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Nick: [00:00:00] Welcome to the latest edition of Concilio Better Places podcast. Where today we are joined by our regular guest. it seems now given there is so much to talk about in the planning world, Simon Ricketts of Town Eagle Simon, thank you for joining.

Simon: it's great to have this opportunity, Nick.

Nick: Brilliant. Thank you so very much. The focus of this podcast is going to be the announcement that was made by the government yesterday in the alterations to the affordable housing requirements. In London amongst other measures. but I think it's, it's important just to place it in context as to why the government has decided to take what are quite, quite brave actions, in many respects, which we will discuss.

And that is the housing crisis that there currently is in London. Moor, as I'm sure many of our listeners will know, have, created a lot of headlines recently with, research that shows development has really stalled in London with starts totaling just 3,248 homes in the. First nine months of the year, build to rent, construction [00:01:00] across the uk, but especially in London, is coming to a halt.

And the, the real implications of this is that there's more than 132,000 households living in temporary accommodation in the capital. up almost 8% from last year. And this cost boroughs 5.5 million daily and London councils. I've said 740 million pound black hole in all London Councils because of this need for temporary accommodation, because of a complete shortage of housing debt is being built.

So the government have looked at this, and have decided to go out to consultation on, as I said, amongst other things, reducing the affordable housing requirements. So Simon, I was wondering if you could give your initial overview of what you, what the government's trying to achieve here.

Simon: Well, it's really interesting to see a joint announcement by, the government and the London Mayor package support for house building and the capital. First thing to say, I don't want some people to switch off, but there's nothing in this for, developers [00:02:00] of student accommodation or co-living. it's a bit of a surprise that, you know, these are not.

a pack. This is not a package of announcements, which is going to come into effect immediately. Uh, there is an indication that there's going to be consultation for six weeks, starting in November. We can discuss later, Nick, when we think the precise timing is going to be and what that means. So there's, five components to, the package of support.

I know many people won't, but I do recommend that you read every sentence in the document because every sentence has a nugget in it. But these five components, first of all, temporary relief from SCL for qualifying developments and that. In includes, you know, 50% reduction in the borough sill that, that developers will be charged for residential schemes that commit to delivering at least 20%, a [00:03:00] affordable housing.

And, additional relief available for higher levels of affordable housing that's gonna need a statutory instrument. But that's, that's the first element. secondly, the mayor is going to, remove certain, elements of, London planning guidance that constrain density, including standards on dual aspect of apartments and, units around cause, as well as, relaxing cycle storage requirements.

Thirdly, really importantly, there's A new time, limited planning, route, which is really a new fast track, which is where you, can, secure, Planning permission, for, with, for residential development without a viability, assessment where you can commit to, 20%, affordable housing.

half of the affordable housing will be eligible to receive, [00:04:00] grant funding and, there'll be what's known as. What's called in the document, a gain share mechanism to increase, affordable delivery on schemes that don't start by, a particular deadline, gain share mechanism. And another word for, basically early stage, review mechanism.

we can come back to, the timings, on that. But basically, you will need to. have, reached, a fixed milestone of the end of March, 2030, for construction. in order to avoid that, uh, review mechanism taking effect for fourth category, we can come back to later, but it's, new powers for the mayor to, potentially call in schemes, of over.

50 homes when a borough is minded to refuse. So a significant reduction in the current, threshold and to be able to call in development [00:05:00] proposed on the greenbelt and MOL, all with the attention of supporting additional, delivery. A powers to streamline. the mayor's decision making on called in applications no longer a need for, so there would no longer be a need for the representation hearing.

it could be done by written reps. So the potential for the mayor to really upscale the number of schemes that he's calling in and getting through the system. And finally, funding to establish a city hall developer. Investment fund initial allocation of 322 million of, grant investment. as I say, there's a lot more detail, but those are the headlines, Nick.

