City Hall plans to scrap viability assessments for affordable housing contributions by introducing a non-negotiable 35% flat rate for private sector schemes.
The set tariff will be brought forward by mayor of London Sadiq Khan as part of draft affordable housing planning guidance due to be published for consultation in the autumn.
Khan will maintain his long-term 50% affordable housing target, aiming to make up the shortfall with a greater proportion of affordable housing on public sector-driven schemes.
The tariff would rise to 50% in the long term. The guidelines are being pushed forward ahead of the new London Plan in a bid to deliver certainty to the industry following the Brexit vote.
Jules Pipe, who officially becomes deputy mayor for planning on Monday, told Estates Gazette that City Hall and boroughs were in discussions over a circa 35% set tariff.
He said: “It is certainly a possibility and I know that it is being looked at both by City Hall and by boroughs. It is just one possible solution, but it would be good if we can come to some sort of easily understandable, hard-to-avoid contribution rate that avoids all these endless disputes and turns it into a bit of an industry for people to represent sides in these arguments.”
Additionally, deputy mayor for housing James Murray has been informally consulting developers on an initial 35% fixed affordable housing rate.
He has already called for an end to the confusion around viability assessments and a “clear and certain approach” to assessing contributions.
Murray has also indicated that there will be a “practical and flexible” approach to bringing in the new target, to avoid hampering existing developments.
The move would represent a shift away from how affordable housing levels are currently set through section 106 agreements, whereby developers can attempt to change provisions by submitting a financial viability assessment showing that contributions are commercially unviable.
Jules Pipe, London’s deputy mayor for planning, on:
Public sector building: “The development corporation has effectively got to self-fund affordable housing through the sales of land and private housing.”
The private sector: “Private companies and shareholders have legitimate expectations for return on their investment. But it has to be a fair return and it can’t be inflated returns at the expense of the wellbeing of the population of the capital.”
A 50% affordable housing target: “It is inevitable that there would be give and take. Particularly the fact that there are already projects in the pipeline that, because of where they are today, it is going to be next to impossible to renegotiate and get them to where we would all like them to be.”
Listen to the full interview below