"This is a London-centric announcement; however, if proven successful, then there is no reason why this shouldn’t be used as a blueprint for delivering housing quicker across other regional cities struggling to progress build programmes"
- Simon Cox - Walter Cooper
The government has announced a new support package aimed at significantly boosting house-building in London. The plan is designed to improve the viability of housing developments in the near term and accelerate the delivery of new homes, including affordable homes, in the capital.
The package includes:
A temporary relief from the Community Infrastructure Levy (CIL), including up to 50 % relief for qualifying schemes that commit to delivering at least 20 % affordable housing.
The removal of certain design guidance that constrains density, including standards relating to dual aspect units and unit-to-core ratios, and amendments to cycle storage requirements.
A time-limited planning route enabling residential schemes on private land that commit to at least 20 % affordable housing (with a minimum of 60 % of that at social rent) to proceed without a viability assessment; grant funding will be available to roughly half of the affordable homes in such schemes.
New powers for the Mayor of London to review and call in housing schemes of over 50 homes where a borough is minded to refuse, and to act on developments of 1,000 sqm or more on green belt or metropolitan open land; the mayor will also be able to issue Mayoral Development Orders for strategic schemes without borough consent.
An initial allocation of £322 million to establish a City Hall Developer Investment Fund, to help unlock and accelerate housing delivery in the capital.
Housing secretary Steve Reed said, “Getting spades in the ground in London is crucial if we want to see the biggest increase in social and affordable housing and meet our target of delivering 1.5 million homes in our Plan for Change.”
Mayor of London Sadiq Khan added, “Affordable housing has always been a top priority for me as mayor. … But there’s now a perfect storm facing house-building in London due to a combination of high interest rates, the rising cost of construction materials, the impact of the pandemic and the ongoing consequences of Brexit. … With these significant new powers and the initial £322 million of funding from the government – plus the short-term emergency action to get more investment flowing into affordable housing – I’m confident that we can kick-start house-building and deliver more of the affordable homes Londoners badly need.”
The government described London’s housing sector as facing “a perfect storm” of rising construction costs, high interest rates, regulatory blockers and wider economic pressures, noting that more than a third of London boroughs recorded zero house-building starts in the first quarter of this year.
A six-week consultation will begin in November on the terms of the new time-limited planning route, and the route will be open until 31 March 2028 or until the publication of the new London Plan, whichever is sooner.
This package sits alongside the broader national reforms to the planning system and funding for affordable homes, and is intended as a targeted and time-limited intervention to help revive delivery in London.
Industry reactions
Danny Pinder, director of policy (Real Estate), British Property Federation said, “We have been raising the issue of viability – or lack thereof – for some time and it’s good to see the Mayor and Government recognise this. Housing delivery has been brought to a standstill in London and a more pragmatic approach to affordable housing delivery is essential to start unlocking development."
“As we have long made clear, viability is a huge problem for the sector and this crisis is driven by a myriad of factors across the tax and regulatory landscape. One thing that today’s announcement won’t solve which is particularly affecting London are the delays at the Building Safety Regulator, where 55,000 homes are stuck waiting for sign off for construction or remediation, half of which are in the capital. Today's announcement is a positive step in recognising and reacting to the current viability crisis and we look forward to engaging with the forthcoming consultation on the underpinning detail."
“We hope that the Chancellor uses the upcoming Budget to take further steps to improve the viability landscape as set out in our budget submission in order to make today’s otherwise welcome package meaningful in practice.”
James Cogan, director at Boyer, said, "After a prolonged collapse in house building across London, today’s announcement of action from the Government and Mayor of London is very good news."
"The fact that the Mayor and the Government are jointly proposing key changes to planning policy and how planning decisions are made in London, alongside ongoing reforms at the Building Safety Regulator, indicates the seriousness of the efforts to tackle those structural issues that have led to the slump in housing delivery across the capital this year. The breadth of the reforms reflects the scale of the housing crisis confronting London and its ripple effect across the country. Kick-starting housing delivery in London is fundamental to the Government’s aspirations of delivering 1.5m homes in this Parliament."
Simon Cox, managing director at Walter Cooper, comments, “London’s housing market is in a dire state, with external factors such as skyrocketing material costs and the Building Safety Regulator wreaking havoc on developers. Government intervention has come at the right time, and the measures announced put development in a strong place, with the time-limited emergency relief from the CIL and a reduction in affordable housing targets working to boost viability.
“Our housing crisis is fundamentally down to a lack of development, so while on the surface a reduced target of 20% may appear to dilute social housing stock, actually, I suspect we’ll see figures increase as more developments are brought forward. 20% of a £1 is better than 50% of nothing, which is what we were facing prior to these measures.
“This is a London-centric announcement; however, if proven successful, then there is no reason why this shouldn’t be used as a blueprint for delivering housing quicker across other regional cities struggling to progress build programmes.”
Paul Rickard, chief executive of Pocket Living, said, “The range of measures, including the reduction in the affordable housing threshold which we have been advocating for, is a sensible and welcome short-term move that should unlock thousands of new schemes across London and help restore confidence in the market."
"This helps to kick-start delivery and allows us to look to longer term structural reform, including a rethink of the wider approach to viability in London. There are currently 281,000 unbuilt homes with planning permission, many of which will require further intervention."
"Unlocking as many schemes as possible offers the fastest route towards the Government’s 1.5 million homes target and we expect policy makers to continue to work with the sector to find innovative and fair ways to extend these interventions to consented schemes. That means encouraging local authorities to work pragmatically with developers on projects that are currently tied up in unviable consents.”
