Reports of the demise of Khan's affordable housing goal are exaggerated, by Richard Garlick

Recently, London mayor Sadiq Khan has been stressing that his pledge to make half of all new London homes 'genuinely affordable' is a 'long-term strategic aim' rather than an immediately deliverable goal.

Political opponents suggest that he made the priority sound rather more urgent when he was campaigning in the spring.

They seized on the publication this week of the mayor’s draft affordable housing and viability supplementary planning guidance as evidence that he was edging away from his promise.

In particular, they highlighted the mayor’s plan to offer a light touch assessment regime to subsidy-free schemes that meet the threshold of offering 35 per cent affordable housing, as long as they comply with certain criteria. Andrew Boff, the Tory housing spokesman on the London Assembly, said: "The mayor has resiled on his housing target".

Suggestions that the mayor doesn’t want to be expected to deliver anytime soon on his affordable housing pledge may not be too wide of the mark.

But setting a 35 per cent affordable housing threshold for schemes to be eligible for the preferential viability assessment route does not equate to lowering the overall goal for affordable housing provision within new London schemes to the same level.

The target exists merely to encourage developers to offer more affordable homes in subsidy-free schemes. The mayor has other tools to deploy, including his £3.15 billion affordable housing budget, and public land disposals, to drive up the provision of low-cost housing in London.

That said, it’s not clear how effective all the tools laid out in the draft guidance would be.

Small percentage changes to affordable housing provision make big differences to developers’ profits. So they will need to be convinced that the fast track viability assessment route is going to bring real financial benefits if it is to incentivise them to accept more low-cost homes.

It seems hard to imagine the fast track greatly influencing developers who would not already be willing to offer close to the threshold level.

Other components of the guidance seem more likely to have an impact, particularly the mayor’s proposals for a standardised approach to viability assessment.

This sets a clear expectation that calculations for the profitability of schemes should be based on comparing their value if built, minus development costs, with the site’s existing use value, plus a premium to incentivise land release.

Local authority planning officers complain that, until now, many developers have instead calculated viability by comparing end value with the market value of the site, with the market value often being inflated by an expectation that local plan policy requirements for affordable housing will not be enforced.

If the mayor can make this standardised approach stick, it will help to bring down land values and make higher affordable housing proportions more achievable.

Richard Garlick, editor, Planning richard.garlick@haymarket.com 


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