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Policy H5 Delivering affordable housing


  1. The strategic target is for 50 per cent of all new homes delivered across London to be affordable. Specific measures to achieve this aim include:
    1. requiring residential and mixed-use developments to provide affordable housing through the threshold approach (Policy H6 Threshold approach to applications)
    2. using grant to increase affordable housing delivery beyond the level that would otherwise be provided
    3. affordable housing providers with agreements with the Mayor delivering at least 50 per cent affordable housing across their portfolio
    4. public sector land delivering at least 50 per cent affordable housing across its portfolio
    5. strategic partners with agreements with the Mayor aiming to deliver at least 60 per cent affordable housing across their portfolio.
  2. Affordable housing should be provided on site in order to deliver communities which are inclusive and mixed by tenure and household income, providing choice to a range of Londoners. Affordable housing must only be provided off-site or as a cash in lieu contribution in exceptional circumstances.

Delivering more affordable housing[43] is a key strategic issue for London. Meeting the need for circa 43,500 affordable homes per year, as established in the Strategic Housing Market Assessment, will require an increase in affordable housing contributions from all sources. All schemes are expected to maximise the delivery of affordable housing and make the most efficient use of available resources. This is critical to enabling London to meet the housing needs of its workforce and maintain the function and resilience of the city.

[43] The Glossary provides the definition of affordable housing, this is consistent with the 2012 NPPF definition of affordable housing. Within this broad definition, sections 4.7.3 - 4.7.6 of this Plan set out the Mayor’s preferred tenures.

Past approaches have not adequately met levels of housing need. To provide greater certainty, speed up the planning process and increase affordable housing delivery, the Mayor is adopting a threshold approach to viability. This means that schemes meeting or exceeding the threshold without public subsidy[44], and consistent with the requirements in part C of Policy H6 Threshold approach to applications, are not required to submit viability information. The threshold approach was first introduced in the Mayor’s Affordable Housing and Viability SPG. It provides the opportunity to move away from protracted viability debates, create certainty in terms of affordable housing requirements, embed the requirements into land values, and offer a clear incentive for developers to increase affordable housing delivered through the planning system above the level in planning permissions granted in recent years. Schemes that do not meet this threshold, or require public subsidy to do so, will be required to submit detailed viability information which will be scrutinised and treated transparently. Comprehensive review mechanisms will be applied to schemes that do not meet the relevant threshold as set out in part B of Policy H6 Threshold approach to applications, in order to ensure that affordable housing contributions are increased if viability improves over time.

[44] Public subsidy includes grant, public loans (including the Mayor’s London Housing Bank) and any public land at a reduced cost.

Schemes are expected to deliver at least the threshold level of affordable housing without grant or public subsidy and to increase this proportion through the use of grant and other subsidy, where available. Only where there are clear barriers to delivery and it is fully justified through detailed viability evidence, in line with the methodology and assumptions set out in Policy H6 Threshold approach to applications and the Mayor’s Affordable Housing and Viability SPG, should a lower level of affordable housing be considered.

Given the extent of housing need identified for affordable housing in the 2017 SHMA, the delivery of overall housing targets should not be relied on as a reason for reducing affordable housing delivery or other policy requirements, subject to the approach in this policy, Policy H6 Threshold approach to applications and Policy DF1 Delivery of the Plan and Planning Obligations. In previous years where there has been a relaxation in affordable housing and other planning requirements this has typically led to higher land values, rather than an increase in housing delivery. Whilst the Plan sets out a clear approach for significantly increasing housing delivery in London, the London SHMA has identified that 65 per cent of London’s need is for affordable housing. Therefore, it is crucial that residential and mixed-use development contributes directly towards the provision of affordable housing and other policy requirements that support the delivery of sustainable development.

Affordable housing should be delivered on site to help deliver mixed and inclusive communities. Affordable housing should only be accepted as an off-site contribution in exceptional circumstances where it can be robustly demonstrated that affordable housing cannot be delivered on-site or where an off-site contribution would better deliver mixed and inclusive communities than an on-site contribution.

Cash in lieu contributions should be used in even more limited circumstances[45], and only where there is detailed evidence to demonstrate that on-site affordable housing delivery is not practical, off-site options have been explored but are not acceptable and that accepting a cash in lieu contribution will not be detrimental to the delivery of mixed and inclusive communities.

[45] For exceptions see part F of Policy H2 Small sites and Policy H18 Large-scale purpose-built shared living.

In each case, the approach must result in additional affordable homes, meaning the funding should not be used for affordable units that would otherwise have been delivered. It should also take account of the fact that all sites are expected to deliver at least the threshold level of affordable housing and any cash in lieu or off-site contribution should deliver units in addition to this.

Cash in lieu contributions should be held in a separate affordable housing pot, where resources can be pooled and ring-fenced to enable greater, or more appropriate, new provision to be made off-site. This should either be on an identified site or as part of an agreed programme, in compliance with the statutory tests for use of planning obligations[46].

[46] Community Infrastructure Levy Regulations 2010 (SI 2010 No 948), Regulation 122(2). Crown Copyright, 2010

To avoid incentivising off-site provision or in lieu contributions, agreements for this should provide no financial benefit to the applicant relative to on-site provision and should include review mechanisms in line with the Viability Tested Route. The policy target for schemes delivering off-site affordable housing or in lieu contributions is 50 per cent affordable housing provided across the main site and any linked sites when considered as a whole.

Boroughs must have in place monitoring arrangements to ensure that the additional homes are delivered. As per Policy H8 Monitoring of affordable housing, the Mayor requires information on off-site and cash in lieu delivery as part of the data collection for the Annual Monitoring Report.