Rule Change Means Developers Pay Less Towards Affordable Housing

Rachel Holdsworth
By Rachel Holdsworth Last edited 41 months ago
Rule Change Means Developers Pay Less Towards Affordable Housing

20 Grosvenor Square. Image from Google Street View.

As if it's not hard enough to get affordable housing built in this city, the government has quietly made a change reducing the planning obligations that make developers contribute to affordable housing, either by building it or paying councils to build it.

The Guardian realised that developers turning empty properties into new homes will get a reduction, or even a total pass, in affordable housing contributions. From the government's document (pdf):

"[Developers will get] A financial credit, equivalent to the existing gross floorspace of any vacant buildings brought back into any lawful use or demolished for re-development, should be deducted from the calculation of any affordable housing contributions sought from relevant development schemes. This will not however apply to vacant buildings which have been abandoned."

Smaller developments of up to 10 units will also be exempt from Section 106 obligations, the official term for contributions made by developers to affordable housing or other community improvements (like public space or school places) in return for planning permission. A senior official at Westminster Council, a Conservative borough, told the Guardian the policy was "insane". Westminster is concerned it could lose as much as £1bn for housing; a typical home costs the borough £270k to build, and it's already lost £10m in contributions on the development at 20 Grosvenor Square.

Even the developers themselves think it's a stupid idea. The Westminster Property Association — which represents companies like British Land, Qatari Diar and Redrow — says:

"In prime areas of central London the application of a one size fits all approach is clearly flawed. In addition to removing an important element of developer contribution to the provision of affordable housing, further eroding the ability of people from a wide range of backgrounds to live in the heart of the capital, our concern is that these changes may result in yet more office space being lost to homes in central London, as they could encourage an increase in office-to-residential conversions."

Last Updated 07 February 2015