Planning matters

Our award winning blog gives a fresh perspective on the latest trends in planning and development.

The London Plan: A new direction for planning in London

The London Plan: A new direction for planning in London

Margaret Baddeley & Giorgio Wetzl 29 Nov 2017
The draft London Plan has been published today for consultation, starting on 1 December this year and ending on 2 March 2018. The aim is that the Plan will be examined next autumn, and published just a year later. For now, the draft Plan is a material consideration in determining applications but chances are that it will carry little or no weight, at least until there is a response to consultation submissions, or after its examination.   The Mayor is using the draft Plan to deliver his manifesto commitments, according to the Plan this is justified by the scale of his election victory. As a consequence, it sometimes deviates from existing national policy and guidance, including where it reflects ‘the particular circumstances’ of London. The Mayor also says its content is supported by ‘a proportionate evidence base’.   Lichfields won’t comment on the draft Plan’s length; instead, we focus on its ‘more ambitious and focused’ content that starts to set new directions for planning London from 2019 to 2041 (with a review of its housing targets before 2029). These include delivering 65,000 homes each year (each borough’s housing targets are confirmed as published in October), achieving a zero carbon target by 2050 (including carbon free travel), and 80% of all trips in being made by foot, cycle or public transport by 2041.   The first of the draft London Plan’s two new ‘pillars’ is the concept of ‘Good Growth’ – this is ‘sustainable growth that works for everyone, using London’s strengths to overcome its weaknesses’ i.e. growth that is ‘socially and economically inclusive and environmentally sustainable’. It is no longer a term just used for design. The second is the ‘Healthy Streets Approach’ that is already being taken by the Greater London Authority (GLA), which puts improving health and reducing health inequalities at the heart of planning for transport and public space.   Despite the ordering of its content into topic chapters, the draft Plan states that it has to be read as a whole, with the order of policies being ‘no reflection on their importance or weight’.   So, turning to the draft Plan’s highly detailed policy content – this straightway causes some minor difficulties as there are policies included in other paragraphs (e.g. on ‘tenure integration’), but we will ignore that for now – here are our main observations on the new stances:   Housing The threshold approach is here to stay, confirmed as per the Affordable Housing and Viability SPG. A threshold approach is now proposed for small sites as well, to trigger the ‘presumption in favour of development’ policy. The impression is that, in London at least, this approach to planning will be further extended, if it can achieve its goals. Rumours that the affordable housing threshold would be raised to 50% - or even 65% - were unfounded. The 35% affordable housing threshold (for viability purposes) will stay in place until at least 2021, while the strategic target remains set at 50%. The reference to 65% affordable housing comes from the related identified need in the London SHMA. Interestingly, boroughs may consider applying localised affordable housing thresholds (more than 35% 'where possible') in Opportunity Areas, to provide certainty and ‘help prevent land price rises based on hope value’. The fast-track application determination route, initially designed for for-sale housing schemes that provide 35% affordable housing (and meeting other requirements), will be extended to more developments, such as Built to Rent, specialist older persons’ accommodation and purpose-built accommodation (both for students and shared living). The affordable housing tenure differs according to each development’s specifics. Small sites (up to 0.25ha and capable of delivering 1-25 homes) are the main new element in the ‘increasing housing supply’ catalogue of policies. These should be included in brownfield registers, and some of them granted permission in principle, as the Mayor expects almost 25,000 homes a year to come from these sites over the next decade. A presumption in favour of residential developments will also apply in certain circumstances –including, infilling, the densification of existing schemes within PTALs 3-6 or within 800m of a Tube or rail station, or a town centre. Existing supermarket sites, surface car parks, and edge of centre