Viability – Speed of Delivery Matters

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Last year, the High Court in R (McCarthy and Stone Retirement Lifestyles Ltd) v Greater London Authority [2018] EWHC 1202 (Admin) found the Mayor of London’s 2017 Affordable Housing and Viability SPG unlawful in one respect: the SPG sought to require all planning applications that do not provide at least 35% affordable housing to be subject to early and late stage viability reviews (the ‘Viability Tested Route’). 

This, the Court found, is inconsistent with current London Plan Policy 3.12 which only requires further reviews on developments that are ‘likely to take many years to implement‘.  It was therefore not something that the SPG could, as guidance, properly cover.

So what?

Policy H6 of the Draft New London Plan now seeks to convert the SPG’s approach to viability into policy.  The Mayor has therefore been unruffled by the judgment. Although the Draft London Plan is not yet adopted, he has given full weight to the emerging policy. 

The McCarthy and Stone judgment was more circumspect about weight (paragraph 57), noting that only once representations had been considered and the DNLP amended would it have equal weight to guidance.  It would, it was held, be normal at that point for it to have “some” weight. 

London Plan Weightlessness

The Millharbour appeal decision in December bears out the limited weight that the draft policies deserve. The Inspector found that a late stage review was not necessary to make a proposal, offering 16% affordable housing, acceptable in planning terms.

This was a single-phase, mixed-use scheme including two tall buildings and 319 residential units in Tower Hamlets.

The Council agreed with the developer that only 16% affordable housing could be provided, but nonetheless sought to justify a late stage review on two grounds:

  • first, the appellant’s earlier viability assessments suggested 35% and 40% affordable housing could be provided;
  • second, the Draft London Plan applies the Viability Tested Route where the relevant affordable housing threshold is not met.

Rejecting that, the Inspector had ‘no reason to quibble with the [agreed] 16% level‘ and found that:

  • the previous affordable housing offers carried no weight in justifying a late stage review. The Draft London Plan carried only ‘limited weight’;
  •  a late stage review would only be needed (citing McCarthy and Stone) where a scheme ‘took ‘many years’ to implement or build out‘. It was ‘very unlikely this scheme would be left unfinished for any length of time or that it would take many years to complete’. Hence, no late stage review was required.

This appeal decision shows that decision-takers may, at least in the short term, find it harder to rely on policy alone to justify further viability reviews for schemes offering sub-threshold levels of affordable housing. Where policy is being relied on, it is likely to focus minds on the ‘likely to take years to implement’ criterion, imprecise and evidentially problematic though it is.

The decision also suggests that a) speedy delivery (i.e. of smaller, more straightforward schemes) as a matter of policy has the potential to compromise affordable housing, and b) conversely, slower and longer/phased schemes may be subject to higher affordable housing requirements. The Mayor will be concerned that this does not create perverse incentives. In any event, all sides will be keenly watching the examination of Draft Policy H6.