Emerging Lewisham Affordable Housing Policy VS Adopted

Adopted Lewisham Affordable Housing Policy (June 2011)

Emerging Lewisham Affordable Housing Policy – Regulation 19/22 – January 2023

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The current Lewisham Core Strategy was adopted back in June 2011 and it sets out ‘the vision, objectives, strategy and policies that will guide public and private sector investment to manage development and regeneration in the borough’.

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Current Affordable Housing Policy

Core Strategy Policy 1 of the current Core Strategy sets out the expectations for Affordable Housing in the area, this can be seen below:

## Core Strategy Policy ### Housing provision, mix and affordability . Housing provision across the borough will generally be in accordance with the spatial policies contained in Section 6. 2. Development should result in no net loss of housing and housing densities will be in accordance with Core Strategy Policy 5. 3. The Council will seek the maximum provision of affordable housing with a strategic target for 50% affordable housing from all sources. This would equate to approximately 9,082 net new dwellings between 200/ and 2025/26. 4. Contributions to affordable housing will be sought on sites capable of providing 0 or more dwellings. The starting point for negotiations will be a contribution of 50% affordable housing on qualifying sites across the borough. This would be subject to a financial viability assessment. 5. To ensure a mixed tenure and promote mixed and balanced communities, the affordable housing component is to be provided as 70% social rented and 30% intermediate housing. 6. The provision of family housing (3+ bedrooms) will be expected as part of any new development with 0 or more dwellings. 7. All new housing is to be built to Lifetime Homes standards and 0% of all housing are to be wheelchair accessible or easily adapted for those using a wheelchair in accordance with London Plan policy.[] 8. The Council will seek an appropriate mix of dwellings within a development, having regard to the following criteria: a. the physical character of the site or building and its setting[] b. the previous or existing use of the site or building[] c. access to private gardens or communal garden areas for family dwellings d. the likely effect on demand for car parking within the area e. the surrounding housing mix and density of population f. the location of schools, shops, open space and other infrastructure requirements. 9. For affordable housing, the Council will seek a mix of 42% as family dwellings (3+ bedrooms) and will have regard to the criteria listed above.[] 0. Where a site falls within an area which has existing high concentrations of social rented housing, the Council will seek for any affordable housing contribution to be provided in a way which assists in securing a more balanced social mix. This may include a higher percentage of intermediate housing or other arrangements as considered appropriate.

The above identifies that there is a strategic target of 50% affordable housing on residential development of 10+ dwellings, subject to viability.

The requested tenure mix is 70% social rent and 30% intermediate housing. However, if the site is located in an area that has a high concentration of social rented properties, the Council will seek the affordable units in a tenure that will provide a more balanced social mix.

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Heads up for the New Lewisham Policy!

The adopted Affordable Housing policy is noticeably simpler to what is proposed in the Regulation 19 document (January 2023):

HO3 Genuinely affordable housing A The strategic target is for 50 per cent of all new homes delivered in Lewisham to be genuinely affordable. The Council will seek the maximum amount of genuinely affordable housing to be delivered on new housing developments. Development proposals that deliver high quality affordable housing through the Fast Track Route, as detailed in HO3.F below, to achieve a minimum 35 per cent affordable housing will be considered favourably. Development proposals involving new housing will only be supported where the site capacity has been optimised and delivery of affordable housing maximised. B The affordable housing requirement will apply to all forms of conventional housing in the C3 Use Class, unsecred student accommodation and, where appropriate, specialist and supported accommodation. Affordable housing requirements for Purpose Built Student Accommodation are set out in Policy HO7 (Purpose Built Student Accommodation). C The affordable housing requirements for major developments (large sites) will apply in circumstances where developments has already been permitted and 10 or more dwelling units will be delivered taking into account: a. New residential units that are proposed which would result in an uplift in the overall number of units on the site of the extant permission; and b. Development that is proposed on an adjacent site which by virtue of its layout, design and use is functionally related to the extant permission and would result in an uplift in the overall number of units across the sites. D Applicants will be expected to make all reasonable efforts to secure grant funding to deliver an increase in affordable housing beyond the level that would otherwise be achievable. The Council will work positively with development industry partners to help identify opportunities to secure grant funding to deliver more genuinely affordable housing in Lewisham. Development proposals will be considered favourably where they demonstrably deliver the maximum viable amount of affordable housing whilst meeting the minimum threshold level of affordable housing without public subsidy, as set out in HO3.F, and secure grant funding to deliver provision of genuinely affordable housing additional to this level. Large sites (major developments) E Development proposals for new housing, including mixed-use developments, with site capacity to accommodate 10 or more dwelling units must deliver the maximum amount of genuinely affordable housing, taking into account: a. Their contribution to the Borough’s strategic affordable housing target, based on habitable rooms, subject to viability;

