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Published on: Viability

35% Affordable Flat Rate For London?

The (relatively) new London Mayor, Sadiq Khan, is considering the introduction of a non-negotiable 35% affordable housing flat rate for all private sale schemes within London. The rationale behind this is to put an end to the “confusion” caused by viability assessments.

The proposed policy forms part of draft affordable housing planning guidance which will be published for consultation in the autumn. The initial tariff of 35% may rise in line with the current target of 50% affordable across London Boroughs and, according to the deputy major Jules Pipe, the Mayor’s office and the Boroughs are discussing this as one possible solution. They see the advantages as being an easily understandable, hard to avoid contribution rate that avoids “endless disputes” over viability.

As part of those discussions they could perhaps consider a non-negotiable level of developer profit and a non-negotiable land value – let’s see how far they get with that.

We are more aware than most of the endless disputes over viability. This is what we do. However, this is a skill set that we and other professional firms have developed to meet demand from both developers and local authorities trying to deal with ill-conceived, inconsistent and financially flawed planning policy. If they had got the policy right in the first place viability confusion would not exist.

It will be interesting to see how the Mayor develops a policy which delivers a non-negotiable 35% affordable housing whilst maintaining the “competitive returns” required for both developers and landowners as set out in the NPPF. Our opinion is that this is merely a headline grabbing press release to demonstrate that the new mayor “means business” in addressing the housing crisis.

We still have a very significant housing shortage and any constraint on supply will only add to that. However, it would be foolish to ignore the potential that such a flat rate , CIL style affordable contribution poses to bringing schemes forward. It would not be the first time that a policy developed for London Boroughs gained traction and became adopted nationally.

The Mayor would also do well to remember that if it were not for viability negotiations, countless schemes would still be on the drawing board rather than being delivered. Viability is not designed to maximise land value, developer profit or affordable contributions – it is there to ensure that the competitive returns set out in the NPPF are met. It is there to ensure that schemes are deliverable and delivered.

That’s what we do.

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