Property developers are dodging their commitment to building thousands of affordable homes each year due to a legal loophole. Developers have sidestepped local planning policy to avoid building 79 per cent of social homes they had initially committed to, due to a legal loophole called a “viability assessment”.
A sample of 11 local authorities across nine cities in England shows developers were able to first win planning permission by promising to build a required number of affordable homes but later go back to the council to say they can no longer honour the pledge because it would reduce their profit margin. This means many developers face no penalty for overpaying for land because they can recover the costs by reducing their commitments to building homes that are affordable for people on middle and low incomes.
Shelter reveals that viability is used most frequently in larger developments, which are generally managed by the country’s biggest developers. It shows that the worst affected areas were Manchester, Birmingham, and parts of London, where viability was used to reduce the affordable housing to less than 1 per cent of homes being built.
Housing developers in Kensington and Chelsea used the same legal loophole to dodge their commitment to build more than 700 social homes in the borough – which would have been enough to house all the survivors of the Grenfell fire plus many more.
Polly Neate, chief executive of the charity, said: “What this research reveals is the scale at which developers are able to use legal loopholes to protect their profits and dramatically reduce the numbers of affordable homes available for people.
A sample of 11 local authorities across nine cities in England shows developers were able to first win planning permission by promising to build a required number of affordable homes but later go back to the council to say they can no longer honour the pledge because it would reduce their profit margin. This means many developers face no penalty for overpaying for land because they can recover the costs by reducing their commitments to building homes that are affordable for people on middle and low incomes.
Shelter reveals that viability is used most frequently in larger developments, which are generally managed by the country’s biggest developers. It shows that the worst affected areas were Manchester, Birmingham, and parts of London, where viability was used to reduce the affordable housing to less than 1 per cent of homes being built.
Housing developers in Kensington and Chelsea used the same legal loophole to dodge their commitment to build more than 700 social homes in the borough – which would have been enough to house all the survivors of the Grenfell fire plus many more.
Polly Neate, chief executive of the charity, said: “What this research reveals is the scale at which developers are able to use legal loopholes to protect their profits and dramatically reduce the numbers of affordable homes available for people.
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