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Joint boroughs REMA response

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  • 1. Please reply to: Lisa O’Donnell Direct Line / Voicemail: 020 7641 4240 Fax: 020 7641 3050 Email: lodonel1@westminster.gov.uk st Date: 31 July 2012Boris Johnson, Mayor of LondonGLA City HallQueen’s WalkLondonSE1 2AADear Sir,The following is a Joint Response to the London Plan Revised Early Minor Alterations(June 2012) from the London Borough of Brent, London Borough of Camden, LondonBorough of Enfield, London Borough of Hackney, London Borough of Islington, LondonBorough of Southwark, London Borough of Tower Hamlets, Royal Borough of Kensington &Chelsea and Westminster City Council. The response relates to issues around affordablehousing, specifically the affordable rent product. Boroughs may also be submitting separate,individual responses to the Revised Early Minor Alterations.1. The above boroughs object to the following text in the London Plan Revised Early Minor Alterations: “In view of the particular priority the Mayor gives to provision of new affordable homes to meet London’s very pressing need, boroughs should give particular weight to the criteria set by national government for the allocation of public resources for affordable housing in setting local plan targets (Policy 3.11) or negotiating provision in private housing or mixed-use developments (Policy 3.12) and should avoid imposing any requirements (such as borough-level caps on rent levels for affordable rented housing) that might restrict the numbers of new affordable homes.” [Paragraph 3.63] Boroughs should enable the range of affordable rents to be applied and should not attempt to set rent targets for affordable rented housing in their local development frameworks as this is likely to impede maximisation of affordable housing provision London wide. Instead The Mayor will may provide details of where variations to affordable rent can apply in his London Housing Strategy and other relevant documents. [Paragraph 3.68](red text shows Early Minor Alterations)2. The above boroughs object to the deletion of the following text in the London Plan Revised Early Minor Alterations: “In practice, the rent required will vary for each scheme with levels set by agreement between developers, providers, and the Mayor. Homes and Communities Agency and , in dealing with individual planning applications, the London boroughs.” [Paragraph 3.61, 2nd bullet]
  • 2. 3. The proposed restriction on boroughs setting rent levels for the affordable rent within the London Plan Revised Early Minor Alterations (REMA) is: i. Contrary to the National Planning Policy Framework, ii. Creates irresolvable internal inconsistency within the London Plan, iii. Would improperly restrict boroughs’ legitimate powers.Background1. The National Planning Policy Framework (NPPF) was published in March 2012. This replaced Planning Policy Statement 3: Housing, and included national policy on housing, the evidence base to support housing policy, and a new definition of affordable housing. The draft London Plan Revised Early Minor Alterations (REMA) have been published to provide consistency with this document.2. A new affordable housing product, affordable rent, was introduced through the 2011- 2015 Affordable Homes Programme published by the Homes and Communities Agency and the CLG in 2011. The NPPF provides a definition of affordable rent within its affordable housing definition as housing let by local authorities or registered providers of social housing to households who are eligible for social rented housing. Affordable rented housing is to be let to households who are eligible for social rented housing and is subject to rent controls of no more than 80% of the local market rent (including service charges where applicable).3. The above boroughs have calculated that delivery of the affordable rent product at the rent levels proposed by the Mayor of London (up to 80% of market rent, with an average of 65% across London and across housing sizes) will not meet the local housing need it is supposed to meet to comply with the NPPF. Appendix 1 sets out the figures for this.4. The London Plan Revised Early Minor Alterations and London Plan Early Minor Alterations seek to prohibit boroughs from setting rent caps or targets for affordable rented housing in their local development frameworks as they consider it likely to impede maximisation of affordable housing provision as per London Plan Policy 3.11. The above boroughs object to the Mayor of London’s approach in relation to the affordable rent housing product.5. The above boroughs feel that the REMA is too prescriptive as currently drafted and does not allow boroughs the flexibility to meet their own specific housing needs, which is against the spirit of the Localism agenda and the NPPF. This is our fundamental objection to the REMA. The boroughs need to respond to widely differing circumstances in their local policies, and one size will not fit all. In line with the NPPF, boroughs should be able to formulate their own policies on affordable housing, to meet the need identified in their local evidence, through whatever mechanisms they consider appropriate. Some of the above boroughs wish to establish local eligibility criteria for the new affordable rent product based on local incomes and local housing prices to ensure that it meets needs, particularly social rented needs, whilst others wish to retain the flexibility to enable them to do so 2
