Affordable housing viability calculations: Herbert Smith Freehills workshops on Mayor’s new guidance

Authors: Matthew White, Partner and Head of Planning and Catherine Howard, Partner, Planning, London

Herbert Smith Freehills are running workshops for property developers on housing and viability, with a focus on London and interpreting the Mayor’s recently adopted guidance on viability and affordable housing.  In our workshops we run through a case study with actual calculations showing how viability reviews work under the Mayor’s new formulae. Please contact us for more information on the workshops.

Background: proposals on a national and London-wide scale to address the housing crisis

Following the Government’s Housing White Paper (in February 2017), several recent publications by the Government and the Mayor of London set out proposed changes to planning legislation and policy, designed to address the housing crisis:

– The Mayor of London adopted his Affordable Housing and Viability Supplementary Planning Guidance (SPG) in August 2017. This SPG aims to improve transparency and trust in the planning process, with a focus on viability information, and aims to increase the expectation of actual delivery of affordable housing to at least 35% (and 50% on public land) for each new development scheme which proposes 10 or more new homes, with an overall long-term strategic aim of at least half of all new homes in London being affordable.  The method and explanations in the Mayor’s SPG are more detailed and rigorous than those in the Government’s national consultation (see below), and there have been industry calls for the Mayor’s methodology to be used nation-wide.

– The Mayor has also published his draft Housing Strategy for consultation, which covers transparency around viability information, recommends on-site affordable housing, and maintaining high design standards in the wake of the Grenfell Tower tragedy, amongst other proposals.

– In addition, the draft London Plan consultation is expected to be published on 29 November, with a consultation period running from 1 December, setting out proposals to update the current policies in the London Plan, including those addressing housing.

– On a national scale, the Government is proposing changes to increase the supply of new homes, including establishing standard methods for calculating local authorities’ housing need, streamlining viability assessments and making section 106 agreements more transparent, as well as proposals to strengthen cross-boundary planning (DCLG’s consultation ‘Planning for the right homes in the right places’). We await the Government response to the consultation, expected alongside the draft changes to the National Planning Policy Framework (NPPF) early in 2018.

– Separately, Communities Secretary Sajid Javid has also promised a Green Paper on social housing outlining reforms on a national level, but this has not yet materialised.

We will be keeping an eye on these proposals, the Autumn Budget and CIL announcements, and the London Plan review and Mayoral CIL 2 draft charging schedule due imminently, as well as the changes to the NPPF expected early next year. Please contact us for more information on any of these, or to attend one of our workshops on affordable housing and viability in London.

See also our post on the Housing White Paper here.

Matthew White
Matthew White
Partner and Head of Planning, London
Email | Profile
+44 20 7466 2461
Catherine Howard
Catherine Howard
Partner, Planning, London
Email | Profile
+44 20 7466 2858

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