20 Jul 2015

Council sets out new rules to stop developers dodging affordable homes

Islington Council is consulting on new rules to make it harder for developers to game the planning system and avoid building affordable homes.

Viability assessments are used to work out how much affordable housing developers can afford to build as part of new developments.

However, since government changes in 2012 it has become standard practice for developers to use the assessments to argue that they cannot afford to meet local affordable housing, infrastructure and environmental requirements.

In comprehensive guidance - one of the first of its kind in the UK - published by Islington Council, a number of measures are set out which will help to re-balance the process and protect the public interest when assessing viability.

Cllr James Murray, Islington Council’s executive member for housing and development, said: “Like the rest of London, Islington is facing a housing crisis, with a huge shortage of the affordable housing that everyday Londoners badly need.

“There is growing evidence some developers use ‘viability assessments’ to their advantage, such as inflating land costs to say they can’t afford to build affordable housing.

“We’re setting out new rules to make sure developers can’t game the system. We want to make the system transparent, clear, and fair, to help make sure the affordable housing we badly need is built.”

Key points from the draft guidance include:

•         New requirements to ensure greater transparency, enabling the council and the public to better scrutinise the information submitted. If a developer wants to keep information confidential they will have to demonstrate that this would be in the public interest, rather than purely their commercial interest as has hitherto been the case;

•         The guidance seeks to prevent land owners from inflating values and developers overpaying for land at the expense of affordable housing.  It exposes the way in which industry guidance on land value is being manipulated;

•         It requires developers to justify the levels of profit that they seek and challenges the notion that this should still be at levels established during the financial crisis;

•         It sets out the process for requiring reviews of viability when a development is constructed to determine whether additional affordable housing and other planning requirements can be delivered.      

The council has also been working with other London boroughs to share expertise and establish a joint approach to viability.

The consultation ends on 4 September.  To read the consultation document see http://www.islington.gov.uk/developmentviability

 


Contact information

Islington Council Media Team

Follow us on Twitter @IslingtonBC and @IslingtonLife

Tel: 020 7527 2307

media.team@islington.gov.uk

Notes to editors

NOTES TO EDITOR:

Since the introduction of the National Planning Policy Framework by the government in 2012, development viability has become a central issue within the planning process.
Islington has the fifth highest residential values in the country and consistently exceeds its housing targets, but developers often argue that they can only provide low levels of affordable housing. The council's policy, which was  viability tested and approved by the Planning Inspectorate, is that 50 per cent of housing delivered over the period of its Development Plan should be affordable.

Islington is the first local authority to produce detailed guidance on development viability which will enable the council to robustly scrutinise viability assessments and addresses a number of current issues in the process.

Islington produced a preliminary viability consultation paper in the autumn that has helped to highlight key flaws in the process and moved discussion forward. The issues raised were cited in several national and academic reports including the Lyons Housing Review and CPRE’s Getting Houses Built (June 2015).

Last year Islington gave evidence to the Commons Select Committee Review of the National Planning Policy Framework. The Committee’s report concluded that "Provisions in the NPPF relating to the viability of housing land are leading to inappropriate development: these loopholes must be closed".

The council is fighting planning appeals on this issue. Islington and Camden Councils are also legally challenging the Mayor of London’s approval of the Royal Mail’s Mount Pleasant proposals due to a lack of affordable housing.