b. The need for provision of a mix of secure housing tenures, with the affordable component sought to be provided on the basis of a tenure split of 70 per cent genuinely affordable (social rent or London Affordable Rent) and 30 per cent intermediate (London Living Rent or shared ownership); c. The preferred housing size mix for affordable housing, as set out in Table 7.1; d. Availability of public subsidy; and e. Other planning benefits that may be achieved, having particular regard to the delivery of the spatial strategy for the Borough. F A threshold approach to viability will be applied to major development proposals, in accordance with London Plan policy H5 (Threshold approach to applications), taking into account the different routes to affordable housing delivery (i.e. Fast Track Route and Viability tested Route). In Lewisham, the threshold level of affordable housing on gross residential development is set at: a. A minimum of 35 per cent; b. A minimum 50 per cent on public sector land; and c. A minimum of 50 per cent for Strategic Industrial Locations and Locally Significant Industrial Sites where development would result in a net loss of industrial capacity. G Where the Viability Tested Route is used, and in other circumstances where a Viability Assessment is submitted to support the level of affordable housing provision made by a development proposal, this must be based on a standard residual valuation approach, with the benchmark existing use value of the land taken as the Existing Use Value (EUV) Premium or the potential for Alternative Use Value¹². In order to ensure transparency in the planning process the Viability Assessment must be undertaken in line with the Mayor's Affordable Housing and Viability SPG or future equivalent. H To maximise affordable housing delivery and address economic uncertainties that may arise over the lifetime of a development proposal the use of 'review mechanisms' will be required, where appropriate, and implemented in line with the Mayor's Affordable Housing and Viability SPG. I In order to promote inclusive and mixed communities all new affordable housing provision should be delivered on-site. Off-site provision for major development proposals will only be considered in exceptional circumstances, where it can be demonstrated to the satisfaction of the Council that: a. It is not practical or feasible to provide affordable housing on-site due to site development constraints; b. A higher level of affordable housing can be secured through provision on an alternative site; c. Off-site provision is necessary to better meet priority housing need, such as for affordable family housing; and This approach is in line with the Government's National Planning Practice Guidance and the London Mayor's Affordable Housing and Viability SPG.

d. The provision will better support inclusive and mixed communities. J Small sites (minor developments) Development proposals for new housing delivering between 2 and 9 dwelling units must make provision for affordable housing. They should seek to deliver affordable housing on-site wherever feasible Where it can be demonstrated to the satisfaction of the Council that off-site contributions are acceptable these will be secured through planning obligations, with payments in lieu calculated using Table 7.2 (Small sites affordable housing requirements) and the formula set out in Table 7.3 (Small sites affordable housing payments in lieu). Further details will be set out in the Planning Obligations SPD. Table 7.3: Small sites affordable housing payments in lieu FORMULA FOR CALCULATING PAYMENTS IN LIEU X = ((A-B) x C) - ((A x C) x D) X = the payment in lieu (£) A = the market value of a square metre of floorspace in the development B = the value of affordable housing per square metre of floorspace (reflecting the mix between genuinely affordable and intermediate products) C = the number of square metres required to meet the affordable housing requirement D = additional costs to the developer (the difference between profit applied to market housing and affordable housing, and marketing costs of private housing) K Inclusive and mixed neighbourhoods and communities In order to secure inclusive and mixed neighbourhoods and communities the Council may seek to alter the tenure and/or mix of affordable housing provision on a case-by-case basis. In establishing the most appropriate level of provision for a site, development proposals will be considered having regard to the existing levels of housing tenure and mix in the area (including extant permissions). 53 The equivalent number of on-site affordable units is based on the 35 per cent affordable housing requirement of the Fast Track Route of the threshold approach set out in London Plan policy H6 (Threshold approach to applications). I.e. where 1 dwelling unit is equivalent to 0.35 affordable units. 54 Developer profit is typically applied at between 17-20% of GDV on private housing and 6% on the affordable housing, so the increased profit arising from converting a unit from private to affordable housing would be 11% to 14% (i.e. 17% or 20% less 6%).

