"London is in the midst of a housing crisis, with thousands of Londoners priced out of a city they call home," according to the Mayor of London who has today (Tuesday 29 November) published Draft Supplementary Planning Guidance (SPG), entitled “Homes for Londoners: Affordable Housing and Viability”.
A key election pledge for Mr Khan was the provision of 50% affordable housing as part of new developments, and this remains the Mayor’s “long-term strategic aim.” Nonetheless, the Mayor’s latest guidance has acknowledged that the stretch towards this goal should be seen as a “marathon not a sprint.”
The SPG seeks to accelerate housing delivery and increase the amount of affordable homes being built in London.
35% affordable housing threshold
35% affordable housing within new developments is the Mayor’s benchmark, set out today. Developers who bring forward schemes which do not meet this threshold or need public subsidy to do so will be required to submit detailed viability information for scrutiny from the Local Planning Authority. Conversely, the carrot for developers is that those who meet or exceed the target without public subsidy will not be required to submit viability assessments.
The SPG states that the threshold is a “clear incentive for developers to increase affordable housing delivered through the planning system above the level in planning permissions granted in recent years.”
Mr Khan expresses the hope that that the plans will mean that the 35% threshold embeds the requirement for affordable housing into land values – although the effectiveness of this will be regularly reviewed.
The SPG also makes it clear that “where a Local Planning Authority currently adopts an approach which delivers a higher average percentage of affordable housing - without public subsidy - the local approach should continue to apply.”
It should be noted that the SPG is, at this stage, guidance. Policy amendments can be made through the London Plan, but it is likely that the new Mayor’s updated Plan will be another couple of years in the making.
The “Homes for Londoners” document is now out for consultation. Comments on the SPG are invited until 28 February 2017.
Call in powers
The SPG states that the Mayor will consider calling in applications where:
Transparency
On viability assessments, City Hall will require all information to be made public, including council and third party assessments. Applicants will have the opportunity to argue that limited elements should be kept undisclosed, but the onus is on the applicant to make this case.
London Affordable Rent and London Living Rent
Within the 35% target, different tenures are specified. The document sets out that 30% of the affordable homes in a development should be available at London Affordable Rent, a new tenure for those who are deemed as being in the “greatest need”.
Further to this, a new London Living Rent will be brought forward, whereby maximum rents will be set at one third of average household income in a borough. This will mean an average cost of £977 a month for a two-bed home in London.
The SPG describes the new rent as “a new type of intermediate affordable housing that will help, through low rents on time-limited tenancies, households with around average earnings save for a deposit to buy their own home.”
Build to rent sector
In a clear signal that the Mayor is supportive of build to rent, he has signalled that “to help level the playing field for this sector”, the Mayor is proposing a new build to rent ‘pathway’, meaning that the ‘threshold approach’ for affordable housing detailed above would not apply to the sector.
Instead, viability information would be required under a different approach, with schemes assessed individually. To qualify for this pathway, developments will have to comprise of more than 50 units, and they will have to remain as build to rent blocks for 15 years, as part of the Section 106 agreement. If a developer sells individual homes during this time it will have to pay a “clawback” charge to the local authority – two mechanisms for which are being consulted on.
For this type of scheme, the Mayor has stated that his preferred product is London Living Rent, for the stated reasons that it “has a London-wide electoral mandate, can be consistently understood and applied across London, can earn the public’s trust as being genuinely affordable, and will be backed by the GLA who will uprate it every year.”
