Mayor Ken Livingstone has come in as an apparent white knight, riding to the capital's rescue, armed with that hefty 419-page tome, the draft London plan – not to mention its 23 supporting reports. Since the mayor launched the plan last June, it has been broadly praised by the residential development industry for its vision and for providing a spatial framework that aims to mend the fractures wrought by local politics. But now we are about to get down to the nitty-gritty. Next week, the plan starts its progress through the Examination in Public process, when a government-appointed panel will hear what the industry thinks of the Greater London Authority's proposals, including Livingstone's big idea that 50% of homes on new residential sites should be affordable.
The 50% figure has become something of a totem since it was given credence by a team of academics in a report for the GLA two years ago. A methodology that was based on the high land prices of some – but by no means all – London boroughs, it has since been seized on by other local authorities, added to planning guidance, and is set to be applied to locations such as Oxford. But the methodology has yet to be thoroughly tested in the capital, except on a relatively small number of sites like St George's Imperial Wharf in Fulham, west London. Questions remain about whether housebuilders can afford the mayor's affordable housing target.
"We don't object to a high percentage of affordable housing, so long as there's a means to achieve a return on the accommodation for our investors," says Peter Harris, director of development at London Town, which project-manages residential development in the capital for investor buyers. The plan advocates the 50% target for all but 13 of the 33 London boroughs. Where the 50% target is imposed, the plan says that 35% of that housing should be social and 15% "intermediate", which is defined as housing for people earning between £15,000 and £35,000 a year, such as key workers.
"This is what the mayor wants to achieve, but I think a balance will be brought to bear," says Jonathan Seal, managing director of agent Hamptons International's residential development division. A financial contribution towards the cost of affordable housing has to come from somewhere other than their own pockets, says the housebuilding industry – whether that is Housing Corporation grant, income from intermediate housing or ultimately the landowner in the form of lower land prices. "The viability of it depends on land prices and on the additional help available," says Seal.
"Developers will have to integrate private and affordable housing – they will have to make the affordable housing look good and it probably will cost more to build, so they won't be able to pay as much for the land," he continues, but the simple fact that private buyers have to live cheek by jowl with affordable renters should not adversely affect developers' sales prices, says Seal. "At Paddington Basin, the Hermitage Street development has been selling really successfully at around £500 per ft2 and it has affordable housing all around it and is in a regeneration area."
It is not housebuilders but local authorities that could really make or break the mayor's affordable housing strategy. "The planners have got to be with it," says Seal. "The plan includes a map of where development is necessary, and there is a need to get down to what the section 106 agreements are likely to be so that development time can be brought down considerably.
If that happened it could tempt more housebuilders into an area to buy sites unconditionally."
Austin Mackie, regional planning director for London at architect Broadway Malyan, says: "Most sensible developers are taking the current 25-35% affordable housing requirement on the chin. The plan refers to the 50% figure as a target, but still every application in boroughs where the 50% target is set – like Brent, Ealing and Hounslow – that doesn't meet this target is likely to get an objection."
Recent changes in the office and residential market have led the robustness of some of the plan's targets to be questioned even before they have come into force. "There is a big debate about whether the targets for commercial building should be adjusted because of the downturn in the office market," says Mackie. "The plan will be around for a long time and housing slumps don't last too long. The issue is not so much one of demand, as affordability. The intermediate market is key – they are the people who come into London and drive the market."
Hamptons International's Seal agrees that the intermediate market might not only be central to London's well-being, but also be good for housebuilders. "The industry has changed a lot," he says. "Many housebuilders have come into London and retreated again. They have wanted a flagship that gives credence with the board and maybe the City, but it hasn't benefited the bottom line. Maybe their horizons need to come down a bit."
No comments yet