During the run up to the London Mayoral Election this May, MP Sadiq Khan positioned himself as a ‘Mayor for all Londoners’, citing the election as a ‘housing policy referendum’. In the six months since replacing Boris Johnson, who became a target in the Khan campaign over his housing record, housing policy remains front and centre of his London shakeup. We examine the Mayor’s Supplementary Planning Guidance draft and potential housing delivery opportunities in 2017.
Recent housing announcements: Key talking points
The published draft of the Supplementary Planning Guidance (SPG) coincided with positive housing pledges during this year’s Autumn Statement. The combination of an extra £3.5bn for affordable homes investment with the Mayor’s planning guidance has set the scene for welcome change in the year ahead.
The Affordable Housing and Viability Supplementary Planning Guidance SPG aims to tackle three key areas:
* Affordable housing investment
* Processing more public land for affordable homes
* Tackling the planning system to ensure that affordable housing delivery is increased.
Key takeaways
* Developers offering 35% affordable housing provision will have their developments waived without viability checks to increase affordable housing and develop greater understanding and trust in the planning system
* A ‘London Living Rent’ tenure scheme was announced. Under the proposal, rents will be set at no more than a third of local average household income to help renters save for a property deposit. 30% of affordable homes within a development should be available under this scheme and those with household incomes up to £60,000 will have the opportunity to buy their lets after 10 years
* Housing associations have long been criticised for their lethargy, but they will now be expected to carry a lot more weight. Many will be expected to provide 50% or even 60% affordable housing per development
* City Hall cannot technically impose the measures until the London Plan is finalised, hence the term ‘guidance.’ What it can do, however, is to nudge developers by referring schemes which aren’t meeting the thresholds. Sadiq Khan intends to work with different boroughs to ensure that differences are addressed and resolved.
2017 opportunities
UK housebuilders have certainly been given a real boost this autumn, as discussed in our recent Autumn Statement blog. 2017 will present opportunities for industry professionals across the property spectrum to start work on London’s next set of property initiatives. There’s now a lot more money to play with, and more expectation to deliver.
Property investors are ready to reinvigorate the build-to-rent sector as nearly half of all landlords in the UK are now considering to stop using letting agency services if their returns falter next year. The security of rental income every month is a major attraction for developers. As renting is no longer viewed as last resort option, there is greater scope for developers to move out of metropolitan areas into suburban and rural areas.
The relaxing of rules for affordable housing investment could also enable small and medium-sized companies to develop a mixed range of housing options. As housing associations begin to feel the
pressure, greater cross-sector proposals are also likely to develop, creating potentially thousands of extra homes in the process.
During the Autumn Statement, Philip Hammond proposed that non-resident and resident developers should pay the same general corporation taxes, which includes limiting loss relief rules. This move could also grant greater opportunities for SME developers operating in the UK.
Londoners themselves are set to benefit under the guidance which recommends that local residents should be involved from an early stage to influence housing and regeneration plans.
A new direction
During the announcement this November, Sadiq Khan, said: “London is in the midst of a housing crisis, with thousands of Londoners priced out of a city they call home.
“I have been clear that fixing the housing crisis will be a marathon and not a sprint, but I am determined to lead from the front and get on with building genuinely affordable homes for Londoners to rent and buy.
“These announcements today demonstrate real progress on the long road towards fixing London’s housing crisis.
“The record-breaking investment I have agreed with government means we can start building a range of different affordable homes to suit Londoners’ needs. Together with my new planning guidance, we can begin to boost the number of homes built in London and move towards a long-term strategic goal of half of all new homes being genuinely affordable.” A consultation draft of the new London Plan will be published in Autumn 2017.
Find out more
LD Events will be examining housing delivery challenges and opportunities at our hugely popular first conference of 2017: the National Housing Delivery Conference. This is a key event for investors, developers, local authorities, housing associations and their related advisers.
We will hear the views of Central Government and four Housing Association Chief Executives as well as those in charge at Local Authorities and several other senior industry experts. We will be briefed on the impact of New Legislation, PRS, Starter Homes, Emerging Tenures, Planning Changes, off-site construction and other factors that are changing Housing, and the strong opportunities that exist in the sector, and how to maximise them. This event is likely to sell out again so please book early to guarantee your place.