Westminster Council agrees to grant 'affordable housing credits' to landowner

Under the new affordable housing model, a landowner can agree to sell land for a price at below the market rate in exchange for an "affordable housing credit" that can be used as a set-off against affordable housing obligations required forin future schemes.

Commercial property company Land Securities has made the agreement with developer Pocket, under which Land Securities sold a site on Fermoy Road in Westminster to Pocket for £2.3 million less than its market value.

Westminster Council agreed that the £2.3m could be held by Land Securities as credit against affordable housing obligations on future developments. The credit can be used in lieu of payments that might have to be made where it is not feasible to have affordable housing on-site.

The Committee did not accept that the number of affordable housing units could be used as an affordable housing or general housing "credit", because it was considered to be potentially problematic in advance of an agreed land use credit policy which might emerge under the Local Development Framework.

Planning Officers at Westminster Council instead proposed an alternative mechanism.

"A sum of money equivalent to the subsidy that is calculated is required to ensure delivery of a viable development at Fermoy Road could be recognised by the City Council as being available to Land Securities as a "credit," the Committee said  (33-pages/5MB PDF).

"The proposed mechanism would allow the "credit" to be used only to offset against any policy requirements to make financial contributions in lieu of providing on-site affordable housing in respect of future schemes in Westminster," it said.

A section 106 agreement has been used to secure the operation of the mechanism.

Pocket plans to build 32 homes on Fermoy Road which would be sold at a discount of 20% - 30% on market rate. Only buyers that meet the Mayor of London's first-time buyer scheme would be eligible, so potential buyers must earn less than £61,400 a year. The asking price for the flats ranged from £180,500 to £202,500.

Under the terms of the agreement, all future sales of the flats must be approved by the Council, they must not be sold for more than 80% of its market value and they must be sold to a person who qualifies for affordable housing.