Affordable housing evidence is lacking in Greenwich scheme, says inspector

The inspector concluded that the terms of the proposed viability review mechanism set out in a unilateral undertaking provided by the developer would not make sufficient provision for affordable housing and would not satisfy local policies.

The Council had resolved to grant permission for the scheme in September last year. However, following disagreement with the Council as to the terms of planning obligations for the development, in relation to affordable housing and low emission zone matters, Derreb Limited made an appeal on grounds of non-determination.

The site fell within the 'Kidbrooke Development Area' in which the Council's local policy seeks a 50% affordable housing contribution on greenfield sites. The developer had carried out a viability assessment and submitted a unilateral undertaking with provision for 26% on-site affordable homes, with a viability review mechanism allowing for an additional off-site contribution of £50,000 per dwelling, capped at up to a maximum of 31 homes.

The Council accepted that a 26% on-site provision was suitable. However, it said it would require that the additional contribution should be  £100,000 per dwelling to cover the costs to the Council of supplying each off-site affordable home. It said that a £50,000 'cap' on contributions would lead to a maximum affordable housing contribution of 38%.

The costs to the Council were not disputed but the developer argued that viability considerations meant the £50,000 per dwelling cap was the maximum that could be afforded.

However, in dismissing the appeal, the inspector said it had not been "conclusively demonstrated that the scheme would be unviable if provision was made for the level of contributions sought by the Council".  The Inspector said that placing a 'cap' on the maximum financial contributions below what is required to achieve a target of 50% affordable housing would be premature and would not comply with local policy.

The inspector said in his decision letter (6-page / 145KB PDF) that it would be down to future viability assessments to determine the appropriate level of additional affordable housing contributions.

Planning expert Susanne Andreasen of Pinsent Masons, the law firm behind Out-Law.com said: "This appeal decision demonstrates that, when it comes to developers seeking below policy affordable housing provision, the quality and extent of viability evidence, even to impose a cap on costs under a viability review mechanism, is key. The London Plan states that affordable housing targets should be applied flexibly, taking into account viability and for certain schemes viability review mechanisms are suitable. Where appropriate, developers and local authorities do thus agree an affordable housing provision below target, but with mechanisms to ensure additional contributions are made should viability improve at a later stage," she said.

"What's interesting about this case is the degree of scrutiny of the viability evidence underpinning the "overall liability cap" including the viability review mechanism.  

"Developers will wish to ensure that any total cap proposed to the level of affordable housing proposed in any viability review situation is supported by robust viability evidence," Andreasen said.