retail/leisure parks with sustainable transport should deliver ‘housing intensification’ through redevelopment, with new homes above e.g. commercial uses and transport infrastructure too. Town centre policies themselves hold no great surprises. Minimum space standards in the current London Plan remain unchanged. Communal amenity space in a housing development, e.g. as in Build to Rent/ ‘compact living’ etc., is not a justification for not delivering these minimum standards. The draft Plan is not anti-basement, nor anti the permitted development right (PDR) for changes of use of offices to homes – but it does not hide GLA support for Article 4 directions to prevent both (the office to residential PDR crops up numerous times and in many contexts).   Employment The Central Activities Zone (CAZ) and Northern Isle of Dogs will ‘remain vital’ to London’s economic success, but growth elsewhere in town centres across London will be ‘equally important’. Future potential reserve locations for CAZ office functions are Stratford and Old Oak Common. Low cost business space and affordable workspaces are promoted via s106, with fleeting policy reference to viability evidence for the latter. Strategic Industrial locations and Locally Significant Industrial Sites (SILs and LSISs) can be considered for intensification/ colocation and substitution (there is a handy diagram of what this means at Figure 6.3 in the draft Plan) – this has to be plan-led. Mixed use or residential development can take place on Non-Designated Industrial Sites but again, plan-led (and with higher expectations for affordable housing).   Design Design policies seek to micro-manage the impacts of all manner of development projects, particularly tall buildings. While the development industry has said that increased densities will sometimes have to be at the expense of good design, the draft Plan states that housing density should result from a design-led approach linked to planned levels of infrastructure. The first step in delivering good design is an evaluation to identify the capacity for growth (PTAL is still a measure for referable developments). Then design analysis and visualisation are required, masterplans and design codes follow, and design scrutiny using design review is undertaken. Post-Grenfell, a Fire Statement will have to be submitted with all major development proposals.   Green infrastructure The Green Belt, local green and open spaces, green roofs, street trees will all be protected. Metropolitan Open Land is not protected in the same policy terms; the local plan process should be used to change boundaries, whereas Green Belt ‘de-designation’ will not be supported. There is a new ‘urban greening factor’ for assessing new developments.   Transport Car-free developments (housing and commercial) feature in well-connected locations in new maximum parking standards that no longer give ranges. The Mayor continues to oppose Heathrow’s expansion – unless there will be no additional noise or air quality harm. Despite concerns around uncertainty already expressed, Mayoral Community Infrastructure Levy (MCIL) will be charged, to secure funding towards transport infrastructure of strategic importance ‘such as Crossrail 2, and potentially other strategic transport infrastructure’.   Our first conclusion today is that the draft Plan requires some stiff editing before submission, with a lot less detail (after all, what will there be left for the supplementary planning guidance mentioned here and there in the draft Plan, that can be more ‘fleet of foot’?).   Second, the draft London Plan justifies the ‘Good Growth’ pillar as follows:   ‘Every individual decision to provide affordable housing helps to make the housing market fairer. Every decision to make a new development car-free helps Londoners to depend less on cars and to live healthier lives. Every decision to build or expand a school improves the prospects of the next generation of Londoners.’   But from the development sector’s perspective, taking this approach has been instrumental in the draft plan’s policies taking on such a phenomenal degree of micro-control.   We can see a well-thought through strategic spatial development strategy, currently buried deep within the overly complex consultation document: that strategy needs to be extracted, published and consulted on and (eventually) approved in its own right. It is that spatial strategy that should be the new strategic plan for London.   The Draft London Plan can be read here.  Further analysis of the Draft London Plan and its implications can be read here. Click here to subscribe for updates.

