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Government lets developers off the hook on affordable housing

Changes to planning rules pushed through Parliament by Eric Pickles will lead to fewer affordable houses being built.

For many years developers have been required to provide affordable housing on or off-site as a condition of planning permission. However, the introduction of the Government’s ‘Vacant Building Credit’ in November means housing developers  who replace empty buildings with private housing will be exempt from paying for affordable housing.

The change is good news for property companies but bad news for the 21,000 people currently on Lambeth’s housing waiting list.

Analysis of 14 major schemes in Lambeth, showed that had the Vacant Building Credit been in place at the time of consent, instead of the current total of 866 affordable units, just 592 would have been built.  

Leader of Lambeth Council, Cllr Lib Peck has co-signed a letter with seven other council leaders calling for the Government to scrap the proposal:



Rt Hon Eric Pickles MP
Secretary of State for Communities and Local Government
Eland House
Bressenden Place
London SW1E 5DU

25 March 2015

Dear Secretary of State,

Changes to National Planning Policy Guidance

We wish to express our collective concern at the impact of the national planning policy changes announced by the Minister for Housing and Planning on 28 November 2014. Our particular focus relates to the introduction of a vacant building credit and national minimum threshold indicating that a contribution to affordable housing should not be sought as part of proposed housing developments of 10 units or less and a gross floorspace of no more than 1,000 sqm.

As announced, these changes will significantly inhibit delivery of much-needed affordable housing in central London, which will in turn make our efforts to ensure a vibrant, successful community continuing to play a crucial role in delivering prosperity for the UK as a whole more difficult. In our view, it is vital that these policy changes are reversed if the detrimental social and economic impacts on central London that are a very real risk are to be avoided. Notwithstanding this principled opposition to the announced changes, their current imprecision means that at the very least they should be refined and accompanied by guidance to explain how they should be implemented.

For many years, all of the central London boroughs have had planning policies that require developers to provide affordable housing on-site or off-site via the well-established s106 process. All of them have been formally tested to ensure they are properly evidence-based, take account of local circumstances and are otherwise sound. Contributions are always subject to appropriate viability assessments and, where appropriate, can be provided off–site or commuted to a financial payment. Each borough has set its own minimum threshold for triggering payment based on the prevailing local development environment, which obviously varies from place to place.

The single national minimum threshold of 10 units or less is not sufficiently flexible to take account of this local variation and thereby does not maximise affordable housing provision. It also differs from the 10 units or more threshold which has long been used in London (and enshrined in the London Plan since 2004), has been established as appropriate in numerous London Plan and borough examinations and has been implemented without any evidence to support the idea that the change made by ministers has any significance in development viability terms.

We think the introduction of the vacant building credit is particularly injurious for our boroughs. The imprecise way it has been set out in national guidance also raises real problems of implementation. At the very least there is a need for an explicit recognition that local planning authorities should be able to define what constitutes vacancy given their local development context, perhaps backed with clear guidance explaining the type of vacancy the policy is intended to address.

Almost all new residential development in central London takes place on previously developed ‘brownfield’ land. Therefore the application of this credit to brownfield sites within central London means that liability for s106 contributions for affordable housing provision is greatly reduced in central London. Given this, the policy also introduces considerable scope for perverse incentives (such as established businesses being evicted to enable buildings to be made “vacant” to benefit from the credit), and the very real scope for confusion alongside the Community Infrastructure Levy.

Existing planning policies and related s106 agreements collectively generate a vital supply of affordable housing within central London. Without these funds, the resultant reduction in affordable housing provision can only serve to exacerbate the well-documented housing shortage in our respective boroughs and severely hinder our ambition to maintain mixed and functioning communities in central London.

We are therefore urging you to work with the central London boroughs to address these issues so as to deliver the Government’s stated objectives without undermining delivery of urgently needed affordable housing or causing huge disruption to the nationally important strategic function of London’s Central Activities Zone.

Given the extreme concerns about the complexity and impact of the vacant building policy on a number of London Boroughs we would be very happy to meet with you to discuss these issues. We would also be very glad for our officers to work with your officials to ensure the concerns expressed in this letter are addressed.

Yours sincerely,




Councillor Sarah Hayward

Leader of Camden Council


Mark Boleat

Chairman of the Policy & Resources Committee, The City of London


Councillor Richard Watts

Leader of Islington Council


Councillor Lib Peck

Leader of Lambeth Council



Councillor Nicholas Paget-Brown

Leader of the Royal Borough of Kensington & Chelsea


Councillor Peter John

Leader of Southwark Council


Councillor Ravi Govindia

Leader of Wandsworth Council


Councillor Philippa Roe

Leader of Westminster City Council

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