Mayor’s new powers must not dilute affordable housing

Emergency measures announced for the Mayor of London yesterday have stoked concerns that tackling the city’s housebuilding crisis will come at the cost of affordable housing

New emergency powers announced for the Mayor of London must not become a ‘new normal’ that leads to the watering down of affordable housing provision, industry figures have warned.

Yesterday, the Ministry of Housing, Communities & Local Government (MHCLG) announced that the government had agreed to grant London Mayor Sadiq Khan emergency powers intended to unlock the development of tens of thousands of new homes across the capital.

Among the package of measures, is a confirmation that affordable housing targets on developments will be reduced for the duration of the emergency powers. Under this provision, projects with a minimum 20% – rather than 35% – of affordable housing will enjoy fast-tracked planning.

Furthermore, the Mayor will be able to call in and potentially overrule borough planning decisions on schemes of 50 homes or more. Meanwhile, design guidance that is considered a constraint on the density of developments will be relaxed.

And levies placed on developers will also be temporarily suspended to make it cheaper for them to build. The government is also offering £322m of initial funding for a City Hall Developer Investment Fund.

Sadiq Khan, the Mayor of London, said: “Affordable housing has always been a top priority for me as Mayor. We have started more new council homes in London than at any time since the 1970s and, prior to the pandemic, completed more new homes in London than any time since the 1930s.

“But there’s now a perfect storm facing housebuilding in London due to a combination of high interest rates, the rising cost of construction materials, the impact of the pandemic and ongoing consequences of Brexit.

“All of this means we are now in the midst of the most difficult period for housebuilding since the global financial crash. Urgent action is required, which is why I’ve been working with the government on this package of bold measures.”

Steve Reed, the housing secretary, said: “Getting spades in the ground in London is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5m homes in our Plan for Change.

“I have worked closely with the Mayor of London to give the capital the shot-in-the-arm it needs to ensure more Londoners have an affordable home of their own.”

Despite the assurances that affordable housing remains – in the words of Khan – a “top priority”, leading industry figures have expressed concern that the reduction in the ratio of affordable housing does not lead to a watering down of targets more widely.

Gavin Smart, chief executive of the Chartered Institute of Housing (CIH), said: “We know that London is currently experiencing acute and specific challenges with new developments and understand why the Secretary of State has brought in these changes to support London. However, this must be a temporary measure and cannot set a precedent for affordable home targets more widely.

“We urge the government to set clear timelines and guidelines for reverting back to the agreed 35% affordable homes target in London, particularly as there is an overwhelming need for social and affordable housing in the city.”

Smart’s concern is echoed by Florence Eshalomi MP, chair of the Housing, Communities & Local Government Committee. She said this morning: “There has been a failure over many decades to build enough homes, including homes affordable to local people. It’s crucial there is a significant increase in London’s house building over the coming years, but it is a matter of serious concern that the government’s announcement means that London’s affordable housing target has effectively been cut.”

Emergency measures

Under the plans, housebuilding projects which commit to at least 20% of affordable housing on private land in the capital will be accelerated, subject to a requirement for 60% of those affordable homes to be for social rent. Some of this will be eligible for grant funding.

Schemes which are consented under the new planning route that do not build out in a “timely way” will be subject to a gain-share review mechanism ensuring delivery of more affordable homes – above the 20% set out – where market conditions improve.

The GLA will consult on the terms of the new time limited planning route over six weeks from November, with the aim of having guidance in place at the “earliest opportunity”. The new time limited planning route will be open until 31 March 2028, or the publication of the new London Plan, whichever is soonest.

Housebuilders will also receive time-limited emergency relief from the Community Infrastructure Levy (CIL) where this is “necessary” to unlock development, which will apply to projects that begin after the new regulations come into force, and before 31 December 2028, ensuring their focus can be on building more homes and their plans are viable.

The CIL will be available for qualifying schemes that commit to delivering at least 20% affordable housing, and additional relief available at higher levels of affordable housing. This proposal will be consulted on, the government says.

Some design restrictions will be withdrawn, with developers instead handed more flexibility so long as homes have adequate passive ventilation, daylight and privacy, and avoid overheating.

There will be flexibility in residential cycle storage requirements to reflect demand, and account for the rise of dockless bikes and e-scooters in London. The changes are said to reflect pressure on development viability such as where extra levels of basements are required, impacting the delivery of affordable homes on some sites.