  • 3. should they wish to in the future. The boroughs may wish to set out these criteria in Supplementary Planning Documents and in their Local Plans. There should be sufficient planning guidance on affordability in terms of local incomes and house prices/rents for affordability to be addressed as a material consideration for planning.DETAILED OBJECTIONNPPF definition of affordable housing1. The NPPF definition of affordable housing, repeated in Policy 3.10 of the London Plan Revised Early Minor Alterations (REMA), states: “Eligibility is determined with regard to local incomes and local house prices.” (emphasis added)2. The definition does not differentiate between affordable housing products and therefore applies to all of them. It should be for the local authority to define those eligibility criteria in relation to local incomes and local house prices. The London Plan should not, and we believe can not, stop a local authority from doing something in its Local Plan that the NPPF explicitly allows it to do. To do so would not be consistent with the NPPF.3. Paragraph 3.62 of the REMA states: “For the purposes of the paragraph 3.61 definition, eligibility criteria for intermediate housing should be qualifying prices and rents should be set locally to recognise the individual characteristics of local housing markets”4. If it is NPPF compliant (and indeed added to the REMA to achieve compliance with the NPPF) for boroughs to set eligibility criteria for one affordable housing product (in this case, intermediate housing), it cannot be NPPF non-compliant to set eligibility criteria for a different product (affordable rent) when the requirement to set eligibility criteria locally doesn’t differentiate between the two products. This creates an internal inconsistency between different parts of the London Plan.5. By seeking to prohibit local authorities from setting eligibility criteria for the affordable rent product, the REMA restricts the definition of affordability to rent levels that are up to 80% of market rent, without any reference to local incomes and local house prices as required by the NPPF. This is inconsistent with the NPPF definition and requirements.London Plan requirement to meet affordable housing need6. Paragraph 14 of the NPPF requires local planning authorities (including the Greater London Authority) to “positively seek opportunities to meet the development needs of (the) area”. Paragraph 17, setting out the core planning principles requires planning to: 3
  • 4. “Proactively drive and support sustainable economic development to deliver the homes... that the country needs. Every effort should be made objectively to identify and then meet the housing... needs of an area, and respond positively to wider opportunities for growth”.7. The London Plan fails to meet these policies. The affordable housing which will be delivered by the proposed REMAs will not meet the range of affordable housing needs of the area (refer Appendix 1). It would only meet a very small proportion of households in need, to the extent that this provision is de minimus. The REMA is therefore inconsistent with the NPPF.Local Plan requirement to meet affordable housing need8. Paragraph 174 of the NPPF states: “Local Planning authorities should set out their policy on local standards in the Local Plan, including requirements for affordable housing.”9. Paragraph 47 of the NPPF requires local plans to meet affordable housing need: “To boost significantly the supply of housing, local planning authorities should use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in this Framework, including identifying key sites which are critical to the delivery of the housing strategy over the plan period.” (emphasis added)10. For some boroughs, setting rent levels is the appropriate policy response to deliver against these NPPF requirements. For some, setting rent levels for all affordable housing products will enable them to meet the soundness test of being the best policy option compared to all others. Other boroughs may decide to take up this policy option in the future, and it is therefore crucial that the flexibility is retained for boroughs to utilise this appropriate and legitimate mechanism in order to meet housing needs in their areas. In line with the NPPF, boroughs should be able to formulate their own policies on affordable housing which would meet the identified needs in their local evidence. Boroughs should be able to determine to what extent each of the three forms of affordable housing addresses the need, and have the flexibility to set their targets/proportions/standards for any or each of the tenures accordingly. This may include setting rent levels for affordable rent where there is evidence that this is appropriate to meet local need. The REMA are therefore inconsistent with the NPPF. They also seek to improperly restrict the boroughs legitimate plan-making powers, making it impossible for them to meet other duties in relation to their own Local Plans in relation to the soundness tests of being positively prepared, justified and consistent with national policy. 4
