Affordable Housing Planning Policy Cancelled
A Government planning policy that could have allowed luxury London landlords to escape over £1 billion a year in affordable housing payments has been cancelled.
Housing Minister Brandon Lewis revealed the vacant building credit at the end of 2014, but councils soon experienced chronic housing shortages.
The credit allowed developers that were planning to convert vacant office buildings into flats to pay only an affordable housing contribution on new space created. Before its introduction, developers paid according to the size of the whole building.
Westminster Council voiced its concerns in January, stating that it could lose £1 billion a year from its affordable housing fund and called the credit “insane”.
On Abu Dhabi Investment Council and Finchatton’s project to redevelop the former US Navy HQ in Mayfair, the Council said that its affordable housing payment fell from £17.6m to just £8.6m.
Affordable Housing Planning Policy Cancelled
A legal battle by West Berkshire District Council and Reading Borough Council has resulted in a judge ruling that part of the policy was incompatible with the legal structure for planning.
Head of Planning at law firm Mishcon de Reya, Daniel Farrand, says: “This means that councils will be able to once again levy affordable housing requirements on developments in accordance with their own local plan policies.”1
Brandon Lewis initially launched the plans to boost house building and put vacant properties back into use.
Some raised concerns that developers could kick tenants out of offices to convert them into flats and others would resubmit plans already granted permission to take advantage of the lower affordable housing bill.
The decision to cancel the policy was welcomed by numerous politicians and groups.
Labour Mayor of London candidate, Tessa Jowell, says: “The vacant building credit has done untold damage to London and has now rightly been quashed by the courts.
“This Tory scheme delivered developers a loophole to avoid providing any affordable housing – just when our city needs it most.”1
A Generation Rent spokesperson adds: “This loophole absolved them [developers] of any responsibility to make a contribution to wider society and with the economy booming that is completely unjustifiable.”1
Mark Williams, Southwark’s councillor, believes it was “a deeply unjust policy that could have cost thousands of new affordable homes.”
A spokesperson for Labour Built Environment adds: “This court decision is a victory for common sense and will help generate more affordable homes in London.”1
JR Capital manages money from the Middle East for residential property investors. It says it does not believe the removal of the credit will stop developers investing in London.
The Department for Communities and Local Government says it is “disappointed by the outcome” and will seek permission to appeal against the judge’s decision.
It explains: “We’ve got Britain building and we’re determined to maintain this momentum, including by reducing the red tape and extra costs that prevent smaller developments from getting built.”1
The British Property Federation thinks that affordable housing payments should be set at a local level, rather than by the central government.