Robin White
Robin White

By Robin White

Time to build on cross party support to end viability loophole and make housebuilding popular again

We’ve been talking about the viability loophole for a while now, but our new research has shone a light on just how much of a problem it is. Last week, we revealed England is losing thousands of potential affordable homes each year through this loophole in the planning rules.

Happily, both major political parties are already committed to ending the use and abuse of this loophole.

Shelter isn’t alone on this. Local councils and communities across the country are angry at the way the rules deny them the homes they desperately need. At our recent Conservative Party Conference event, organised with Campaign to Protect Rural England (CPRE) councillor after councillor raised the problems viability assessments cause with the Secretary of State for Communities and Local Government.

And this isn’t a case of councillors not wanting housebuilding – it’s a case of them wanting to ensure that housebuilding in their area meets their community’s needs. Something viability assessments are currently preventing.

Ultimately, closing the viability loophole will also mean that we not only increase the supply of affordable housing but can start growing local support for housebuilding as well.

What is already being done

Last week, at a session of the Communities and Local Government Select Committee, the Housing Minister, Alok Sharma MP, confirmed that action on viability is very much on the agenda and that the current system “clearly… does not work”.

This followed the recent ‘Planning for the right homes in the right places’ consultation in which the government made some positive first steps towards reforming viability. Articles in both the Financial Times and the Independent have confirmed that Labour also wants to stop the aggressive use of viability assessments from reducing affordable housing commitments.

So what we are seeing is the emergence of a clear and welcome consensus, one that we hope is the start of a real push towards change and towards more affordable homes.

Affordable housing is popular housing!

All too often we hear stories about NIMBYs being at the heart of why we aren’t building homes. This argument has become widely accepted, despite the statistics showing something completely different – that housebuilding is actually growing in popularity (which we’ve written about before).

In fact, data from the British Social Attitudes survey shows that only 24% of people now oppose new home building in their local area while 57% are supportive. That support rises to 73% if the homes built are affordable.[1]

Closing the viability loophole and increasing the supply of affordable homes means:

  • More affordable homes get planning permission, and ultimately get built;
  • Local communities have confidence that new developments will include the affordable homes they need;
  • Confidence that what is needed is what will be delivered filters through into support for housebuilding.

Why now and why this?

This isn’t a case of moving the goalposts and asking developers to accept it. It is just about making sure that whatever a local council says it needs in terms of new homes being affordable they are getting.

Let’s be clear, on its own closing the viability loophole won’t be the thing that solves the housing crisis. However, it would be a major step in ensuring that the affordable homes that local areas identify as being needed are actually built.

It’s also straightforward and free: the government can make the necessary changes in the planned update to the National Planning Policy Framework early next year.

What has to be done?

The government should:

  1. Strengthen Local Plans – so they make it absolutely clear what local communities expect to get from development
  2. Limit the use of site-level viability assessments – so the Local Plan policies (like affordable housing) are the default, not something to be routinely negotiated away
  3. Incentivise policy-compliant schemes – by fast-tracking them through the planning process
  4. Redefine and justify the level of returns supported by the planning system – so that developer returns are more appropriate to the level of risk they are taking
  5. Introduce full transparency – so that local communities can scrutinise the numbers and hold developers and councils to account

For more information on why we need reform of viability and how to do it please see our blog: ‘The high cost of viability assessments: 2,500 affordable homes lost in just one year’.

[1] Source: NatCen’s British Social Attitude survey 2016, published by National Housing Federation in Demise of the NIMBY

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