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Labour sets out plans to reform viability testing
Labour is planning a five-step approach to make it harder for builders to swerve affordable housing commitments in its review of the future of social housing.
The party intends to propose several measures to strengthen the position of planning authorities in dealing with developers that claim they cannot afford to provide affordable housing.
These will include a tariff system where developers will be fast-tracked if they meet a certain percentage, as well as clawback powers for schemes where profits exceed expectations.
Councils can use Section 106 deals to demand developers contribute to the local community in order to gain planning permission. In the majority of cases this is used to demand they provide affordable housing.
But viability assessments – introduced by the coalition government in 2013 – allow developers to refuse to provide affordable homes if they can show it would leave them with anything less than a profit margin of 20%.
Figures from academics at Oxford Brookes University released earlier this year revealed that the number of affordable homes provided through Section 106 agreements has fallen from 29,065 in 2009/10 to just 16,452 last year – a drop of 43%.
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Labour is proposing:
- Strengthening councils’ powers to set firmer affordable housing requirements as policy in local plans, rather than targets that can be negotiated away
- Setting out standard guidance on the Section 106 process and appointing a team of viability experts to back up councils that are in negotiations with developers over affordable housing
- Making the viability process more transparent by requiring relevant information to be published in contested cases
- Giving councils powers to ‘claw back’ greater-than-expected profits where developments don’t include the required amount of affordable housing
- Introducing a fast-track system for developers who meet affordable housing requirements as mayor Sadiq Khan is planning to do in London
Recent research by Shelter covering 11 local authorities found viability assessments had been used to deliver a 79% reduction in affordable housing built, compared to what council policies would demand.
John Healey, Labour’s shadow secretary of state for housing, said: “Changing the rules to capture more of the value created by the granting of planning permission will not only help fund new affordable housing, but help increase local support for new housing too.
“As part of Labour’s review into the future of social housing we will be looking at how we can maximise the number of genuinely affordable homes to rent and buy on new developments.”
Last week housing minister Alok Sharma told the Communities and Local Government Select Committee that the viability system should be reformed.
He said: “Clearly the system as it is does not work. We are proposing a set of improvements we believe will make it work better. Let’s see what views come forward as a result of the consultation.”