  • 5. Legitimacy for boroughs to set rent levels11. The NPPF requires Local Plans to set out “clear policies on what will or will not be permitted and where” (paragraph 154) including requirements for affordable housing as set out in Paragraph 174 (see paragraph 8 above). For some boroughs setting rent levels will establish an important set of local criteria for development management to be able to determine whether the affordable rented housing offered as part of a planning application is in fact affordable housing (i.e. to what degree it meets needs and is therefore necessary to deliver against the borough’s own targets and objectives). This will make it possible for officers to assess the planning application in relation to local, regional and national policies, and therefore apply those policies correctly.12. Some London boroughs have published affordable rent statements in connection with their housing powers and duties, setting out alternative rent levels where the 80% level would not be affordable. The GLA has accepted this, and has recently advised boroughs that this is appropriate (17th July 2012). Clearly these statements are capable of being a material consideration under Section 38 of the Planning and Compulsory Purchase Act 2004 when determining planning applications, regardless of whether they are published in a planning document. The GLA have objected to references to these statements as material considerations on the basis of general conformity with the London Plan. The London Plan should not be a vehicle to preclude consideration of relevant material considerations.13. The above boroughs consider that they are best placed to advise on eligibility criteria for affordable housing because they have objectively assessed housing needs through the preparation of the required evidence base to support their local plans.Supporting economic growth and maximising housing delivery14. It is a key objective of this government to simplify the planning system, and give certainty to developers to enable them to make the decisions necessary for development, economic growth and investment. It cannot be left to site-by-site negotiations to determine the level of rent that might be acceptable on individual schemes, as suggested by the Mayor. Boroughs must be allowed to set clear policy expectations and requirements not only to ensure that the right type of affordable housing is delivered, but also, very importantly, to give certainty to the development industry. Having clear policy requirements reduces speculation and discourages overinflated land values, which in turn might negatively affect the amount of affordable housing being delivered.15. Publication of local policies and targets, including affordable rent eligibility criteria at a local level will provide the certainty developers (and registered providers) crave. GLA officers have advised that this should not be necessary as developers should have a Registered Provider (RP) partner at the time they submit their planning application. Firstly, it is difficult under current legislation to invalidate an application because they don’t have an agreement in place with an RP. Secondly, many applications are speculative or in advance of sale, so the applicant is not the final 5
  • 6. developer. And thirdly, perhaps most importantly, in order to make investment decisions, the value of the affordable housing units has to be estimated at pre- purchase stage, not pre-application stage. If this information isn’t available at this stage, it is entirely legitimate for developers to raise viability concerns at application stage because they have over-estimated how much an RP can pay for the units, based on an over-estimation of the rental income from those units. Where viability is an issue, affordable housing is not maximised. Therefore restricting the ability of boroughs to provide up-front investment advice about affordable rent eligibility criteria fails to meet the policies of the London Plan and REMA. This is also inconsistent with the NPPF, including in relation to “proactively driv(ing) and support(ing) sustainable economic development to deliver homes...that the country needs” (paragraph 17) and setting out “clear policies on what will and will not be permitted” (paragraph 154, NPPF) amongst other policies.16. Whilst the boroughs support the objective of maximising delivery of affordable housing, the approach taken will not achieve this. This is because much of the housing that will be delivered will not be affordable to the majority of eligible households and therefore cannot really be defined as affordable. At the rent levels suggested, the affordable rented housing provided would only meet a proportion of affordable housing need, and an even