Mayor of London Sadiq Khan’s 35% flat rate is already boosting affordable housing provision in the capital following years of decline under Boris Johnson, EG research reveals.
EG first reported in July 2016 that Khan planned to offer developers a fast-track planning process if they agreed to meet a minimum 35% affordable housing target for private schemes by allowing them to shirk the costly viability assessment process if they do so.
The 35% route was brought forward by the mayor as part of a supplementary planning guidance document on affordable housing published in November.
EG research can now reveal that the policy is already taking effect. Khan inherited a pipeline of just 15% of schemes adhering to a 35% level, down from 39% of schemes in 2010. A jump back up to 22% so far this year already shows that the policy is having a tangible effect on the amount of affordable housing being delivered in the capital.
The number of schemes that have no affordable housing has also started to fall. During Johnson’s tenure, wholly “unaffordable” schemes grew to a high of 47% of all permitted housing developments in 2015, up from 30% in 2010. That number has only started to fall in the past two years and stands at 41% so far this year.
Prominent private schemes that have achieved 35% affordable or higher since Khan’s plannning guidance was released include:
- Hadley and L&Q’s 518-home scheme at South Grove, Walthamstow, E17 (54% affordable – up from originally proposed 25%)
- Galliard’s 295-home scheme at Silvertown, E16 (35% affordable – up from originally proposed 18% for 307 homes)
- HUB’s 514-home redevelopment of Taberner House in Croydon (35% affordable commitment helped get the scheme approved just 11 weeks after submission).
Khan was elected on a manifesto pledge that 50% of all new housing would be “genuinely affordable”. However, he has since eased back on this for private schemes, while intending to increase the level of affordable housing on publicly owned sites. Deputy mayor for housing James Murray said raising the level of affordable housing provision would be “a marathon, not a sprint”. He added: “The mayor has been clear that solving London’s housing crisis will not happen overnight, but these figures are positive evidence that his clear stance is already starting to bear fruit.”
Demonstrating his flexible approach, Khan called in Wandsworth Council’s decision to refuse the National Grid UK Pension Scheme’s 348-home development next to Wandsworth Town station, SW18, even though it only proposes 24% affordable housing. Although the scheme falls below Khan’s 35% target, his GLA report states that the “348 new homes would equate to 19% of the council’s annual housing target”.
Adam Challis, head of UK residential research at JLL, said: “The mayor’s unwavering commitment to the 35% signalled to developers that it must be the starting point for affordable housing viability assumptions. It is clearly now having an impact.”
However, he warned the 35% target has been “a challenge for the sector and many developers protest that it is already too high” and a 50% target was “probably an overstep and there is no question that housing supply would suffer”.
He added: “Government needs to show a stronger direct financial commitment to solving the housing crisis than simply foisting the burden onto developers. Alongside CIL and the other elements of section 106, development already makes an enormous contribution.
“Affordable housing requirements, like most areas of housing policy, need more stability. Cross-party support would give developers the confidence to know that the affordable housing percentage is not up for debate, meaning it will be reflected fully and more consistently in land values.
“At a certain point, there is simply not enough profit for landowners, constraining land supply. That is no good for anyone.”
To send feedback, e-mail Louisa.Clarence-Smith@egi.co.uk or tweet @LouisaClarence or @estatesgazette
EG explains the data
EG Data has analysed all applications of 10 units or more across all 33 London boroughs.
Permitted development schemes, which are not subject to affordable housing through planning policy, were omitted from the research.
■ Schemes with at least 35% affordable housing
■ Schemes less than 35% affordable housing
Graph 1 shows Khan inherited a pipeline of just 15% of schemes adhering to a 35% level, down from 39% of schemes in 2010. A jump back up to 22% so far this year gives optimism that the land market has deflated somewhat and that developers are taking the new stance from City Hall seriously.
■ No
■ Yes
Graph 2 shows that, after the gap between private and social housing widened between 2010 to 2015/16 under former mayor of London Boris Johnson, the tide is turning. During Johnson’s tenure, the number of 100% “unaffordable” homes grew to a high of 47% of all schemes in 2015, up from 30% in 2010. In the past two years, that figure started to decrease. It stands at 41% so far this year.
■ Social
■ Private
Graph 3 shows how over the past few years the split between the total number of private and social units granted consent each year has remained fairly static, in the mid to high 70s. So far in 2017, the figure has dropped by a single point. With all three indicators going in the right direction, this figure is also likely to drop further in coming years.
Many housing associations and registered social landlords, which typically take on the affordable elements once complete, find it difficult to make a small number of homes a viable proposition, as graph 4 demonstrates. Because of this, local authorities often accept a payment in lieu instead, allowing smaller schemes of wholly private units through the planning system.
However, graph 5 shows that, when looking at the size of schemes getting to the 35% target, the “sweet spot” tends to be around 31-40 homes, where smaller developers are more likely to operate, and then dropping off slightly as schemes get larger. A cynic may argue that larger developers are savvier at getting around targets. However, it is more likely due to larger sites being more prone to contamination and greater costs in site preparation.
To send feedback e-mail paul.wellman@egi.co.uk or tweet @paulwellman eg or @estatesgazette