Nick: And if you can take a breath now, Simon, we can after that is, is an awful lot to unpack there and certainly what has generated the most headlines, interest and commentary is the change. to [00:06:00] secure planning commission without viability. if you are at 20%, affordable housing, I mean, this, this is quite the change, isn't it, from the stance we have seen, since, Sadid became mayor, in 2016, and really is one of the major complaints which developers have had, which is that d.

Requirements of a London plan, which date back to 2017. the world has changed, in the amount of contributions developers have to give, and for, for whatever, whether it be second staircases, build and safety regulators, the massive increase in build costs meant that what, in 2017 with the London plan was probably deemed a sensible and deliverable amount at 35% has just made far too many schemes unviable.

Simon: Uh, if you can commit to that much affordable housing, you are not subject to, you don't need viability, appraisal and you're not subject to.

Late stage review. And the big question is, it might be chairish to ask, but the big question is whether it's [00:07:00] enough for, the threshold to be reduced to 20%. Although, bear in mind this. Commitment that there seems to be that, um, 10, that half of the, you know, that, that affordable housing would be, grant funded.

Just drilling into the details, a bit of that 20% affordable housing. At, uh, at least 60% would need to be, social rent. and there's, there's requirements in relation to the intermediate rent as to the levels of that. 30% have to be, uh, at or below London, living rent levels, 70%, a range of genuinely affordable.

Levels. Um, if you're dealing with, public land and industrial land, rather than 50% at, as at present, the threshold will be 35%. Really interesting, and this is why every, every sentence counts are read it out For utilities sites that are subject to substantial decontamination, enabling and [00:08:00] remediation costs.

20% threshold will apply. So, you know, industrial land. Potentially 50% down to 20%. this route's only going to be available until the 31st of March, 28. Or the publication of the Revised London plan, whichever is the earlier, I think we can take it, but that means 31st of March, 2028.

Nick: Yeah.

Simon: Yeah. and all planning decisions on, the application will need to.

It. That's interesting wording. All planning decisions on applications will need to have been issued by the local planning authority by that deadline, so you know, you can only qualify if you get your permission by March 28.

Nick: But does that mean that committee, or does that mean with a fully signed section 1 0 6? Agreement and all legal obligations because getting to a committee is relatively easy. It's my experience and I won't name borrowers, but some do take [00:09:00] an awful long time to, to get to the section 1 0 6 side. So what, what would that mean,

Simon: Well, abs ab absolutely. You know, we don't know until, you know, the outcome of the consultation. all it says is all planning decisions will, because it says we'll need to be, have been issued. I do take that as meaning, the planning permission, and so section 1 1 0 6 completed. that's gonna place quite a lot of pressure on us lawyers, but, that's

Nick: as, as we always say, there's always a winner and it tends to be, our friends in the profession. Um, but just on the

Simon: the other thing, yeah, well I was gonna say, and of course the mayor has the calling power, so, you know, if. it, you know, if things are going slow for no reason, then, um, you know, assuming the, the mayor is gonna take a muscular a attitude to all of this, then, um, he can step in and, um,

Nick: Mm-hmm.

Simon: hopefully, uh, unlock things which have got delayed.

Nick: I thought people would find it interesting to know the sums of money which are being talked about with respect to [00:10:00] grants. So grant rates, uh, benchmark grant rates are 200,000 pounds per home for social rent. 140,000 for intermediate rent below London living rent. Benchmarks, 90,000 for intermediate above, uh, London living rent benchmarks, and then 70,000 pound for shared ownership.

So that's the type of grant we are talking about. Um, which combined with the 20% reduction, one would, would assume, make it more, um, appealing, uh, for developers to, to start. But what struck me just before we move on to the other issues was it's time limited, but you know, the world costs only tend to go one way up.

This is. Is it gonna be, it strikes me it might be quite hard to row back from because I can't see anybody in the development industry saying, yes, let's go back to 35% when they've been working under these conditions. And, uh, the more power to the mayor here as well in relation to this particular issue.