lesser proportion of social rented need (refer also Appendix 1). At a pan-London level, this doesn’t represent maximisation of affordable housing delivery, or “mak(ing) optimum use of the resources available to fund affordable housing (or), to maximise affordable housing output” (Policy 3.12 and Paragraph 3.71 of REMA).17. Of particular concern is the Mayor’s stated intention to give particular weight to this issue when considering conformity of boroughs’ emerging plans, and the Mayor has already issued a number of non-conformity opinions . This creates a serious risk that the Mayor’s proposed approach will slow down or prevent boroughs in bringing forward their development plan documents, and thus boroughs will not have up to date policies on a range of planning issues, not just affordable housing. This would create a policy vacuum at a local level and add to uncertainty in the planning process, and is likely to lead to “planning by appeal” resulting in unnecessary delays and costs to all parties involved. This is at the time when the government is urging local authorities to put local plans in place as quickly as possible to help bring forward sustainable development at an accelerated rate. The Mayor’s approach could seriously jeopardise this objective, as it will hinder rather than help boroughs with speedy plan preparation.Affordable rent as a social rent product18. The REMA states that affordable rented housing should be let to households who are eligible for social rented housing. In setting local eligibility criteria for the affordable rent product, this would therefore involve possible publication of the income bands at which the affordable rent product should be made available (which may or may not be converted into weekly rental (plus service charge) levels for convenience and practical purposes). 6
  • 7. 19. Given the guidance regarding the relationship between gross and net annual incomes, and the guidance that housing costs should not exceed 40% of household income, the availability of relevant income bands for intermediate housing eligibility (which therefore defines social housing below the income bands and market housing above), affordable rent eligibility is obliquely defined anyway. Publication of affordable rent income bands merely allows local authorities to a) provide clear, consistent advice to developers, b) define affordable housing for determining of planning applications which include affordable rent units, c) meet objectively identified need20. Some of the affordable rented housing provided to date has been declined by reasonable preference groups because they can not afford it. This is a significant concern to the boroughs and makes a strong case for why boroughs may need to establish affordability criteria at a local level, to ensure the affordable rent product is both affordable, particularly those who are eligible for social rent.Conclusion21. The boroughs represented by this response acknowledge the considerable difficulties faced by the Mayor in endeavouring to maximise affordable housing delivery and meet his targets in light of the significant cuts to government funding. These boroughs very much want to work with the Mayor to maximise the delivery of the range of housing needed to meet the capital’s acute housing needs, particularly for affordable housing. However, we do not believe that the approach taken in the REMAs is the right one, an appropriate one, or one which will in fact contribute to this aim. There is little to be gained from delivering housing as an affordable housing contribution which does not meet the range of needs across the city, and that cannot be let to those in need because it is too expensive.22. Boroughs need to retain the flexibility necessary to continue to deliver affordable housing which meets the range of local needs and circumstances identified for their boroughs. This flexibility should allow boroughs to set eligibility criteria for all three affordable housing models; social rented, affordable rented and intermediate housing, with reference to local incomes and local house prices. If boroughs choose to set criteria, they should also continue to have the flexibility to use these to negotiate affordable housing, including ensuring that any homes coming forward are made available to those eligible for that type of housing. 7
  • 8. CHANGES SOUGHT BY THE BOROUGHS1. The changes sought by the boroughs are shown in bold. Text that should be removed is shown in strikethrough. Text that is proposed for deletion but should remain is shown in bold. Red text shows Early Minor Alterations.2. Paragraph 3.61 “In practice, the rent required will vary for each scheme with levels set by agreement between developers, providers, and the Mayor and , in dealing with individual planning applications, the London boroughs.”3. Paragraph 3.63 “In view of the particular priority the Mayor gives to provision of new affordable homes to meet London’s very pressing need, boroughs should give particular weight to the criteria set by national government for the allocation of public resources for affordable housing in setting local plan targets (Policy 3.11) or negotiating provision in private housing or mixed-use developments (Policy 3.12) and should avoid imposing any requirements (such as borough-level caps on rent levels for affordable rented housing)that might restrict the numbers of new affordable homes.”4. Paragraph 3.68 Boroughs should enable the range of affordable rents to be applied and should not set rent targets for affordable rented housing in their local development frameworks as this is likely to impede maximisation of affordable housing provision London wide. The Mayor may provide details of where variations to affordable rent can apply in his London Housing Strategy and other relevant documents. 8
