Viability tests; affordable and social housing. No need for viability tests – just refuse planning consent.

 

For quite a while it has become common for developers to say to Local Planning Authorities that they cannot afford to deliver the number of affordable homes that the local planning policy says are required. Too often the local authorities have accepted these claims outright, or allowed a viability assessment to ‘prove’ that the developer cannot afford to do what the policy says.

Likewise, for quite a while , I have been saying that Local Planning Authorities must stand up to developers and insist that the latter deliver what an evidence based Local Plan and set of Planning Policies has set out.

Local Councils need to stand up to developers and say ‘If you haven’t taken all of our planning policies into account when working out how much you are going to pay for a development site you cannot claim that the site is unviable; it is unacceptable to get the taxpayers and citizens of this council to bail you out because you have over-paid for the site’.

At times I have been told that it would take a very confident Local Council to do this because of the potential costs of the developer successfully appealing against the granting of planning permission on these grounds. I usually reply that once a Local Authority gets a reputation of not being a push-over (and not appearing to have no understand how development appraisals are carried out), potential developers will soon get the message and will pay the correct price for the land taking into account all published policy requirements.

In the last few days two things have happened which, hopefully, will give Local Councils the confidence to say ‘no’ to the viability argument.

Firstly, the Planning Inspectorate has ruled in favour of the London Borough Of Islington in refusing to give planning permission to a development which claimed that it wasn’t viable to deliver the required 50% affordable housing (with affordable meaning no more than 80% of market value).

The Inspector, Michael Boniface, said: “I have had regard to the need to encourage rather than restrain development, and the need for flexibility in the application of planning policy, but this should not be at the expense of delivering much-needed affordable housing.

Nor should an inflated land value be subsidised by a reduction in affordable housing.”

So, it seems quite clear: when deciding how much to pay for a development site, the developer must allow for the costs of including the level of affordable (or social) homes which the local planning policy says is required. By extension, this also applies to the costs of meeting other planning requirements such as providing open space, and contributing to the costs of other social infrastructure.

This decision should now give confidence to Local Planning Authorities to refuse consent to those applications which ignore their planning policies.

The second encouraging thing is what Mayor of London, Sadiq Khan, said at an event at The London School of Economics on 10th July 2017 (“Good Growth by Design – a Vision for London”)

He said that with only 13% social housing being built in 2015 there can be no more vanity projects with a focus on branding over substance, and that the message to potential buyers of land in London is that a certain number of affordable homes will be required: “so it will be no good coming back to me and saying it’s ‘not viable’ to provide your minimum level of 35% affordable homes, because we will say ‘hard luck’ ”. This is very good to hear, although he seems to be confusing and conflating affordable and social housing.

So, putting these two things together, local planning authorities now have no (or very little) excuse for backing-down from what their policies say they require in order to grant planning permission.

Also, what this really means is that (as I have always said) ‘viability assessments’ are a red-herring and, apart from very few and limited cases, shouldn’t even be bothered with because all they will do is to prove that the developer has paid too much for the site and that is their problem not ours.

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