"Labour's affordable housing plan 'needs to be more flexible'" - a bold headline for my debut in The Times but one that resonates with my opinion on the matter. We need to deliver more high quality sustainable housing (the high quality AND sustainable part is critical) and we clearly need to deliver more affordable housing, so that it can be easily accessed by everyone, no matter their position. Setting ambitious targets is a positive start and supporting this with innovative ideas like the Grey Belt is even better. However... deliverability is key. To expect that all grey belt sites will be able to deliver 50% affordable housing, is unrealistic. What ultimately determines the number and quality of homes that might be delivered is the viability of development sites. The majority of our homes are delivered by the private sector and no developer will be able to acquire land or gain funding if sites can't be made to stack up financially. The reality is that affordable housing costs developers nearly the same to build as private housing, but it only generates a fraction of the revenue (which in turn leads to much lower land values). An inflexible 50% affordable housing requirement could easily render a huge proportion of grey belt sites unviable therefore leading to the delivery of no homes at all, either private or affordable. I wanted to support my view with accurate data, so I let Viability loose on potential Grey Belt sites in the London Green Belt to quickly and accurately assess site viability. The conclusion - dropping the affordable housing requirement to 35% resulted in an overall increase in affordable housing delivery of 44%. Let me know your thoughts! #property #propertydevelopment #development #homebuilding #land #planning #affordablehousing #thetimes
If it was taken forward as a 100% affordable scheme with grant (GLA or HE) on every home (including all the s106 affordable homes) by an RP (no 20% profit margin required) I wonder whether more projects would be viable due avoiding draconian BLV’s being introduced into the viability calculations? If so, perhaps this is the intended consequence of this policy? Grey belt is more an opportunity for RP’s than private for profit developers? Land promoters could still make a margin in this scenario. I would be interested to know what #viability make of this?
Great article!! I’m surprised as many as 20% of sites do work at 50% affordable. I suspect in reality less would be viable because a 20% developer margin combined with a 10% premium on EUV is rarely enough to justify the cost and risk of getting planning permission… https://www.knightfrank.com/research/article/2024-09-10-benchmark-land-value-fine-margins
Great article. Government have lost track of the cost of building a basic new home. Add in the cost pressures of high quality, sustainability, space standards, fire safety, cost of debt and soaring construction cost inflation and we're not in a pretty place. If we want more homes building (let alone affordable homes), then something has to give. Until realisation dawns on this most basic of economic principles, then the UK housing crisis will just continue to escalate.
Henry. Perhaps explain what the subsidy is required per social rent home and per Affordable Rent home (Local Housing Allowance). This subsidy is otherwise the reduction in land value per home. I think you will find that it is a multiple of the land value per plot generated by building private housing.
I think this is an interesting observation Henry. I wonder if you could carry out some sensitivity testing to see what the results would be for other %s and identify if there is an optimum, that could be used to inform #planningpolicy on #affordablehomes. At least in these areas.
No grant from GLA @ 35% btw.
Not sure I totally agree. Green belt land was never land that could be developed (subject to a limited number of exceptions). That’s the point. If it’s ag land that doesn’t perform strongly in GB terms and could be classed at grey belt, how could it not be viable for a scheme with 50% AH? It’s EUV is a lot lower than a site with pp for 100% AH let alone pp for a scheme with 50% AH. I’d take your point if most grey belt land was previously developed but that’s not what is stated in the article and of course there are massive variations in site abnormals on PDL just like there are sales values. Small sites are more of a challenge yes, but twas ever thus. From a landowners perspective, it’s that or nothing - their alternative is no development, not a better deal later. Flexibility is being considered by the government, and I do have reservations about the govt’s BLV multiplier and have said so. Grey belt sites are a shorter term solution to housing delivery and it’s important as local plans are faltering, but the government are offering a ‘deal’ of 50% AH in order to get around the strict GB rules. Ordinarily those sites wouldn’t necessarily ever get allocated or developed.