The London borough of Greenwich is leading a charge to stop developers hiding behind confidential calculations, when arguing they cannot afford to deliver planning gains, notably affordable housing.
Greenwich has adopted a new policy that will demand applicants provide a “full unredacted viability assessment” with planning applications, if they argue they cannot meet affordable housing policy requirements. The borough has a blanket requirement of 35% affordable homes, for all new residential developments in the borough.
The borough is setting out a list of locally established criteria, giving clarity over the information needed with a planning application. This will include the need for a fully public viability study, whenever a proposal has less than 35% affordable homes. The study will, says the council, be published on its website along with all other documents submitted as part of an application.
“This is about transparency for local people,” said councillor Danny Thorpe, cabinet member for regeneration and transport. “Previously, our hands have been tied on affordable housing levels if the viability study showed a development won’t work financially with the levels of affordable housing that we want.”
“This crucial change means whole process will now be far more transparent – making the viability studies publicly available as part of the planning documents means the Royal Borough and residents alike can see precisely why a developer might claim they cannot meet our affordable housing targets. We believe we’re the first local authority in the country to be doing this – looking at policy which insists on these studies being in the public domain.”
The borough is not the only one moving to be more assertive around viability assessments. In January, Islington adopted a supplementary planning document which requires applicants to make viability information public.
The moves come as boroughs are becoming frustrated by the current system. Evidence presented recently to the GLA planning committee has suggested viability assessments are now routinely used by developers to wriggle out of affordable housing policy compliance, arguing that to meet the policy would render their development unprofitable. Applicants often argue their viability figures must remain confidential, because the calculations are commercially sensitive.
There has also been evidence presented that developers find themselves unable to comply with planning contributions policy, because they have simply overpaid for a site, in a competitive market. A viability argument returns the project to profit.
However, frustration is also growing that, once arguments have been advanced and accepted, a developer will then go on to build out a scheme and earn considerably more profits than they said they would expect to. And in many cases, local authorities do not put measures in place to recover this overage or excess profit, once a viability argument has been accepted. Among London boroughs, Croydon was singled out at one hearing, for having achieved such an agreement and secured additional funds from a developer, after a project was built out.
Victoria Lindsay of Pinsent Masons commented: “This is a defiant stance taken by Greenwich and comes in the context of a number of ICO rulings and case law gradually eroding the extent to which viability reports can remain partially or wholly redacted and confidential on commercial sensitivity grounds.”
“Applicants will need to balance the repercussions of releasing potentially commercial sensitive information that puts them at a commercial disadvantage against the feasibility of accepting the 35% affordable housing requirement and the risk that it could make the whole scheme unviable. It will be interesting to see whether other local planning authorities follow suit.”
While Marcus Bate, also at Pinsent Masons, added: “Greenwich’s proposals are as controversial on the issue of timing as they are on the issue of commercial confidentiality. Good planning involves ongoing and constructive discussions throughout the planning application process and invariably involves submission of additional information post-submission. It is counter-productive to front-load the planning application process so heavily and create yet more delay to delivery of new development.”
The move comes after Greenwich received criticism for giving in to demands of developers at Greenwich Peninsula, to cut affordable housing provision as part of the massive development. Investigations suggest that Knight Dragon, which bought the site, did so in full knowledge of the local housing market, but almost immediately made a viability submission to argue it could not afford the previous landowner’s affordable housing commitment.
Shane Brownie, a housing researcher who pursued a Freedom of Information Act request to see the submission, and the local authority’s response, told the Bureau of Investigative Journalism that viability assessments have potentially had larger impacts: “In my view, there have been fundamental problems with the lack of transparency of the decision making process in planning decisions such as this that have had a major impact on the future shape of local communities.”
“Too often, these negotiations are held behind closed doors and without any public consultation. This lack of transparency undermines full public confidence in the planning system. What we need is an open and transparent approach where decision makers and the community can see the facts to bring back confidence in the planning system.”
LPA Perspective: Greenwich, obviously stung by what happened at Greenwich Peninsula, is the first mover to help clear up a largely discredited route that has been allowed to develop, running rings around the planning system. It appears that other boroughs may be ready to follow their lead.
Will this lead to boroughs becoming no-go zones for developers? Perhaps in the short term, those who have paid top money for development sites in Greenwich will worry that their chance for a profitable development in the near term has been hampered. It should diminish greedy prices being paid for sites in the borough, as development appraisals need to build in an upside into the price paid – including a full affordable housing provision.
Perhaps densification and building taller will become the new battleground, for developers keen to make their money out of a development site. If you need to deliver more affordable homes, what’s the problem, so long you are permitted to build more overall on the site?
The flip side is there is now greater clarity on both sides. For anyone wanting to develop in Greenwich, the whole game of horsetrading, hiring consultants to argue first one way, then another, should be reduced – until the next loophole is spotted.
Plenty of other authorities will be watching the Greenwich experiment with interest. But their move is not in isolation. The government is making noises about fixing the viability game, too, limiting the way the argument can be constructed.