  • 9. We trust you will take these significant concerns into consideration in taking the London PlanRevised Early Minor Alterations forward to public examination later this year. Boroughrepresentatives would be happy to meet with you or your officers to discuss this further andfind a pragmatic solution.Yours sincerely,Councillor Janice Long David JoyceLead Member for Housing Head of PlaceshapingLondon Borough of Brent London Borough of CamdenCouncillor Ahmet Oykener, Councillor Del Goddard,Cabinet Member for Housing Cabinet Member for Business & RegenerationLondon Borough of Enfield London Borough of EnfieldGraham Loveland Councillor James MurrayAssistant Director of Planning Regulatory Executive Member for Housing andServices DevelopmentLondon Borough of Hackney London Borough of IslingtonCouncillor Peter John Owen WhalleyLeader of the Council Head of Planning & Building ControlLondon Borough of Southwark London Borough of Tower HamletsJonathan BoreExecutive Director, Planning and Borough Rosemarie MacQueenDevelopment Strategic Director for Built EnvironmentRoyal Borough of Kensington & Chelsea Westminster City Council 9
  • 10. APPENDIX 1 GROSS HOUSEHOLD INCOMES REQUIRED TO AFFORD DIFFERENT RENTS ACROSS LONDON BOROUGHSSmaller Homes I bed 2 bed Median income Lower IH income Borough 100% 80% 65% RP EC 100% 80% 65% RP EC Brent £36,400 £29,120 £23,660 £47,171 £37,737 £30,661 £30,352 Camden £55,714 £44,571 £36,214 £18,345 £74,286 £59,429 £48,286 £20,737 £33,054 Enfield £34,357 £27,486 £22,332 £15,927 £44,943 £35,954 £29,213 £19,257 £38,337 Hackney £30,750 £24,600 £19,987 £42,150 £33,720 £27,397 £26,788 Islington £62,029 £49,623 £40,318 £18,571 £84,500 £67,600 £54,925 £21,914 £31,560 Kensington £46,429 £26,500 £53,857 £29,000 &Chelsea Southwark £41,991 £33,595 £27,294 £12,637 £54,786 £43,829 £35,611 £14,448 £16,800 Redbridge £20,810 £16,648 £13,526 £37,143 £28,505 £22,804 £18,528 £40,392 £29,534 Tower Hamlets £36,285 £29,028 £23,585 £16,584 £48,350 £38,680 £31,427 £17,550 £29,383 £18,100 Westminster £72,150 £57,720 £46,898 £24,514 £25,000 - £102,266 £81,813 £66,473 £27,300 £27,500 - £39,951 £20,000 £32,000 £36,000 LP REMA £64,300 £51,400 £41,795 £64,300 £51,400 £41,795 £27,762 £18,100Family Housing 3 bed 4 bed Median income Lower IH income Borough 100% 80% 65% RP EC 100% 80% 65% RP EC Brent £60,171 £48,137 £36,103 £81,342 £65,074 £52,873 £30,352 Camden £98,429 £78,743 £63,979 £23,511 £125,357 £100,286 £81,482 £26,799 £33,054 Enfield £55,714 £44,571 £36,214 £23,467 £70,571 £56,457 £45,871 NA £38,337 Hackney £52,900 £42,320 £34,385 £69,710 £55,768 £45,311 £26,788 Islington £104,371 £83,497 £67,841 25,071 £29,343 £31,560 RBK&C £63,143 £29,714 £74,286 £31,385 Southwark £65,221 £52,177 £42,394 £16,198 £75,135 £60,108 £48,838 £18,222 £16,800 Redbridge £32,120 £25,696 £20,878 £41,042 £42,550 £34,040 £27,657 £40,857 £29,534 Tower Hamlets £60,388 £48,310 £39,252 £18,460 £67,418 £53,934 £43,821 £19,500 £29,383 £18,100 Westminster £135,850 £108,680 £88,302 £28,229 £29,000 - £28,971 £29,000 - £39,951 £20,000 £39,000 £39,000 LP REMA £77,200 £61,700 £50,180 £77,200 £61,700 £50,180 £27,762 £18,100100% denotes the annual household income required to afford market rent for this sized property. The 80% and 65% figures are given up to the LHC cap levels, at which affordable rents arecapped. Where the LHA cap applies, this is denoted by an *. RP indicates the household income needed to afford current social rents. EC indicates the eligibility criteria sought by thatborough, setting out the income cap, band or target which that borough considers is necessary to ensure the affordable housing product meets local need. Median income is the median grosshousehold income across all housing tenures for that area. Lower IH income refers to the lowest annual household income for which households would be eligible for intermediate rent products.The 100% figures set the upper limit of this income band i.e. if a household’s income is above that level, they can afford a market property.The figures above assume net income is 70% of gross and housing costs not exceeding 40% of household income. LB Southwark note they would usually use 30% rather than 40% in theaffordable housing study and as quoted. Target rent is based on 2009/10, and median income on 2008 study, so both would be higher. All boroughs note that average incomes for council andhousing association tenants is even lower than the median given above.