CONTINUE READING

London Mayor’s ‘Draft Affordable Housing and Viability’ SPG published, alongside guidance on bidding for grant funding from Affordable Homes Programme 2016-21
The Mayor’s long-awaited ‘Homes for Londoners, Draft Affordable Housing and Viability Supplementary Planning Guidance (SPG) 2016’ has now been published (on 29 November). His new guidance on bidding for grant funding from the £2.171bn Homes for Londoners Affordable Homes Programme 2016-21 has also been published, setting out how housing providers and developers should be considering bidding for grant funding from the Programme. Turning first to the draft SPG, consultation will close on 28 February 2017. It is important to underline how once finalised, the SPG will supersede section 3.3. (Build to Rent) and Part 5 (Viability) of the March 2016 Housing SPG; the rest of the Housing SPG is to remain current. The new draft SPG provides guidance on a wide array of affordable housing-related issues, which broadly fall within three main topics: A threshold approach to viability (Part 2); Guidance on viability assessments (Part 3); and Build-to-Rent (Part 4). A threshold approach to viability After having been mooted for a few months, the proposed 35% affordable housing (to be measured in habitable rooms) threshold (‘This SPG does not and cannot set a fixed target for affordable housing in developments’) is now ‘official’. The so-called ‘threshold approach’ is meant to incentivise developers to deliver 35% or more affordable housing in their schemes, by not requiring them to submit viability assessments (‘Route B’) if that proportion can be delivered without public subsidy and respecting other requirements (such as tenure mix). The draft SPG underlines that where Boroughs adopt different approaches to delivering a higher average percentage of affordable housing (without public subsidy), their local approach should continue to apply. When a scheme does not meet the 35% threshold (‘Route A’), viability evidence would have to be submitted, and review mechanisms should apply to ensure that ‘any future uplift in values contributes to the delivery of the maximum reasonable amount of affordable housing’. These review mechanisms would consist of early review, where an agreed level of implementation progress is not made within two years of the permission being granted, and near the end of development, once 75% of units have been sold. If a surplus profit were to be identified, ‘this should be split 60/40 between the local planning authority (LPA) and developer’. Applications which propose off-site or cash-in-lieu contributions, which involve the demolition of existing affordable housing or where the applicant claims the vacant building credit applies would all have to submit viability evidence. The new ‘Homes for Londoners: Affordable Homes Programme 2016-21 Funding Guidance’ that has been published alongside the draft SPG specifies the incentivising circumstances in which the Mayor will make funding available to guarantee an increase in the number of affordable homes delivered. For Route A schemes (viability evidence is required), grant will apply to all affordable homes if the affordable housing delivered with grant is more than 40%; if the affordable proportion with grant is lower than 40%, the grant will only apply to the additional units ‘over and above the baseline level of affordable housing […] viable on a nil-grant basis’. For Route B schemes (viability evidence NOT required), grant will only be available if this allows the proportion of affordable housing to increase above the nil-grant position to a level of 40% or more. Further details are provided on the London Living Rent (LLR) – expected to ‘offer tenants (whose combined income is below £60,000) the right to purchase their LLR home on a shared ownership basis’ after a rental period of 10 years – and on intermediate housing products, as well as starter homes (‘the Mayor will provide an update on how any starter homes requirement might affect the details of this SPG once the Government’s position has been made clear’). Finally, the Mayor’s view on the national Planning Practice Guidance’s Vacant Building Credit (VBC) is that this will not be appropriate in London ‘in most circumstances’, as developments on brownfield land would come forward anyway. The draft SPG also underlines that if an applicant claims a scheme qualifies for VBC, community infrastructure levy relief cannot be claimed through the Regulation 40 vacancy test. Guidance on viability assessments Given the importance placed on viability assessments as the means for scrutinising schemes that fail to hit the 35% affordable housing threshold, the draft SPG provides guidance on how these assessments should be undertaken. The draft guidance offers detailed explanations on different appraisal requirements, development values and costs, including: How abnormal costs should be considered (these ‘are assumed to have influenced the level of premium above the existing use value a land owner would expect’); Built cost inflation, which should not be included; and Developer’s profit, which is recognised as being ‘scheme specific’ and that it needs to be justified by applicants, taking account of ‘individual characteristics of the scheme’, the potential risks of the development and comparable schemes. Furthermore, the Mayor underlines his preference, in terms of viability assessment