The issue of 'viability assessments' where developers attempt to reduce the amount of affordable housing in developments that have already started has been well documented recently. This article from last year sets out the issues with passion LINK
Brent's Planning Committee on Thursday will receive a report which, between the lines, sets out how the Government and London Mayor are seeking to tie the hands of councils wanting to build affordable housing.
London councils have been trying to work together to develop a Protocol over the issue and are considering employing consultants to respond to the developers' claims.
The report LINK states baldly:
Brent's Planning Committee on Thursday will receive a report which, between the lines, sets out how the Government and London Mayor are seeking to tie the hands of councils wanting to build affordable housing.
London councils have been trying to work together to develop a Protocol over the issue and are considering employing consultants to respond to the developers' claims.
The report LINK states baldly:
Government still wants to be seen to be encouraging additional housing development. Recent policy announcements such as the Starter Homes Initiative and the Vacant Buildings Credit both see normal affordable housing planning requirements as an expendable component in the delivery of this aim.The Vacant Building Credit was introduced by Ministerial Decree in November 2014:
The officers comment that details of the policy are inadequate and it is unclear to what extent it will affect Brent LINK but propose:The basic premise is that in order to support brownfield regeneration, development of empty or redundant buildings should be further incentivised. This is through reducing or potentially removing affordable housing contributions normally sought from qualifying housing developments. The Practice Guidance gives no flexibility on the application of the Credit related to a development’s viability. Consequently even if the development could in any case afford to provide policy compliant affordable housing amounts the Credit still applies.
What will certainly affect residents and those seeking affordable housing is the issues around developer profits and viability assessments that reduce the amount of affordable housing in developments, as well as the requirement to increase social rents to market levels. It is worth quoting the report LINK in detail here:Vacant Building Credit will only be applicable to:i) the Gross Internal Area of buildings (buildings as defined in the Community Infrastructure Regulations)ii) buildings that have been in lawful use for a continuous period of less than six months in the three years before which planning permission first permits the chargeable development
. Notwithstanding the increases in values and delivery
rates within the housing market and the viability of housing developments,
Government still wants to be seen to be encouraging additional housing
development. Recent policy announcements such as the Starter Homes Initiative
and the Vacant Buildings Credit both see normal affordable housing planning
requirements as an expendable component in the delivery of this aim. In
addition developers can still appeal agreed Section 106 affordable housing
levels on the basis of viability direct to the Secretary of State through
changes introduced by the Growth and Infrastructure Act 2013. The adoption by
the Council of the Community Infrastructure Levy (CIL) reduces the element of
discretion that the Council has in relation to infrastructure matters that
previously would have been captured through S.106 obligations. This means that
when viability is raised as an issue, affordable housing represents a larger
cost within what is a smaller contributions ‘pot’ around which there is
flexibility to negotiate.
.
Local authorities’ ability to
control rents in S.106 obligations, following the move away from social rent as
the preferred rented product, have been hindered by a judgement supporting the
Mayor’s London Plan policy position of restricting such an approach. (LB
Islington & Others v Mayor of London & Another - CO/16997/2013). The
general assumption at national level (and followed through by the Mayor) is
that affordable tenants should be paying higher amounts of rent more reflective
of market levels. Where tenants find this unaffordable, they are initially
supported by benefits. When benefits become insufficient, tenants should move
on to options that they find affordable. Whatever the merits of this approach
Planning has to work within these parameters.
.
3.12 Notwithstanding the potential
progression of the protocol it is recommended to Committee that Brent in the
mean time issues a position statement/guidance that seeks to ensure that as
much of the information contained in viability assessments and ideally all can
be viewed by the public. Where the developer is adamant that commercially
sensitive information is contained within that they do not want to be
disclosed, the Council will require an document that provides as much
information as possible in the public domain. An easily understandable
Executive Summary document should also be provided to be made available so that
the opportunity for greater transparency exists.
Islington
Council has set out its requirements on viability assessments fully with a
detailed process that begins at the pre-application stage and is a document
that Panning Committee members should study in detail. LINK
Another controversial issue which Planning Committee has encountered is that of 'poor doors', separate entrances in mixed developments for 'market' and 'social residents. This is what officers say on the issue:
Tenure Blind development
.
3.18 There have been concerns and media
coverage about ‘poor doors’ and highlighting differences in tenure related to
design. The current Mayor’s Housing SPG in paragraph 1.3.18 is clear: “Schemes
should be designed to maximise tenure integration and all affordable housing
units should have the same external appearance and entrance arrangements as the
private housing.” The Draft Interim Housing SPG recently issued for
consultation has a slightly different approach to entrances. It states: “In
some higher density schemes, separate provision of entrance and circulation
spaces for different tenures may enable affordable housing provision which
might otherwise be made unviable given high service charges and management
arrangements. All entrances will need to be well integrated with the rest of
the development...”
.
3.19 Both documents are clear about the
design being the same but reflect the real practicalities of dealing with
management charges in particular. Case law has clarified that
cross-subsidisation between tenures for management charges are not legal. Many
private occupiers/tenants expect the prices they are paying for properties to
reflect additional levels of service/standard related to the communal areas.
Unsurprisingly Registered Providers are not keen for management charges to be
higher than they need to be for their tenants/leaseholders. They want to
control the charges as much as possible. They are also reluctant to be reliant
on a third party freeholder/managing agent in managing those costs.
.
3.20 Compared to some rents, service charges can
provide significant additional cost. For the purposes of benefits they are also
regarded as part of the affordable rent charged. This increases risk to the
Registered Provider of having to meet the cost out of other funds, thus
impacting on overall affordable housing delivery. If there are risks of high
charges, it will also affect the interest of Registered Providers in purchasing
the affordable dwellings. Officers will seek to ensure that wherever possible
tenure blind development occurs, however there may well be practical reasons
why there may need to be differentiation in approach or physical separation
between tenure types.
This appears to leave wide open the potential for the continuation of at least some 'poor doors' developments in Brent.