  • 11. APPENDIX 2 COUNSEL’S ADVICEIN THE MATTER OF THE LONDON PLAN AND AFFORDABLE HOUSING 1. I am asked to advise the London Boroughs of Brent, Camden, Enfield, Hackney, Islington, RBKC, Southwark, Tower Hamlets and City of Westminster in respect of an issue on the GLA’s and Mayor’s approach to affordable housing in the London Plan. 2. The NPPF introduces a new concept of “affordable rented accommodation” this is defined as “let by local authorities or private registered providers of social housing to households who are eligible for social rented housing. Affordable rent is subject to rent controls that require a rent of no more than 80% of the local market rent” [annex 2 p.50]. This is then differentiated from “intermediate housing” which is homes for sale or rent above social rent levels but below market rent. 3. The policies in the NPPF do not provide a great deal of detail about the delivery of affordable housing but the most relevant extracts are a. Para 47(1) local planning authorities should use their evidence base to ensure that the Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, ..” b. Para 50(1) plan for a mix of housing based on …market trends and the needs of different groups in the community.. 4. In summary, the approach the GLA has taken to affordable rented properties, is to publish Revised Early Minor Alterations “REMA” in June 2012, which apply an across London definition of affordable rent; and also to object to LDF documents produced by any of the London Boroughs which seek to apply a definition of affordable rent which requires a lower level of rent than that set out in the REMA. The issue could therefore be described as the degree to which the London Plan can dictate to the individual boroughs how “affordable rent” in the NPPF should be defined in their areas. 5. The GLA’s objections in respect of the individual LDF documents is most easily seen from the response to Islington’s Development Management Policies DPD, where the GLA Statement of General Conformity under the PCPA 2004 is dated 20 June 2012. The approach to Housing is at para 15 onwards. The Islington DPD has a policy at DM8 which seeks to fix rented affordable housing at rents that do not exceed target rents. The GLA objection says that this policy is not in accordance with London Plan policies 3.11 and 3.12, which seeks to maximise the provision of affordable housing. In essence the argument is that by setting the rents for affordable housing at a lower level Islington (and the other boroughs) will impede the viability of that affordable housing and thus reduce the quantum being provided. That outcome then fails to meet the policy of maximising the provision of affordable housing. At para 23 of the GLA Statement it says; “Whilst Islington Council’s supporting information is strong on identifying need, there is no evidence provided to indicate that its approach is a realistic way of actually delivering enough affordable units to meet that need. The Mayor has sought to address this through an indicative London wide 65% of market rent assumption for affordable units, within which 40% will be around target rent. Achievement of these indicative targets is only possible if boroughs allow flexibility in rent levels. There is no support in national or regional policy for the setting of binding affordable levels to be implemented through the planning system, and that Islington Council has failed to bring forward adequate evidence to justify a different approach is also a concern.”
