Continuing Challenges in Affordable Housing

Greenwich council has recently introduced a policy forcing developers to openly publish viability tests, containing potentially commercially sensitive information, relating to new housing schemes when seeking dispensation from meeting the borough’s affordable homes quota.

Each council sets their own affordable homes quota and in Greenwich that quota is set at 35%.  The council has recently adopted new criteria, which includes a requirement for developers to provide a “full, un-redacted viability assessment” to justify why they are unable to meet the council’s threshold.  Historically this assessment has been confidential. 

The council suggests that they want developers to be open about why they cannot achieve the target.  However, there is concern amongst planning specialists that the publication of viability tests will actually have an adverse impact on the level of investment in affordable housing.  This is because developers may be discouraged from committing to schemes in which they will be required to divulge confidential information relating to a development such as site costs and deals with building contractors, as well as sales values and profits.

It has emerged that those funds that councils do receive to develop affordable housing in London are not necessarily converted into new homes.  A recent Freedom of Information Act request by the Estates Gazette has revealed that only 8% of the £800 million received by 11 inner London boroughs in affordable housing payments has been spent since 2011.  For example, Westminster and Southwark councils have received a combined sum of £554 million over the last five years but have spent just 6.6% and 15%, respectively, of their share.

Senior development consultants have suggested that this shows that councils do not possess the necessary knowledge and foresight to invest in development.  Wandsworth council appears to be attempting to fill this gap by seeking a joint venture partner for one of its largest regeneration projects to date.  The scheme is set to rebuild out-dated council homes as well as introduce new affordable housing to the area alongside privately rented and private sale accommodation.  The intention is that combining the knowledge of a commercial joint venture partner with the ambitions of Wandsworth council will produce a scheme that fully considers the needs of the people already living in the area while yielding a financial return for developers.

Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.

For further information, please contact John Mills on jmills@glovers.co.uk