It, it, whoever the next mayor may be,

Simon: Yeah.

Nick: it's at equal, whoever the next mayor, mayor is, [00:11:00] they're not gonna wanna give up increased power. So it strikes me, once we, once we go down this route, is just gonna be hard to come back from.

Simon: These transitions are really difficult. Yeah. So it's storing up a real issue. Um, for the end of the period. Um, the transition is equally difficult. Moving from the current position to the new per permission. In the case of, um, schemes which have planning permission and may not have been built out or which are in the system, um, maybe we'll come back to that.

But also on in terms of, um, the affordable housing. Of course, one of the blockers at the moment has been, um, the reluctance of registered landlords to take on, um. To register providers to take on, uh, you know, section 1 0 6 units and, you know, there's a reference in. Uh, the document to, uh, uh, uh, uh, the, the government expecting and the GLA expecting [00:12:00] registered providers, including local authorities to be proactive in supporting this new route, including early engagement with developers to provide certainty that they'll acquire, uh, affordable units.

Uh, and there's, there's a nudge to developers that they really need to build, um, schemes, which are. Uh, attractive and meet the quality requirements of registered providers now is, you know, is that plus that grant funding enough? I dunno.

Nick: But it, it, it is fascinating. There are eight, eight and a half thousand housing units either under construction or set to begin construction within 12 months, which lack an RP buyer. Um, so again, it, it is always these practical points as much as the headline affordable housing figure, which need to be dealt with, which is why in and of itself, the affordable housing whilst getting the headlines is not the total story.

Because as you mentioned Simon, there's also the sill changes, uh,

Simon: Yeah.

And.

Nick: will also have a significant impact potentially.

Simon: Yes. And, and, [00:13:00] um, yeah, just I, I'll go on to talk about the cell. The one further thing I'd say about that this new, um, sort of fast track route is, as I mentioned, in order to avoid the, um. Gain share mechanism or, or viability review mechanism. Um, you need to have got to a particular stage in the scheme by 31st of March, 2030.

And that, um, uh, for larger phased schemes that will be, um. Uh, you won't require a review where the, where for phases where the first floor of buildings provided, um, uh, providing at least 200 residential units have been built by that date for unphased schemes. The first floor of the scheme has to have been built by 31st of March, 2030.

Now, I think there's gonna be a, a lot of, um, you know, thinking about that and [00:14:00] what that means. In terms of strategies for phasing schemes because, um, you know, at the moment, you know, it's, it's useful for a seal cash perspective to phase schemes. Um, but, um, you know, there's the opportunity here to bake in, bake, you know, bake bacon.

These, um. These relaxations, uh, as long as you commence development, um, either on your own phase scheme or on the phase of a phase scheme. So, you know, there may be opportunities to have bigger phases or, or un phase as, as far as, uh. The SIL relief goes. It's interesting that 50%, uh, at least relief from Borough il, uh, the mare is keeping his sil

Nick: I saw that.

Simon: in place. Um, uh, and, and generally, you know, what does this tell us about IL more generally? If, uh, you know, this money that was, [00:15:00] you know. Previously meant to be essential for accommodating for delivering the infrastructure needed to deliver development. Suddenly half of it can be taken away. Well, you know, great if that does unlock development and more affordable housing.

But, uh, it's just interesting. So yeah, this is for schemes that, uh, commence after the relief is in place and, uh. Before 31st of December, uh, 2028, and it's for, it covers 50% of SIL for schemes which deliver at least 20% affordable housing, uh, under this new time limited planning route. Um, the possibility for increases in relief to above 50% where schemes delivering more than 20% affordable housing.

But there's no reference yet to, you know, how that is, to be calibrated. That's gonna be really important. 'cause, you know, I do hope that some people are going to just be still bringing forward schemes that deliver more than [00:16:00] 20%. Um, and they really need to be incentivized to do that. Um, there's a, there's a quite opaque passage that says.

