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The Mayor of London's Affordable Housing SPG: 10 things you need to know (part 1)

24 August 2017

This supplementary planning guidance, issued this month, builds on the Mayor's long-term aim for half of all new homes in London to be affordable (as defined in the London Plan).
More will no doubt be heard in the revised London Plan when that emerges, but in the meantime here are some headlines which we hope help you cut through the SPG.

1. This is the Mayor's 'preferred approach'
This SPG is the Mayor's preferred approach to implementing relevant London Plan policies and provides a framework for delivery of the maximum amount of affordable housing – it does not (and cannot) contain new policies itself. This SPG replaces sections 3.3 and 4 of the March 2016 Housing SPG, with the rest remaining current. The replaced parts of the earlier SPG are helpfully showing as struck out in the online version. Whilst local planning authorities are 'strongly encouraged' to follow this new SPG when determining applications of schemes of 10 homes or more, the SPG does expressly state that where a local plan will deliver more affordable housing, without public subsidy, that local approach can continue to apply.

2. A fast-track route through the planning process is being introduced
If the relevant authority is applying the SPG, applicants will not have to submit any viability evidence if they are promising at least 35% onsite affordable housing (50% on public land and potentially more for registered providers), to be provided without public subsidy, provided this offer meets tenure and other local requirements and the applicant has sought to increase the offer beyond 35% through the use of grants. This is being sold as a 'fast-track process', but the standard legal test for the determination of applications in accordance with the development plan unless material considerations indicate otherwise will still apply.
The percentage of affordable housing will usually be measured by habitable rooms but the figures should also be presented by percentage of units and floorspace. The fast-track route will not be available for estate regeneration schemes where existing affordable housing is being demolished.

3. The pressure will be on to deliver quickly
The SPG states that one of its main aims is to accelerate overall housing delivery. As well as tackling the planning process as set out above, there is some incentive after that to actually get building: if agreed progress hasn't been made within 2 years of the grant of consent (or as otherwise agreed), a viability review will be needed – regardless of whether applicants have benefitted from the fast-track planning route. This review could result in further affordable housing being required onsite, and plans will have to show which units could switch to affordable housing in such a case.

4. Land value figures will have to stand up to close scrutiny
The SPG contains detailed guidance on how viability assessments are to be carried out, with a view to creating a clear and standardised approach. Benchmark land values are expected in most cases to be based on 'existing use value plus'. Fixed land values are considered inappropriate, and alternatives to EUV+ will only be considered in exceptional circumstances. It should be clear that policy requirements, s106 obligations and CIL charges have been factored in to the land value.

5. S106 agreements aren't going away
Where the fast-track process isn't available, reviews will need to be carried out during the build process. Whilst the SPG advocates a standard approach to review mechanisms (with the late stage reviews take place when 75% of the units are sold or let), there will still be an element of negotiation required. In the absence of any general legislation requiring these reviews, the detail will have to be agreed between the parties, and all the necessary 'whens' and 'hows' (and the 'who is paying' – although, spoiler alert, this will be the applicant) secured via s106 agreements.

Part 2 of this blog post will be published shortly – please do subscribe to receive an alert as soon as it is available.