Developers should build affordable housing to offset losses caused by the downturn in London's private residential markets, a leading housing consultant has recommended.
FPD Savills' snapshot of the capital's residential sector in April has found that affordable housing could give greater returns than sites earmarked for more expensive properties.

The bulletin says: "Sites that have been bought recently and that may be put on hold in light of weaker market conditions could potentially be more profitable if they were developed as affordable housing."

Anecdotal evidence from housing associations in London also suggests they have been able to buy London sites that had been intended for luxury flats for knockdown prices.

However, the report goes on to warn that the withdrawal of local authority social housing grant "is a key area of risk for developers".

James Brown, director of the affordable housing department at FPD Savills, said the loss of government funding – which underpinned extra housebuilding in the Greater London Authority's London plan – would be "horrific" for developers.

He said: "This will mean developments will slow down or stop. A shift to providing shared ownership housing might ease the situation, but if councils persist in demanding only affordable housing [as part of planning gain discussions], it will be very harmful. Councils need to be more flexible."

Source

Housing Today