The, the relief would be contingent upon meeting proportionate qualifying criteria to, in ensure relief is targeted at schemes which would otherwise remain stalled or fail to come forwards with a lower relief applicable, where the full available amount.

Nick: Mm-hmm.

Simon: be warranted. You know, that seems to be some sort of get out that people need to be aware of.

Um, and, and this, this relief doesn't apply to, uh, greenbelt, uh, releases.

Nick: Right. I mean, it, it is, I mean, from our perspective on consultation, it is, you know, what, what's affordable housing levels and what are we as the local community going to get are the, for resident, well, not not, we have many residential schemes in London recently, which is of course is part of the problem.

But that is the really the first question people ask. And on [00:17:00] both measures. That's being decreased. Um, so again, I think politically this is a very brave move by the government, of which I certainly give it credit for, is a, is a way to unlock. The planning process is not necessarily going to be the most popular.

Um, but it also strikes me on some of the design changes as well. We've, we've been told that dual aspect was a, a necessity. Um, I, I don't think there's gonna be any developer who, who is not glad to hear about the cycle requirements. As I always hear tales of thousands of empty cycle racks, and especially in it's noted given, you know, the rides of e-bikes as e scooters, et cetera.

Um, you know, people just don't own as many bikes. They are cycling more, so there isn't that need. Um, again, some of these design changes, the things that we've been told were absolute necessities. And now, now apparently not.

Simon: Yeah. Uh, the last version of the MPPF did have, uh, did call for some flexibility over, um, uh, uh, uh, over these design, uh, aspects. But no, I, I, I, I do agree. Um, [00:18:00] so, um, it's in, you know, um, perhaps Nick, we should look at, you know, what this means for, you know. Schemes in different, at different stages through the process.

And you know, uh, we won't go through what the implications are at each stage, but, you know, I just jotted down for myself, you know, what do we need to think about? If the application's not yet submitted, if the application's submitted, but still undetermined if it's passed resolution to grant and your.

Getting ready to sign section 1 0 6, and now, you know, uh, once all of this, um, uh, takes effect, um, are you better off, uh, waiting and, um, this into account or should you still press on, If you've got an existing planning permission, whether it's unimplemented or you're part the way through, building out a phase development, [00:19:00] you know, what should, should you be doing in relation to the unbuilt phases?

I think this is what's gonna keep

Nick: those one? Yeah, no,

Simon: busy.

Nick: So should we tackle those one by one? So, um, actually let, let's start, start at the end if you like, and then because, uh, uh, and finish it at the beginning. So existing planning permissions aren't implemented. do you think this

Simon: Yeah.

Nick: them?

Simon: Surely the, one of the most urgent problems at the moment is stalled schemes that have planning permission, um, where people are basically keeping them alive by digging a trench or whatever, but, and waiting for times to get better. Um, so that's really key.

Nick: Yeah, 281,000 homes according to what you are currently in that position.

Simon: So people need to, if they're in that position, it's just two paragraphs in the document, paragraph 33 and 34. And you know, they're saying that basically. Um, the [00:20:00] expectation is you should, um, keep to your commitments, but if you can, but if you can demonstrate that that isn't possible, amendments to the affordable housing level or tenure should be renegotiated by deed of variation with the aim of, uh, delivering at least the level that is, um, set under this new 20% planning route.

And on the same terms, um, that is dependent on. The local authority and the mayor playing ball when you go to, um, them and say, I need to renegotiate. So, um, you know, some guidance that that encourages that will be really helpful. Um, there has been a trend towards use of section 73 to amend conditions on planning permissions and in the slipstream of that, uh, amending the 1 0 6 with.

The affordable housing reduced that was done in the Cuba Street appeal into our s earlier this year. You know, the government, [00:21:00] paragraph 34, sort of warns against that and says that the government will issue planning pla practice guidance in due course to clarify the circumstances in which section 70 threes can justifiably be used to modify obligations.

