London assembly planning committee asks for more guidance on viability

Out-Law News | 11 Feb 2016 | 3:54 pm | 2 min. read

The London assembly planning committee has written to the London mayor Boris Johnson to "urge [the London mayor] to bring forward supplementary planning guidance (SPG) on viability assessments in London" and that there is a "strong case for a new approach to viability."

The letter states that "viability assessments should be used to assess whether a development can feasibly be delivered with the planning obligations placed on it, especially on sites facing numerous constraints."

The planning committee is concerned that "viability assessments are being used to overestimate costs and avoid providing affordable housing." It argues that an SPG could accelerate the planning process and the delivery of affordable housing and promote transparency.

The planning committee has made a number of recommendations to the London mayor. This includes that any SPG should "promote the full public release of viability assessments in the interests of the public and in line with the NPPG". The planning committee understands that some information in "exceptional circumstances" cannot be published for public interest reasons but it can see no reason why in most cases, viability assessments are not made public.

A further recommendation is that "a clear case for the existing use value plus approach to valuing land" should be used to ensure viability is not used to avoid affordable housing. The committee argue "there is currently a lack of clarity on how to value land which can trump the provision of affordable housing" and often causes delays. The lack of clarity on this matter means that developers often overpay for land, which can lead to the loss of planning obligations. As, viability assessments still mostly remain confidential, it is difficult for the committee to analyse the true extent of this problem.

The committee says that the London mayor has the power to ensure that major London developments fulfill policy requirements by "extending the application of fixed affordable housing targets". If this was extended it would ensure that developers consider the viability of affordable housing and design from the offset.

Local councils can continue to use individual housing targets but they should use the fixed target as a minimum.

The letter also states that the secretary of state should give the mayor of London more powers to refuse planning applications where it is obvious from the draft section 106 agreement "that overpayment for land has led to reduced affordable housing."

Other recommendations include the creation of guidelines and training for planners in assessing viability and the removal of any reference to a "benchmark profit level". 

Planning expert Victoria Lindsay of Pinsent Masons, the law firm behind Out-Law.com said: "viability, and the question of whether viability reports should be made public, are hot topics at the moment and comes at a time when Greenwich Council has announced that all viability reports are to be un-redacted and published alongside all other application documents. The two mayoral candidates have each put housing at the forefront of their campaigns and it will be interesting to see how the newly elected mayor will address the housing crisis and viability".