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Mayor’s new planning rules to boost affordable housing
At least half the new homes built on public land in London will have to be affordable to benefit from faster planning permission under a new approach to development set out in guidance published on 16 August 2017 by the Mayor, Sadiq Khan.
Sadiq’s new Supplementary Planning Guidance (SPG) sets out his innovative approach to increasing the levels of affordable housing, while also speeding up decisions in the planning system. It will help raise affordable housing levels from the low of just 13 per cent given permission that he inherited from his predecessor when he first became Mayor.
His new approach offers developers of private land a fast-track route through the planning process - bypassing costly and protracted viability negotiations that have become the norm for applications in London - if they meet a strict minimum of 35 per cent affordable housing without public funding. Developments on public land will have to achieve at least 50 per cent affordable housing to qualify for the fast-track route.
All developments should get underway within two years of planning permission being granted, or else they face detailed scrutiny of the financial modelling behind their plans. Any developments that do not meet the minimum affordable thresholds will also face further scrutiny as they near completion - with financial details in the application being published online for the public to see, and a share of any unexpected profits being re-invested in more affordable housing.
The need for public land to make a significant contribution to affordable housing is reflected in separate draft planning guidance for the Holloway Prison site in Islington, which the local council has published on 16 August 2017 for consultation. That guidance sets out how, under an approach in line with the Mayor's, the site could deliver 50 per cent affordable housing and a land receipt for the Ministry of Justice even on a baseline scenario before the number of homes has been maximised.
On the back of the SPG, following an extensive consultation period, City Hall officials have 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. This team, drawn from the public and private sector, was introduced by the Mayor earlier this year to scrutinise in detail the financial modelling behind developers' plans.
Although the Mayor has no formal powers to intervene in cases where it is the local council's decision, he is pushing for a greater role after the issue came to a head in June, when developers put forward plans to cut affordable housing at Battersea Power Station by 40 per cent from its original planning consent. In this case the Mayor offered his team to work with the council to scrutinise the developers' financial modelling and ensure the maximum amount of affordable housing was secured - though this offer was regrettably not taken up by the local authority.
The Mayor is using his new guidelines to substantially increase the number of affordable homes coming through the planning system - on top of which his key housing association and council partners will deliver programmes of 60 per cent or more affordable housing, backed by funding from his record-breaking £3.15bn investment deal with Government. He also expects public landowners to seek to follow Transport for London's lead, who have committed to delivering 50 per cent affordable housing across their development programme and also meeting their revenue targets.
The Mayor of London, Sadiq Khan, said: “The housing crisis is the biggest challenge facing Londoners 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 £1.7bn 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; this 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 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.”
Ian Fletcher, Director of Policy (Real Estate), at the British Property Federation, said: “Delivering a greater number of affordable homes in London is fundamental if the capital is to continue to grow and deliver the vital services that everyone uses. Our sector relies on a thriving London economy and, through initiatives like Build to Rent, has been seeking to ensure we deliver more homes to cater for the capital’s population.
“We think the Mayor is right to seek to build as much affordable housing on public land as he can, to the extent that it is also delivering the infrastructure needed and communities that people want to live in. On private land, affordable housing obligations are often one of many developer contributions, and for the sake of all involved it is important that the process is fair, time and priority conscious, and well-informed. We therefore support the expertise on planning and viability the Mayor is establishing in City Hall and would encourage its use.”
Mayor Sir Steve Bullock, London Councils’ Executive member for housing said: “Lack of affordable homes remains a huge challenge for London and therefore we welcome the Mayor’s plans to provide new homes and particularly affordable homes for Londoners.
“Boroughs are a key part of tackling this issue, not only through direct building, but also in helping identify public land and working with developers to facilitate new homes. It is encouraging to see the Mayor’s acknowledgement of this, which will give a boost to joint working between boroughs and City Hall as we do our utmost to meet the need for homes.”
Jasmine Whitbread, chief executive of London First, the business group behind the Fifty Thousand Homes campaign, said: “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 housebuilding ambition.”