How much affordable housing can developers support?

Kensington street

Dorothy Laing

In a recent planning appeal decision a developer’s plans were blocked by the Planning Inspectorate because they failed to provide sufficient funding for affordable housing. This decision is significant to both developers and local authorities and highlights the need for accurate viability assessments of the amount of affordable housing which a development can support.

In September 2013 The Royal Borough of Kensington and Chelsea refused Illona House Securities permission to build a cinema, shop and 11 flats on King’s Road arguing that the developer didn’t fully honour its section 106 obligations regarding the amount of affordable housing. Illona’s financial viability assessment indicated that no affordable housing could be provided, while the Royal Borough of Kensington and Chelsea’s assessment found that a significant contribution could be made.

The developers appealed and at a public inquiry in April 2014, planning inspector Jessica Graham was asked to consider whether the scheme made a sufficient financial contribution towards affordable housing. The developer told the hearing that the section 106 included an obligation to pay a contribution of up to £200,000, however the council argued that the development could provide a surplus of over £1 million towards social housing.

The London Plan recognises ‘a pressing need’ for more homes in London and requires that local planning authorities should seek the ‘maximum reasonable amount of affordable housing’. The inspector found that £200,000 would fall considerably short of the ‘maximum reasonable amount’ that could be contributed towards affordable housing, and agreed with the council that some of the main assumptions in Illona House Securities’ financial viability statement were wrongly balanced in its favour to reduce the funding available for affordable housing. Summing up the inspector said

“..the failure of the proposed development to deliver the maximum reasonable contribution toward affordable housing would conflict with the requirements of Policy CH 2 of the Core Strategy’.

In a comment from the council welcoming the decision Cllr Timothy Coleridge, said:

“This decision supports the Council’s rigorous approach. Developers should be clear that we will leave no stone unturned to make sure we get as much affordable housing as we can as part of new developments.”

Whether this will set a precedent for future development plans remains to be seen.

Further reading

Find our how to become a member of the Information Service to access these articles and thousands more

  • Fit for planning? An evaluation of the application of development viability appraisal models in the UK planning system, IN Environment and Planning B: Planning and Design, Vol 40 No 1 Jan 2013, pp3-12
  • Greater London Authority development appraisal toolkit: guidance notes, Greater London Authority (2014)
  • Open secrets (viability assessments), IN Estates Gazette, No 1423 7 Jun 2014, pp70-72
  • Planning performance and planning contributions (TCPA briefing paper no 44), TCPA (2014)
  • Section 106 planning obligations in England, 2011-12: report of study, Department for Communities and Local Government (DCLG) (2014)
  • What should be the gain from planning gain? (delivery of affordable housing), IN Town and Country Planning, Vol 83 No 3 Mar 2014, pp101-104
  • Post waste (level of affordable housing on Royal Mail’s Mount Pleasant site), IN Property Week, Vol 14 Feb 2014, pp46-47
  • Practice and law: planning by numbers (section 106 requirements), IN Estates Gazette, No 1349 7 Dec 2013, pp66-68
  • Section 106 affordable housing requirements: review and appeal, Department for Communities and Local Government (2013)

 

 

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