Consultation on updated GLA guidance: Affordable Housing and Development Viability – what changes are proposed?

The Greater London Authority has launched a consultation regarding a draft Affordable Housing and Development Viability London Plan guidance (the "LPG").  My colleagues Matthew Tucker, senior associate, and Grace Fadden, trainee set out the implications of this below. 

History of the SPG

The LPG will replace the Supplementary Planning Guidance (the “SPG”) previously published by the GLA in 2017 on Affordable Housing and Viability.

The SPG was created as formal guidance to explain how the policies in the London Plan should be implemented. There have been many SPG documents covering a range of areas, from affordable housing to heritage and culture.

Since its original publication in 2017, the GLA has also issued the 2021 London Plan, with sixteen SPG documents being retained. Various LPG’s have been drafted and published to provide guidance to developers and boroughs as to how to apply the policies within the London plan to new developments. It is important from a planning perspective as it is a material consideration for planning decisions.The LPG will be updated over time to fully replace the remaining documents.

New consultation

The Affordable Housing LPG and the Development Viability LPG are being consulted on in parallel, although they will be separate guidance documents. The consultation process aims to highlight 'genuinely affordable housing' as a key deliverable for the City, to ensure current housing needs are met.   Work on the draft began back in 2021 and the consultation will be open to the public until 24 July 2023. You can add your views here.

The proposed amendment versions of the Affordable Housing LPG and Development Viability LPG include a number of significant changes from the previous SPG. The headline changes, for existing users of the SPG, are as follows:

Fast Track Route / Viability Tested Route

• The consultation allows for “changing lanes” partway through a scheme of development. If an application is assessed as Viability Tested, but the number of homes increases and the affordable housing threshold to join the Fast Track Route is then met, the scheme can be considered using the Fast Track Route (at 2.8.3 of the Affordable Housing LPG).
• The trigger date for an Early Stage Review is where substantial implementation is not achieved within two years of the planning permission. The Development Viability LPG, at paragraph 5.2.3, codifies the GLA’s position that this timetable applies irrespective of the reasons for delay, and therefore provisions which delay the trigger date would not be acceptable in any planning agreement. The SPG didn’t specify this previously, but this reflects the position that the GLA have adopted in negotiation in the interim.
• The 35% threshold to qualify for the Fast Track Route is no longer subject to the requirement that this is provided without public subsidy (which forms part of the current SPG).
• Clearer guidance is provided on the application of grant funding powers. If an applicant “commits unconditionally” to provide 40% Affordable Housing by habitable room with grant (or 50% where this is public or industrial land) the Fast Track Route applies unless the Section 106 Agreement allows for a lower proportion of Affordable Housing to be provided. For example, this would exclude a development subject to a Section 106 Agreement which enables a lower level of Affordable Housing provision where grant funding is not obtained.
• Applications for large-scale purpose-built shared living are not expected to meet the London Plan’s minimum internal space standards, and a financial contribution towards Affordable Housing is required instead. However if policy-compliant affordable housing is provided, the GLA can assess a scheme of this type using the Fast Track Route. The level of affordable housing required should be calculated by reference to the total internal proportion of floorspace, including shared and communal facilities (i.e. at least 35% of everything). This is at A2.5.1 of the Affordable Housing LPG.

Eligibility

• Local authorities and housing providers are now “strongly encouraged to prioritise key workers” when setting their eligibility and prioritisation criteria (as per 3.2.12 of the Affordable Housing LPG). They were not mentioned at all in the SPG.
• The Mayor’s preferred affordable housing tenure for low-cost rented homes is Social Rent (3.1 of the Affordable Housing LPG) and for intermediate homes is London Living Rent and Shared Ownership (para 3.2). The current SPG does not include a specific rented preference.

Review mechanisms

Mid-term reviews now have specific requirements (at 5.4 of the Development Viability LPG). In summary:

• Mid-term reviews are required for larger phased schemes “including those that proposed 500 more residential units”) or the equivalent in other floorspace;
• Mid-term reviews are also required where the overall construction programme is 5 years or longer, or for estate regeneration schemes;
• Finally, mid-term reviews are required to assess the scheme as a whole (including development to date and estimated future phases). Their overarching objective is to enable the delivery of additional on-site affordable housing in the next and subsequent phases.

Legal agreements

The Affordable Housing LPG now includes prescribed recommendations for drafting Section 106 Agreements. Primarily:

• They should set out the amount of Affordable Housing by unit and habitable room for each tenure;
• They should include restrictions on occupation of a proportion of market housing before an appropriate proportion of the Affordable Housing is constructed and disposed of;
• The Affordable Housing should not be concentrated in the final buildings or phases;
• It may be appropriate to secure a specific level of Affordable Housing and tenure mix within each phase (effectively endorsing the concept that each phase washes its own phase);
• The Section 106 Agreement should also include terms providing for recycling of subsidy where a home is no longer used as Affordable Housing.

 Assessing viability

We would recommend that professionals involved in viability assessment review the entirety of the “Principles for undertaking viability assessments” and “Viability assessment information, inputs and sense-checking” sections of the Development Viability LPG. This is an expanded version of the previous SPG drafting which is significantly more prescriptive. Approaches to individual inputs are described in detail, and further clarification is provided on finance costs and how to treat grant funding.

Our thoughts 

Overall, the consultation represents a very substantial set of proposed amends to the current structure by which viability is assessed and captured for re-assessment through the planning process. In general the content is more specific and particularised, leading to a more prescriptive, “tighter” process with less room for debate.

If you have any queries, please contact Matthew Tucker or me.