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Key points from the draft guidance include: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