approaches, for the ‘Existing Use Value plus’ (EUV+) approach, where ‘the benchmark land value is based on the current use value of a site plus an appropriate site premium’, as this is considered ‘the most appropriate approach for planning purposes’. Therefore ‘in most circumstances the Mayor will expect this approach to be used’; alternative approaches will only be considered in exceptional circumstances but a ‘market value approach’ will generally not be acceptable for the Mayor. Finally, LPAs are invited to consider a more tailored approach to affordable housing for Opportunity Areas and Housing Zones, taking into account the characteristics of sites, while for Strategic Industrial Locations (SIL), the Mayor recommends that ‘when the release of SIL is deemed appropriate (in local plans), it fully contributes to other important planning objectives, in particular new affordable housing’. Build-to-Rent The last section of the draft SPG focuses on Build-to-Rent (BtR); the Mayor openly expresses his support for such development and particularly recognises the ‘distinct economics of the sector’, in comparison with more mainstream ‘build for sale’. The draft SPG has therefore defined specific requirements for these schemes. In recognising that one of the major constraints affecting BtR developments is the lack of an appropriate legislative/ planning framework, the Mayor aims to propose a ‘BtR pathway’, the key principles of which are: A clear definition of BtR, this being: schemes of at least 50 units, with homes (all self-contained and let separately) to be held as BtR under a covenant of at least 15 years; unified ownership and management, including professional and on-site management; longer tenancies being offered (ideally three or more years); and where the property manager is a member of a recognised professional body; Recognition of a specific affordable housing type associated with BtR, as all homes in BtR schemes should stay under single management and therefore discounted market rent (‘preferably at London Living Rent levels’) is to be preferred; The design of schemes, in terms of space standards, should be in accordance with Policy 3.5 of the current London Plan (with the draft guidance however recognising ‘flexibility to consider innovative design where they meet identified need and are of an exceptional design and standard’); A specific approach to viability, recognising ‘the distinct economics of the sector’ – the threshold approach (Route B) would not apply to BtR schemes and viability information would be required; and Management standards, as BtR schemes should ‘showcase the best management practice in the rented sector’. Looking then at the Mayor’s new guidance on bidding for grant funding from the £2.171bn Affordable Homes Programme 2016-21, it provides all the detail for providers and developers considering bidding for grant funding. In terms of timing, funding bids will have to be submitted using the GLA’s new ‘Open Project System’ (OPS) between 31 January and 13 April next year. The assessment of all bids will take into account: deliverability (including consideration of a provider’s delivery output under previous funding programmes, when a bid is for ‘Indicative proposals’ i.e. those just showing the number of homes to start in each financial year); feedback from the London Borough; and Regulator feedback (e.g. on the provider’s business plan). Announcements of allocations will then be made in May, with the GLA’s ‘partners’ contracted by the end of June, 2017. With the Programme being for 60,000 starts on-site by 2021, eligibility to bid for grant is limited only to organisations intending to own the completed affordable homes. If properties are to be funded as London Affordable Rent or London Living Rent, the landlord also has to be registered with the Social Housing Regulator. As explained above, BtR developers are expected to provide some units in their developments for sub-market rents. Where set at the level of London Living Rent, providers retaining a legal interest in these homes will be able to bid to secure grant from the GLA, if the landlord of the properties is registered with the Social Housing Regulator (such properties would not have a mandatory right to shared ownership). Funding bids are also encouraged from London Boroughs. As regards process, there are three bidding mechanisms: the ‘Approved Provider’ route (available if at least 50% of the provider’s housing starts in London between April 2015 and March 2021 are affordable homes); the ‘Developer-led’ route (for all schemes with less than 50% affordable housing, or with an ‘in lieu’ off-site provision that proposes more affordable homes than required under the s106 obligation); and a route for negotiated grant rates (for supported or specialist housing). Schemes using the ‘Developer-led’ bidding route are incentivised to provide more affordable homes. Where the percentage of affordable housing proposed is more than 35% but less than 40%, funding is only available for the homes over and above the 35% level. If however grant would enable the level of affordable housing to be viably increased to 40% or more, it can be applied to every affordable home in the project. And if a development could viably achieve 40% or more affordable housing without GLA grant, providers can use the grant-funding to increase the level of affordable provision to an even higher level.

CONTINUE READING