The head of Berkeley Group, one of the UK’s largest housebuilding groups, has proposed the setting of a simple affordable housing tariff across major developments.
Tony Pidgley said a 30% affordable housing level, set as a blanket rule, would be something developers could simply work around. He also proposed that affordable rents should be set at a level that is linked to the income of a local area.
Pidgley floated his ideas in a speech at the Ecobuild event in London, and repeated them at the MIPIM property conference in Cannes.
“The day the government stands up and sets the level, then developers would adjust accordingly,” he told the Ecobuild conference at ExCel in London. “If the government sets the level at 30% developers will respond.”
“It’s time the government stepped up and looked at how they face into this housing challenge,” he said. “I get the feeling that the industry is ready to step up to it. If you tell us guys to produce 30 per cent affordable, we will adjust the land value. We all know land values have doubled in the past five years”.
Pidgley told Planning magazine he envisaged the 30% being made up of one third shared equity, one third social rent and one third discounted market homes, or alternatively homes designed for elderly tenants, with some care support. He also floated the idea of applying the fixed tariff to sites of more than 1,000 units, and at the same time exempting such projects from CIL contributions. The idea would mean shifting the sector away from time-consuming arguments about viability, he insisted.
“We have six large sites around London. All of them have at least 30 per cent affordable housing, so it can be done,” he claimed. Berkeley, with subsidiary St George, currently builds around 4,000 homes a year.
At MIPIM, Berkeley also celebrated the completion of an agreement with the GLA to build out a major site at Stephenson Street, Newham, where a 3,500 homes development will include a park and secondary school. Homes will be mixed between private rent, units for sale, and affordable. “The 33 per cent didn’t frighten us,” Pidgley told MIPIM delegates.
The concept appears to have support from elsewhere in the industry. Philip Barnes, land and planning director at rival housebuilder Barratt, commented: “Across the vast majority of sites across London a flat rate requirement of 30 per cent affordable housing would be accepted by landowners and developers. As such it would be unlikely to affect housing delivery, indeed it could provide some welcome certainty. Obviously it could not be applied to sites already in the system where the landowner, developer and local authority agree 30 per cent is not appropriate or viable.”
And industry grandee Sir Stuart Lipton, himself connected with residential development in London, added: “We have to have a simpler system, and I think Tony’s ideas are really good,” He also called for a move to a system where “we as developers pay more fees to local authorities, where local authorities use outside professionals, leaving their own people to spend more time on the real issues that are there”.
Pidgley also took aim at City Hall’s London Design Guide for housing standards, arguing: “Let’s have the discussion about space. I think you’ll find that for most people an 11 square foot lounge is fine, with a separate bedroom that’s 10×10 or 10×12 – we only want common sense.”
LPA Perspective: Pidgley’s 30 per cent proposal sounds simple, and for that it may find supporters. It might also do away with the time and expense consuming arguments around viability. And many of those are due to developers overpaying for land, which Pidgley implicitly acknowledged in his comments about land values.
But even as a new idea is floated, there are problems. How do you work out the three lots of 10 per cent, and what qualifies as homes for the elderly? What will authorities do to make up the shortfall of CIL contributions they were expecting? Some worked examples would be instructive, and allow the consequences of any such move to be better understood.
Pidgley has been around long enough, and built a sufficiently successful business, to know how the system works, and so his views are worth exploring. And Barnes at Barratt has some sensible suggestions, too, about how to invigorate housing supply.