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UK Viability Tests: Developers Drag Profitable Heels While Councillors Tear ‘Affordable’ Hair

Balcony installation, Holliday Street. photo by Aidan Sammons is licensed under CC BY 2.0
Housing construction, Birmingham. Modular techniques can bring down affordable housing costs, but in the UK, all kinds of affordable housing are just not being built quickly enough.

In advance of  the UK Government’s update to its National Planning Policy Framework, two big failings hinder the work of local councils trying to catch up with a runaway affordable housing crisis.

First: the viability assessment. Once a development has passed through a lengthy consultation and approvals process, at the very brink of getting on with the job, the developer may re-assess profit and decide that there is none. In the developer’s view, the project is not viable unless the affordable housing percentage of the project is reduced. A lengthy delay ensues until a closed door viability assessment hearing is held.

The frequent result? The local council discovers the development can go ahead, but with substantially less affordable housing than previously promised for the same public investment. Try: Public/Private Housing Partnerships. ‘Gullible’ Climbs Into Bed With ‘Venial’

The delays cause so much difficulty that Bristol City Council is considering halving the required proportion of affordable housing in development contacts, with the hope of bypassing the need for a viability assessment. Try: Bristol, UK: Building Less Affordable Housing In Order To Build More

Who on earth ever thought that permitting an eleventh hour contract renegotiation was a good idea for public/private affordable housing agreements? Private developers are responsible first and foremost responsible to their shareholders, not to the nation’s unhappy councils, home-buyers and renters.

It would seem a dereliction of duty to shareholders if developers did not trigger a reassessment in order to squeeze every bit of profit possible from the project. It’s evidently worthwhile, as the viability assessment seems to reliably reduce affordable housing targets while increasing developer profits. The process is also under fire due to its secrecy. Read more in The Bureau of Investigative Journalism: Housing developers must disclose secret viability assessments, say senior Labour MPs

Second, local councils want to see more money directed to the truly affordable housing that is needed for residents with the lowest incomes. 98% of UK councils report that lack of truly affordable housing is a moderate or extreme crisis. No truly affordable housing is provided by the public/private partnership programs, which are the subject of the viability assessments just described. Try: Report: UK Planning Deregulation + Defunding Is An Affordable Housing Disaster

Two prominent UK public service organizations are calling for the reform of the viability assessment process, which has been panned by nearly two thirds of UK councils. As well, they are calling for direct support to build truly affordable housing. Read more in LocalGov: Whitehall must reform ‘viability tests’, campaigners say

The report itself is published by the Town and Country Planning AssociationGovernment must listen to concerns of local government to secure affordable housing

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