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Despite the government’s laser focus on affordable housing, viability remains key
Developers fear that the rigid commitment to affordable housing may prevent them building at all, writes Simon Corp, partner in affordable housing at Rapleys
Simon Corp is a partner at Rapleys
The UK needs affordable housing – there’s no doubt about it and there’s an appetite to deliver it. The new Labour government has a laser focus on this, and many would say rightly so.
However, there are fears among developers that this focus will turn a blind eye to viability of sites and that their ability to develop anything will be curtailed by a rock-solid commitment to ratios of 40% to 50% (depending where the site lies).
Many are even holding off on planning submissions until the chancellor’s first Budget on 30 October as a result.
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This is where it’s crucial to have the right expertise on hand to provide guidance as to what’s possible, what’s practical and what needs to be done when.
It’s true that 40%, or even 50%, of nothing is nothing. I’ve said this time and time again over the past few years – ratios mean nothing if they are not deliverable. And in the case where a developer does meet the required ratio, what happens if there are no registered providers willing to take on the Section 106 homes?
This is a situation we find ourselves in today.
“It’s true that 40%, or even 50%, of nothing is nothing… ratios mean nothing if they are not deliverable”
There are examples, however, where common sense prevails, and this government should be looking at these cases as insight and best practice when driving the agenda forwards so they know where the practical balance lies.
One recent case tells the story well. We had a half-built site in East Street, Southampton whereby the developer went bankrupt and it was left vacant and unfinished for several years thanks to a 35% affordable housing requirement which rendered it not viable to other parties.
Rapleys ran the viability and found that in this case the affordability ratio was at zero.
Through vigorous evidence, we managed to agree this with the local authority and now this previously locked/stalled site is coming forward. There may be no affordable housing units directly on this development of just 16 properties, but it is much-needed delivered housing in an undersupplied location.
In anticipation of the Autumn Statement – the first Labour full Budget – developers and planning consultants should thus be reassured that there are opportunities to argue a viability point, particularly when it comes through a construction cost viability argument and the ability to bring forward an otherwise stalled site.
There is some hope on this latter point: deputy prime minister Angela Rayner announced that a special group set up as part of a New homes Accelerator programme would be charged with unlocking stalled sites across the country.
“In anticipation of the Autumn Statement… developers and planning consultants should thus be reassured that there are opportunities to argue a viability point”
It’s estimated that there are 200 large sites in the country that are currently stalled and could provide up to 300,000 homes. But, realistically, there will be as many if not more locked in smaller pockets across the country that, like our Southampton example, shouldn’t be ignored either.
It’s important to get the right advice and have the right expert on hand to navigate these matters so that development is practical. It’s something that the government will need to be sensible on or nowhere near the development targets will come into play.
It just takes real insight and knowledge of how to convey viability, so choosing the right advisor is crucial.
Simon Corp, partner in affordable housing, Rapleys