The Mayor of London will be handed new powers to review and call-in housing schemes of 50 homes or more, and will be able to be the decision-maker on developments on more than 1,000sqm on green belt.

Khan added: “I grew up in a council house, so I know the importance of social and affordable homes. I’m not willing to stand by while the supply of affordable housing for Londoners dries up. With these significant new powers and the initial £322m of funding from the government – plus the short-term emergency action to get more investment flowing into affordable housing – I’m confident that we can kickstart housebuilding and deliver more of the affordable homes Londoners badly need.”

Diluting provision?

Councillor Grace Williams, executive member for housing and regeneration at London Councils, said: “The chronic shortage of affordable housing in the capital is the root cause of London’s skyrocketing rates of homelessness, with one in 50 Londoners currently homeless and living in temporary accommodation.

“If we want to end London’s homelessness emergency, we desperately need to build more affordable homes, including social homes. That will remain our priority as boroughs, supported by the £11.7bn announced for the capital through the Social and Affordable Homes Programme.”

She went on to add: “Boroughs will now be looking at the proposed changes in detail to understand the implications for housing delivery in our local areas. Ultimately, with boroughs having already granted planning permission for almost 300,000 homes in London that are yet to be built, we need to ensure housebuilders deliver on their commitments so that we can collectively tackle the housing crisis facing the capital.”

Kate Henderson, chief executive of the National Housing Federation said: “London has an acute housing crisis, with 95,000 children in temporary accommodation, alongside a perfect storm of serious and unique challenges to housebuilding.

“It’s vital that action is taken to address these challenges, and while we don’t want to see affordable housing ambitions watered down, we hope that this temporary and London-specific package of measures gets spades in the ground and is quickly followed by ambitious plans to boost social housebuilding. This should include the confirmation of rent convergence, details of social housing funding and low cost loans.

“What’s most important is that we deliver the homes people need, and we know that affordable housing requirements in the planning system deliver almost half of all new social and affordable homes across the country. Housing associations are committed to working with the government, developers and local government to ensure these requirements operate effectively and provide the homes families need.”

Further reaction

Smart added: “It is crucial that we continue to build the homes we need to tackle the housing crisis at its core and address the record numbers of households living in temporary accommodation. We welcome the government’s commitment to boosting affordable housing through the 60% target in the upcoming Social and Affordable Homes Programme.”

Eshalomi added: “The government should set out how this temporary reduction will increase the number of affordable units delivered overall. As a committee, we will be keen to examine the detail of this announcement, including how the clawback mechanism will operate to ensure developers are kept to their commitments to deliver more affordable homes.

“It’s also important that we build high quality, safe homes for people to live in so we will be particularly keen to understand the implications of the announcements on density guidance in London.

“As the Secretary of State acknowledges, there are a range of factors holding back housing delivery. We are in a housing crisis, and I want to see the government bring forward the delayed Long-Term Housing Strategy to set out the comprehensive range of policies needed to address the slow pace of housing delivery and ensure 1.5m homes are built in this Parliament.”

Craig Carson, regional director of Barratt London, said: “These welcome proposals will help us start to tackle the housing crisis we face in London, delivering more homes of all tenures and the investment in infrastructure, jobs and economic growth that development will bring to our capital.

“Alongside this emergency package, it is vital that government looks at ways we can support homebuyers in London. It is crucial we build the private homes which will deliver more affordable housing, helping meet housing need and the ambitious targets set out by government and the Mayor of London.”

John Dickie, chief executive at BusinessLDN, said: “With housing starts, planning applications and house sales at historic lows in the capital, the government and Mayor are right to take action to accelerate delivery of the new homes that Londoners desperately need.

“As housebuilding costs have spiralled in recent years, construction has faltered. This is hitting London’s competitiveness by making it harder for employers to recruit and retain staff, while also forcing boroughs to collectively spend £5.5m a day on temporary accommodation to tackle homelessness.

“Temporarily adjusting the percentage of affordable homes that a project should provide and offering time-limited relief on developer contributions to local infrastructure payments are welcome and these changes, along with greater flexibility on design standards and enhanced planning powers for the Mayor, will help to get more shovels in the ground.

“We are delighted to see the Government back our calls for the establishment of a City Hall Developer with £320m of funding which can be used to leverage in more private investment and create partnerships to unlock more land for development.”