The Mayor's new SPG published in August follows through on his pledge to deliver more affordable housing through scrutiny of viability assessments and review mechanisms. The SPG’s main aim is to increase the number of affordable homes delivered through the planning system and to link the requirement for affordable housing into land values and to make the viability process more consistent and transparent. The Mayor’s long-term aim is for half of all new homes to be affordable. This will be a key aim of the forthcoming London Plan review (the consultation draft is expected in autumn 2017). We highlight the main points of the SPG below.
The SPG does not introduce new policy or set a fixed affordable housing requirement; it provides guidance to ensure existing policy in the current London Plan is as effective as possible at delivering affordable housing ahead of the new London Plan in 2019. The SPG provides a framework to achieve the maximum amount possible (in line with current London Plan Policies). The SPG does not require any more Affordable Housing than the target set in each London Borough’s Local Plan.
The SPG introduces a 35%"Threshold Approach" whereby applications that meet or exceed 35% affordable housing provision without public subsidy (or 50% where on public land, without grant), together with a number of other criteria, will be “fast tracked” and not be required to submit viability information at application stage. The expectation is that a London Borough's local policy will fall in line with this SPG except where they are delivering more than 35% affordable housing.
Local Planning Authorities are strongly encouraged to follow the SPG when determining applications for schemes with ten or more dwellings. However, if the Local Plan delivers more affordable housing, without public subsidy, that local approach can continue to apply.
A key component of the SPG is detailed guidance on viability assessments, aiming to establish a standardised approach, including the Mayor's preference for using Existing Use Value Plus as the comparable Benchmark Land Value when assessing viability.
In addition, the SPG sets out situations where the Mayor can "call in" applications where insufficient affordable housing has been provided or there has been insufficient scrutiny of viability information.
The Mayor is trying to achieve greater transparency in the planning system and the SPG states that he requires viability information to be made public (unless the applicant can argue the limited elements which should remain confidential).
In addition, early and late viability reviews will be applied to all schemes that do not meet the threshold in order to ensure that affordable housing contributions are increased if viability improves over time.
The SPG also sets out the Mayor’s preferred affordable housing tenure mix. This includes a range of products to meet different needs, principally low cost rented accommodation to meet general needs, and London Living Rent and shared ownership to meet intermediate needs.
The Mayor’s view in relation to vacant building credit is that it will not be appropriate to apply it in London. The Mayor’s reason for this is that sites in London have already come forward for development and their affordable housing requirements are already subject to viability testing which is not preventing sites from coming forward.
Specific guidance is given on Build to Rent developments, recognising that they differ from the traditional build for sale model. It also provides guidance on the requirement for covenant and clawback arrangements through Section 106 agreement if homes are sold out of the Build to Rent sector, and in relation to affordable housing, that provision must be included for units to remain at an affordable price in perpetuity or that subsidy is recycled for alternative affordable housing provision. There is also guidance on how Build to Rent viability differs from traditional appraisals.
In conclusion, the “fast tracking” proposal by the Mayor provides a useful mechanism for incentivising the provision of a minimum of 35% affordable housing as there will be no requirement for costly or lengthy viability assessments or the risk of confidential financial information coming in to the public domain.