  • 12. 6. The Boroughs’ position, as outlined in a number of documents that I have seen, is that if the Mayor’s approach is taken then a large proportion of the housing provided as “affordable housing” would not actually be affordable at all because of the very great differential in much of London between market rent levels and average income levels. Therefore the Mayor’s approach, which is set out in the REMA and through his objections, will fail to meet the actual need for affordable housing.7. The REMA are at this stage only in draft, and will be subject to consideration at EiP later in the year. Therefore at this stage there is no issue of any LDF document having to be in conformity with them. There are a number of relevant changes, but the most important for present purposes is at para 3.68; “Boroughs should enable the range of affordable rents to be applied and should not set rent targets for affordable rented housing in their local development frameworks as this is likely to impeded maximisation of affordable housing provision London wide. The Mayor may provide details of where variations to Affordable rent can apply in his London housing strategy and other relevant documents.8. It seems to me that there are fundamentally two issues that arise. Firstly, what the NPPF policy is and secondly, to what degree the GLA can constrain the London Boroughs on the terms of their DPDs, by reference to the London Plan. It is not for me to advise on the planning merits of the two positions, i.e. the degree to which the Mayor’s or the Boroughs’ figures are accurate, and what is the most effective way of delivering affordable housing.9. There are a number of points that emerge from the NPPF a. The definition of affordable housing is that it is provided to eligible households whose needs are not met by the market b. AR housing is let to households who are eligible for social rented housing. c. AR is subject to rent controls that require a rent of no more than 80% of local market rent [my emphasis]. d. LPAs should use their evidence base to meet the full objectively assessed needs … for affordable housing. e. There must be a difference between intermediate housing and affordable rented housing.10. Three points can be made from this. Firstly, for an AR product to meet the definition of affordable housing it must be capable of meeting the needs of eligible households whose needs are not met by the market. Secondly, the NPPF directs the role of LPAs in determining local need and considering the local market rent. Thirdly it is clear that LPAs can set caps on rent, which generally in practice will be through s.106 agreements, in order to ensure affordability in perpetuity. I cannot understand the GLA’s comment quoted above about there being no support in national policy about setting binding affordable levels through the planning system, as that seems to be what the definition section in the NPPF is indicating should be done.11. It is therefore strongly arguable that an approach by the Mayor that involves prioritising absolute numbers of affordable dwellings, over ensuring affordability; and seeking to impose a London wide rent level, fails to accord with the NPPF. The Mayor’s view is that London Plan policy 3.11 requires maximising affordable housing. However, it does not seem to me that that can possibly be read to mean that levels should be maximised even where the result would be that the product that is delivered does not actually meet the assessed need. Such an interpretation would be perverse, and clearly undermine the entire rationale behind the policy. There is an issue of fact and judgement, as to whether the Mayor’s approach to rent levels would or would not meet the need, but that is not a question which I can advise on. 12
  • 13. 12. In respect of the setting of London wide rent levels for AR purposes, I think again the Mayor’s approach does not actually accord with the policy. The NPPF definitions stress “local” incomes, house prices and local market rent. The role in setting the policies and producing the evidence is given to the LPAs. It seems to me that the most reasonable way to interpret this policy in the London context, is to examine rents and housing markets at a Borough level, and perhaps even lower, rather than trying to set a London wide rent level. It is very well known that there are wide disparities in house prices across London, and that affordability levels will therefore vary. I do not think the NPPF supports an approach of analysing the markets and rent levels across London, rather than allowing individual boroughs to determine AR levels in their own areas.13. I turn then to the more procedural question as to the scope of the Mayor’s powers in this situation. There are important differences between London and elsewhere, because only in London is it intended that a regional tier of planning policy will be retained. However, at the present time there is no legal difference because the RSSs still have not been revoked. In terms of the NPPF it draws no distinction between London and elsewhere, and therefore the approach to how to apply the new affordable housing policy, and the level at which rents and affordability is examined has to be one for planning judgement and is not dictated by the NPPF, nor so far as I can see in any other policy document (or statute).14. By s.24 PCPA the LDFs (in whatever form) must be in general conformity with the London Plan. Whether they are or not is a matter for the Inspector. However it is my firm view that it is strongly arguable that the Mayor’s approach to maximising affordable housing is itself plainly flawed, and therefore the LDFs which set a lower rent level in accordance with local circumstances in each Borough are not “not in general conformity” with the London Plan policy, i.e. they meet the test in s.24.15. The London Plan itself must of course be drawn up with regard to the current national policy, and in the case of the REMA this is now the NPPF. There is again a strong argument that the REMA themselves are not in accordance with the