Guest article from the Salford Star:

Research by housing charity Shelter has shown that where ‘viability assessment’ has been used by developers in planning, 79% of affordable homes have been lost. Shelter looked at planning applications for eleven councils, including Manchester where no affordable houses were provided as developers used the get-out.

Separate research by the Salford Star has shown over 1,000 affordable houses in the city have been lost over the last few years through viability assessments. This week, even the Tory Housing Minister said the system is “not working”, while Shelter urged the Government to “fix our broken housing system” and close the loophole.

The issue of affordable housing evasion has permeated the Salford Star over the last decade like a broken record. Virtually every single planning application that comes before Salford City Council has developers getting out their violins and handkerchiefs pleading that if they had to pay Section 106 contributions and provide affordable housing their profits just won’t be big enough. And the Council usually rolls over helping them to wipe their tears away.

Nationally, councils argue that their hands are tied, due to the Government’s National Planning Policy Framework (NPPF) which states that developers have a right to ‘competitive returns’ – interpreted as up to 20% profit margins – otherwise their schemes will not be ‘viable‘…and developers produce ‘viability assessments’, usually created by specialist planning companies such as Gary Neville’s Zerum*, to ‘prove’ their case.

In Salford, the Council refuses to make these ‘viability assessments’ public, so there is no way the public or press can check whether developers are bulling or not; even though, last month, Portsmouth was the latest council to force developers to go public with their ‘viability assessments’ (see previous Salford Star article – click here)

In September, the Salford Star showed how developers responsible for 4,172 flats and houses in Greengate and Chapel Street, including Middlewood Locks and Vimto Gardens, had produced finance for just two affordable houses, using both the viability get-out and Salford Council’s own developer-friendly policies (see here).

Meanwhile, in the Salford Star print issue two years ago, we listed every single housing scheme in the city over a twelve month period in which planning contributions and affordable housing had been lost through ‘viability assessments’. It totalled £19,275,553 in fees and 830 affordable houses (see the electronic version click here). Since then, further research has shown those figures mushrooming to over 1,000 affordable houses lost and over £42million in planning fees avoided by developers (see here).

Now, the ‘viability assessment’ loophole is being questioned on a national level. This week, housing charity Shelter released research based on Freedom of Information responses from eleven councils over a twelve month period showing that, where ‘viability assessments’ had been used, 2,525 affordable homes, or 79%, were lost from the number required by council policies.

“Viability assessments allow developers to reduce the number of affordable houses they build on their site, if they can show building them risks reducing their profits to below 20%” Shelter stated “It means many developers face no penalty for over-paying for land because they can recover the costs by reducing their commitments to building new affordable homes.”

Shelter looked at planning applications in Birmingham, Brent, Bristol, Cambridge, Leeds, Leicester, Manchester, Newcastle, Oxford, Kensington and Chelsea, and Southwark during 2015-16.

In Manchester, out of 2,362 flats and houses that had planning applied for, there was not one single affordable property provided by developers where the viability get-out had been used. With Manchester City Council having a 20% target for affordable housing in applications, Shelter calculated that 472 affordable properties were lost.

This compared to a provision of 11% affordable housing provided where no viability assessment was used, although there was still a shortfall of 178 affordable properties (out of 1,911 applied for).

Other local authorities where no affordable housing was provided, via ‘viability assessments’, included Leicester, Newcastle and Kensington and Chelsea (home to Grenfell Tower).

Birmingham managed to squeeze 1% of affordable housing from developers’ wallets (a loss of over 1,000 affordable properties), and Leeds and Bristol managed 8%. Southwark Council managed 26% and Brent 25% affordable housing – which shows the differing attitudes and enforcement nationally.

This week, addressing a Communities and Local Government Select Committee, even Tory Housing Minister, Alok Sharma, said the viability assessment system was “not working”…although he refused to scrap it.

“If it is much clearer in local plans what the infrastructure requirements will be then potential buyers of land will behave rationally and factor that requirement in to any price they pay” he said “Our view would be that abolishing [viability assessments] altogether is not the approach; making sure we look at this much earlier in the process is probably going to be the right approach.”

Meanwhile, Shelter has urged the Government to fix the system and close the ‘viability’ loophole after the charity unleashed its research…

“What this research reveals is the scale at which developers are able to use legal loopholes to protect their profits and dramatically reduce the numbers of affordable homes available for people” said Shelter chief executive, Polly Neate.

“Through freedom of information powers, Shelter has been able to reveal the extent to which affordable homes are required in local plans, only to be dropped by developers” she added “The Government needs to fix our broken housing system – and it must start by closing this loophole to get the country building homes that are genuinely affordable for people on middle and low incomes to rent or buy.”

Responding to pressure locally, Salford Council has stated that it will change its own pathetic policies that allow developers to avoid provision of affordable housing in certain areas of the city in 2019 (see here) – by which time there won’t be a scrap of valuable land left in the city that hasn’t already got planning permission.


First published in the Salford Star, on the 3 November 2017

* Gary Neville is a director of Zerum Construction Management Ltd, which has helped planning fee avoiders like Middlewood Locks (£6million avoided), Peel Holdings (£millions avoided) and Pegasus M6/Vermont Construction on Frederick Road (£400,000 avoided) – see previous article click here.

For full details of every single planning application in Salford that has used ‘viability assessments’ to avoid planning fees and affordable housing provision just put ‘viability’ into the Salford Star search engine at the top of our website front page.

Sign the 38Degrees petition to ‘Make housing developers be transparent in Salford’ – click here

See also previous Salford Star articles…

Salford Council Gives Ordsall Away For Nothing – click here

Salford becomes 2nd Home Capital of England – click here

Fred Done £22million Backed Subsidised Flats Marketed to Hong Kong Investors – click here

Feature image: Flickr

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