L All new affordable housing developments must be of a high quality design having regard to other Local Plan policies. They must be designed to be 'tenure neutral' in accordance with the National Design Guide, so that affordable units are indistinguishable from market units in terms of quality of design and materials, space standards, access and amenity. Where mixed tenure schemes are proposed these must ensure all residents of the development have access to amenities and communal spaces including play spaces, with reference to Policy QD2 (Inclusive and safe design). Vacant Building Credit M The application of the Vacant Building Credit (VBC) is not appropriate in Lewisham. The use of VBC will only be considered in limited circumstances, where applicants suitably demonstrate there are exceptional reasons why it is appropriate and the following criteria are met: a. The building is not in use at the time the application is submitted; b. The building is not covered by an extant or recently expired permission; c. The site is not protected for an alternative land use; and d. The building has not been made vacant for the sole purpose of redevelopment, as demonstrated by evidence showing that the building has been vacant for a minimum continuous period of five years and has been actively marketed for at least two years therein, at realistic local area prices.

The proposed policy has a different approach to securing affordable housing in the Borough. There are a number of different scenarios in which the contribution will be sought.

The overall strategic target of 50% affordable housing remains the same, with a fast-track route option that offers a minimum of 35%.

Affordable housing will be required on all developments of C3 housing, unsecured student accommodation and, if appropriate, specialist and supported accommodation. These requirements will apply to all major developments of 10+ dwellings, taking into account:

- New residential units proposed that would result in an uplift in dwellings of the extant permission.

- Development that is proposed on an adjacent site that is functionally related to the extant permission ad would result in an uplift in dwellings across the sites.

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For new build housing, including mixed-use schemes, developments of 10+ dwellings must deliver the maximum amount of affordable housing based on habitable rooms, subject to viability.

Lewisham Council will work with development industry partners to help identify opportunities to secure grant funding to deliver more affordable dwellings.

The requested tenure mix is as below:

70% - Social Rent or London Affordable Rent
30% - Intermediate (London Living Rent or Shared Ownership)

There will be a threshold approach to viability that is applied to all major developments, this is in line with London Plan Policy H5. In Lewisham, the threshold level of AH on gross residential development is set at:

- A minimum of 35%.

- A minimum of 50% on public sector land.

- A minimum of 50% for Strategic Industrial Locations and Locally Significant Industrial Sites where development would result in a net loss of industrial capacity.

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Where viability is tested, this must be in line with the Mayor’s Affordable Housing and Viability SPG or future equivalent. Alongside this, review mechanisms will also be required, where appropriate, in line with this guidance.

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Affordable housing is to be provided on-site, and an off-site provision will only be considered in exceptional circumstances where it can be demonstrated that:

- It is not practical or feasible on-site due to development constraints.

- A higher level can be provided on an alternative site.

- Off-site is better to meet priority housing need.

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New Small Sites Threshold

Developments that will deliver 2-9 dwellings will also be required to make a contribution towards affordable housing. Preferably it will be on-site; however, off-site contributions can be secured through planning obligations in lieu.

These payments will be calculated in line with table 7.2 and formula 7.3 above.

In most cases, aside from viability, vacant building credit will not be applicable to reduce an affordable housing contribution. There will only be limited scenarios available in which it could be applied:

- Building is not occupied at the time of planning application submission.

- No extant or expired permission on the building.

- Subject site not protected under an alternative use.

- Building not vacated for the purpose of development – the property must be vacant for at least 5 years continuously and marketed for two of these years.

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Main Differences

The main changes are summarised below:

Adopted or Proposed Number of dwellings – 10+ Number of dwellings – 2-9 & 10+ % - based on no. of units. % - based on habitable rooms. Viability – can be considered. Viability – can be considered.

We understand that the document has now reached Regulation 22, with modifications still being made in 2025. The adoption of the new Lewisham Local Plan will have considerable affordable housing delivery and viability implications.

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If you are hesitant on a scheme of less than 10 units, get your consent in now before the new policy comes into effect!

Otherwise, if you have an existing use value on your site, we can help reduce the contribution through a viability assessment. Get in touch today!

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Emerging Lewisham Affordable Housing Policy VS Adopted

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Viability in the Cost of Living Crisis

Can I develop outside the settlement boundary?