NPPF if they do not secure affordability in the local market area. This is ultimately a matter of evidential dispute, but I certainly think that it will be difficult for the Mayor to justify a London wide approach in the light of the NPPF. QuestionsDoes the NPPF oblige or require the Mayor to stop the boroughs setting affordable rent levels in order to achievecompliance?16. Q1 I have dealt with this above, in summary my view is that the NPPF does not oblige the Mayor to act in this way.Do any of the other Mayoral powers require the Mayor to stop the boroughs setting affordable rent levels e.g.housing or HCA powers?17. Q2 I cannot see any Mayoral power which obliges the Mayor to stop the Boroughs setting affordable rent levels. There may be powers which impact on the viability of delivery in respect of the subsidy/grant regimes on which the Mayor may have relevant powers. However, in my view that is a separate issue from the planning powers which are relevant to this Opinion.Does the NPPF allow the Mayor to stop the boroughs setting affordable rent levels? 13
  • 14. 18. Q3 I have addressed this issue above. For the Mayor to stop the boroughs setting rent levels on the basis of the NPPF he would need to show that the correct approach was to set them London wide, and I think this would be very difficult to establish.Do any other Mayoral powers allow the Mayor to stop the boroughs setting affordable rent levels?19. Q4 See Q2.Does the NPPF allow the boroughs to set affordable rent levels?20. Q5 In my view the answer to this is yes.Does the NPPF require each borough to have all three forms of affordable housing included in the NPPFdefinition? Can boroughs choose to have only one or two forms of affordable housing (i.e. intermediate and socialrented) if the local evidence clearly justifies this?21. Q6 I don’t read the NPPF as requiring all forms of AH to be provided, and therefore it would be possible for an LPA to say that its evidence base supported only two types. However, this is an area where it might be easier for the Mayor to show that there was a London wide need for provision of all types, and therefore a requirement in the London Plan for all three types to be provided, might be justifiable.Does any other legislation allow boroughs to set affordable rent levels e.g. s.1 Localism Act 2011?22. Q7 I would be very nervous of LPAs using the general power in s.1 of the Localism Act 2011 to set affordable rent levels, if the planning system prevents it doing so. Planning is a comprehensive statutory code and I think it highly likely that the court would not accept an LPA using the general power in s.1 to avoid any specific limitations within the planning code.Does the NPPF require or can it be interpreted to require boroughs to set local rent levels e.g. to establisheligibility or to define locally what meets the definition of “affordable”?23. Q8 this is the converse of Q1. The natural meaning of the NPPF is that local rent levels for the purposes of AH policy are set by LPAs at borough level. However, if the evidence supported an analysis that the appropriate local housing market was the whole of London, then it would be possible to support the Mayor’s position. My preliminary view is that the evidence is much more likely to support the Boroughs’ position than that of the Mayor, and that therefore there might be an obligation on the Boroughs to set rent levels in order to achieve the NPPF policy. However, I cannot give a concluded view on this without far more detail on the evidence to be relied upon.If boroughs can demonstrate that setting rent levels will still maximise delivery of housing that is affordable, canthe REMAs be interpreted to allow local setting of rent levels?24. Q9 I do not see how the REMA in its present form can be said to allow local setting of rents because of the express prohibition in para 3.68.Paragraph 3.62 of the REMA appears to require the boroughs to define the eligibility criteria for the affordablehousing product. If this is deemed to be NPPF compliant, could it also be interpreted that the boroughs 14
  • 15. should/could be defining the eligibility for other affordable housing products such as affordable rent, or is theresome difference?25. Q10 I find para 3.62 difficult to understand in the light of the prohibition in para 3.68 on setting rents. If eligibility varies from borough to borough then it seems highly likely that rent levels will also do so. Further, there seems to me to be a fundamental inconsistency of approach. The changes to para 3.62 expressly tell the Boroughs to set eligibility criteria for intermediate housing locally. However, 3.68 is telling the Boroughs not to set rent levels for AR locally. I cannot see on what rational basis this difference is justified.GLA’s equalities impact assessment of Affordable Rent suggests that there might be equalities implications butthese are unclear at this stage. Can evidence of borough level equalities implications provide justification for theLondon Plan policy to allow a locally tailored approach to Affordable Rent?26. Q11 I am asked about the equalities implications of the Mayor’s approach and whether these implications would justify the London Plan allowing the Boroughs to set rent levels. I certainly think that the equalities implications must be considered, and that they may form part of the reasoning why the Mayor’s approach is wrong.If the affordable rent levels were set as part of a housing policy rather than a planning policy, but were used as thebasis for s106 negotiations, is this a legitimate way forward that would carry reasonable weight in a planningappeal, and might it be a legitimate way of avoiding direct GLA control?27. Q12 I am not convinced that setting affordable rent levels as part of a housing policy rather than planning policy would work. I do not see how such levels could be incorporated into s.106 agreements if they did not accord with London Plan, and therefore LDF policies. NATHALIE LIEVEN QC LANDMARK CHAMBERS 25 JULY 2012 15

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