not set new policy, but sets out guidance on how the existing adopted London Plan policies should be implemented. As the SPG has now been finalised, it supersedes section 3.3. (Build to Rent) and Part 5 (Viability) of the March 2016 Housing SPG.

A draft consultation version of a new London Plan is due to be published in Autumn 2017, which will likely pick up the Mayor’s policy aspirations that were not possible to introduce through the SPG.

Summary of Key Implications

The final SPG will now be a material consideration for all planning applications submitted after this date. The SPG could have fundamental implications for the delivery of residential schemes and the affordable housing within these across London.

Threshold Approach is ‘Official’

The finalised SPG makes threshold approach proposed in December’s draft SPG ‘official’, essentially meaning schemes will need to deliver 35% affordable housing (by habitable rooms) without public subsidy, and to meet the specified tenure mix requirements, or will be subject to scrutiny of their viability assessments by the GLA. Any scheme referable to the Mayor, (i.e. over 150 units, mixed use schemes over 20,000 sqm in Central London or 15,000 sqm in Outer London, buildings 30 metres and taller outside Central London and schemes on Metropolitan Open Land or Green Belt) will need to adhere to the GLA’s requirements. Local Planning Authorities will also be required to adopt this approach, but it’s likely this will take longer for borough planning officers to get to grips with, and for the same level of rigour to be applied by Borough Planning case officers on schemes not referred to the Mayor.

Use of Grants and Subsidies must be considered

The SPG makes clear that grant and public subsidy should be used to increase the level of affordable housing delivered. The SPG points clearly to the Mayor’s Affordable Homes Programme 2016-21, which explains how grant should be used to delivery at least 40% affordable housing on private sites and at least 50% or 60% for schemes brought forward by Registered Providers. Where viability assessments are to be scrutinised by the GLA use of grant to increase affordable housing is likely to be enforced.

Specific Guidance on requirements for Viability Assessments

Very specific detail and clarifications have been added, in relation to how viability assessment should be undertaken. For example the need to consider CIL charges as a development cost, and the need to allow for strategic S106 contributions for non-residential development. Whilst the Mayor has clearly tried to provide guidance on a wide range scenarios, there is no doubt that as the SPG takes hold, further detail on the approach may be needed, particularly with respect to mixed-use developments including affordable workspace and community uses.

What happens if schemes are amended?

It’s clear the Mayor has tried to consider all scenarios in detail. For example, the final SPG provides additional detail on how the approach would relate to s73 minor material amendments, where, for schemes approved under the fast track route, as long as the affordable housing is not reduced, there will be no need to submit viability information again. However, if amendments result in a reduction of affordable housing or affordability, the Mayor will be consulted again, and schemes will be ‘rigorously tested’.

Transition to 50% Affordable Housing

The Mayor has made clear his ambition to move towards delivery of 50% affordable housing on all schemes in the long-term. In the medium-term, the final SPG suggests that this expectation will come sooner for certain schemes, such as those in public ownership or on Industrial Land. Whilst the SPG cannot introduce this change it will probably come within the Draft London Plan, due to be published later this year. As we are seeing an increasing number of schemes coming forward on Industrial Land, this could have significant implications for schemes across the capital.

The SPG encourages LPAs to consider setting local approaches to affordable housing in Housing Zones and Opportunity Areas, to provide certainty to developers and landowners. This demonstrates a level of flexibility, suggesting the Mayor is keen to ensure such areas aren’t compromised by the provisions within the SPG. But it notes that where local approaches do not exist the provisions of the SPG will be used.

Density

Whilst the current Mayor has a clear push for achieving quality in new development, this doesn’t mean the SPG is shying away from supporting higher densities. The SPG suggests that for some schemes on a case-by-case basis, where developers meet the 35% affordable housing threshold, it might be appropriate to explore increasing the densities. This appears to lay the groundwork for providing flexibility to decision makers to allow higher density schemes if enough affordable housing is delivered. Basically it’s another way the Mayor is incentivising developers to provide the minimum affordable housing requirements, in return for higher densities to be considered on these schemes. This follows other hints that there would be a push for increased densities within the capital in the Government’s Housing White Paper last year.

Changes expected in the draft London Plan

It is likely that the requirement for greater affordable housing on industrial land will be introduced through the draft London Plan published later this year. The SPG also suggests the London Plan will be based on an updated assessment of housing need. City Hall released household projections which housing need is likely to be based on last month, which showed a lower level of growth for Greater London than the official household projections by DCLG. This effectively means that housing delivery targets may be lower than expected. We await to see what further changes this will bring.

Links

Draft SPG: https://www.london.gov.uk/sites/default/files/draft_affordable_housing_and_viability_spg_2016
Final SPG: https://www.london.gov.uk/sites/default/files/ah_viability_spg_201708152.pdf // End.


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