Partner Article

Do you have a viable ‘affordable housing’ development?

The government has announced plans to unlock 75,000 homes by removing affordable housing from unviable developments.

The Planning Inspectorate can, failing local planning authorities action, adjudicate or waive section 106 agreements where a site has affordable home conditions.

This will help house builders to build more houses for sale at full market value and potentially increase profits (or remove the loss from the development), a move reinforced by the FirstBuy initiative.

The introduction of the Community Infrastructure Levy (CIL) where development is not viable must be carefully gauged to avoid a further reason to stall much-needed housing development. This does not mean that a blanket removal of CIL is appropriate but a selective approach that ensures where development is viable, for example of green field sites for higher value family homes, CIL is charged.

Another selection is to ensure that developing for rented homes is increased by incentivising through the removal of affordable homes conditions and CIL where necessary to create viable development.

This may not be as simple as it sounds since a housing developer may prefer to forward sell say 25% of the development to a Registered Social Landlord for the management of the affordable homes. Each scheme needs to be looked at on its merits and an innovative approach taken to ensure that viability is achieved and development encouraged.

There are numerous ways by which viability is being assessed but the different methods are causing confusion. To counter this the Royal Institution of Chartered Surveyors has published a report: ’Financial viability in planning’. This approach needs to be adopted across the industry, by local planning authorities, developers and their advisors.

JK Property Consultants is an RICS registered valuer and advises on viability of planning and development. For more information please ring Kevan Carrick on 0191 40 600 40 or Thomas Connelly on 0191 40 600 39 or contact them on Kevan@jkpropertyconsultants.com or Thomas@jkpropertyconsultants.com.

This was posted in Bdaily's Members' News section by Kevan Carrick .