Um, so, uh. Legally, that's another route, but I think people are

Nick: Hmm.

Simon: be warned, warned against it. So we do really, yeah. So as I say, it's critical. And if we're just, if the advice is that local authorities should be playing nicely over this, um, you know, query, whether that's really, uh, uh, uh, enough, or whether a developer in that situation is gonna have to make a. Fresh application for planning permission and go through and, and, uh, look to take advantage of, um, these measures under that permission.

Nick: Before we go into the, without section 1 0 6, so I just think it'd be helpful for, for lay people such as myself, so. [00:22:00] Interpretation and guidance. Um, we've got 32, 33 GL city borrowers, all of whom will be their own lawyers, will be looking at this. Uh, again, as a lay person, how is that tackled by the legal team at a local authority?

What, what do they need as part of this process to be sure that what they're advising developers, because we, we can't have one borough. Well, I suppose you can have one borough giving different advice to another. Surely we need conformity across London. How is that guidance actually given as part of this process?

Simon: Yeah. Well first of all, some of this is going to need, um, secondary, uh, legislation. That's the changes to sale and the changes to the mayor's powers when we look at the timing for that. Um, uh. Let's, let's address that now, when they say consultation will start in November for a six week period, um, some people are assuming that means early November.

There is, there is of course, a certain budget coming off [00:23:00] the 26th of November. It could be later in the month, you know, maybe alongside that after that, who knows. But anyway, the consultation isn't going to conclude until December or. Into January. Um, and statutory instruments, you know, will take, uh, two or three week months minimum to put in place.

So we're talking in effect, I think of this not coming, uh, going live, uh, until the end of March. Um, what do, what, what do people need? They need, uh. Stat, those, those statute instruments in place, um, they need, um, uh, the final version of whatever form of guidance is going to come out of. Um, M-H-C-L-G and they need, um, the mayor to have published what's called an Emergency [00:24:00] London Planning Guidance note Emergency LPG.

But of course, those LPGs have no statutory basis. Their only guidance, you know, the development plan is the London plan. So we do have this like, uh, legal tension that. Um, the development plan is still saying to get to fast track, you've got to achieve 35%, et cetera. Yeah. So. Um, this is all reliant on, um, the decision maker, whether that's the borough, the mayor, or an inspector on appeal saying, okay, the development plan still says, has these requirements, but I take into account.

Nick: Mm-hmm.

Simon: circumstances and advice as another material consideration, I give that more weight and therefore, um, yes, I'm going with these lower targets. But obviously, um, some people out there aren't gonna be happy and they're gonna be

Nick: No, they're not.

Simon: of [00:25:00] sniping, politically sniping through lawyers, et.

Nick: And if this comes live in late March or we have the local elections in May, and I can see in certain boroughs this being quite a, quite the topic, um, in the run out to election. So interesting timing, um, if that is indeed the case. So we, we, sorry I interrupted you Mid flow when going through the four scenarios.

Um, the de third scenario we were looking at was applications which have been approved. By committee but do not have a section 1 0 6 signed, which, um, there's probably quite a few out there, um, in the boroughs given It does take quite a while sometimes to get these, get these through,

Simon: And that's, that's the one way, that's probably the biggest dilemma because, you know, you are, you, you may be weeks away from securing a

Nick: yeah.

Simon: Um,

Nick: After. Yeah.

Simon: is the devil, you know? Do you hold off to hope that all of this is going to come into effect in a form that gives you [00:26:00] potentially better outcome?

Um, that's something that's gonna need to be weighed up case by case and depending upon the level of pain that, uh, the, the viability on your project is showing at the moment.

Nick: Yeah.

Simon: you know, your appetite for risk and faith in the government and mayor.

Nick: So practicality wise, you won't be in a position to really know until assuming the, the, the times we spoke about previously until the end of March to know the actual position or, or yeah, the actual position of how is going to be implemented. So it's quite a wait. Yeah,

Simon: that, that, that's, yeah. Um,

Nick: it is quite a gamble, isn't it?

Simon: I'd love It if someone.

Nick: Yeah.

Simon: If someone's listening to this and thinks otherwise, they should let us know. But I'm afraid. That's my conclusion.

Nick: That's with, uh, about the section 1 0 6 signed, um, [00:27:00] uh, um, applications not yet submitted.

Simon: Hmm.

Nick: What do we think? Yeah.

Simon: Um, I.

Nick: how do you think you should be, um, assessing this if you're sitting there thinking, oh, hold off? Do I carry on what, what? What do you think? What are the, what are the cha, what do they have to think about here?

Simon: Well, um, uh, first of all, applications in the system where you, you, you've made your application and you yet gotta committee. Um, I wouldn't want. Uh, committee decisions to be, um, deferred by authorities on the

Nick: Mm-hmm.

Simon: is all now in the offering. But I can see that's a

Nick: Mm-hmm.

Simon: if, if I'm acting for the applicant.

I think there's a lot in here that would add to the, um, uh, the case for. You know, the authority granting planning commission on the basis of recognition of

Nick: Yeah.

Simon: crisis that we're in at the moment and the acceptability of, um, [00:28:00] lower affordable housing, um, um, delivery in, uh, by way of percentage anyway,

Nick: Hmm.

Simon: in, in these circumstances, a

Nick: Just, just, just on that, Simon, if I may, can, let's ask a question on, on that point. So it just struck me, so when you go for a local plan process, it's given wait, the longer you go on in, in the process and committees have to recognize, I believe, or authorities have to recognize, but the emerging plan. Is coming and therefore should be considered. We know we, well, there's assumptions here, aren't there. We assume that after the consultation, the government will go ahead with a direction of travel, which reduces affordable housing requirements. How does that have to be given any weight or is this literally, you can't consider this until assuming end of March again?

End of March. When this becomes legislation ly approved, that's when you have to take it into account.

Simon: In my view, this, um, this document [00:29:00] already, uh, has some weight as, uh, a direction of travel that the, uh, the government has. Indicated it, uh, you know, it wants to go along. Um, so yeah, it has, it has some weight, obviously it will have more weight once, um, the consultation has been carried out and, and concluded so already.

Yeah, no, this is absolutely something that, um, will be being referred to in closing submissions at inquiries over the next few weeks and. Um, in, in, in, um, representations at, at, at, at planning committees. So that's applications in the system and

Nick: Mm-hmm.

Simon: not yet submitted Well, you know, absolutely. emerging schemes should be, you know, and pre-op discussions will, will, will need to be having, um, having likely, um. You know, [00:30:00] this likely policy background, um, I, I in mind, and it will be, you know, it'd be interesting to see whether it influences, you know, some of the decision making in terms of, you know, whether to, you know, the relative attractiveness of co-living versus another alternative residential, um, models versus traditional C3.

I don't know.

Nick: that, that, that was my fault as well, because certainly from a business perspective, co-living and student really is the only residential schemes that we've been asked to tend to for or work on in the last year. Very, very few what you would call traditional private sale or or rental. It has all been co-living in the student, I guess because of the viability challenges.

And I was wondering, does this tip the balance back in favor of residential, traditional residential rather than co-living student? It's gonna be fascinating to see, um, if that's the case. Um, well, yeah, no, I just trying to think of outstanding tenders. Almost all of our outstanding residential [00:31:00] tenders in London are co level student, not traditional residential.

So

Simon: Yeah, I mean, there is a question mark as to whether, uh, these, the support should be extended to, to co-living because,

Nick: Mm-hmm.

Simon: so, you know, is it right that these measures aren't, and also it must be said that the mayors, um, plan, you know, policies in relation to the affordable housing requirements, Uh, you know, the offsite contribution requirement in relation to co-living is, is, you know, very tough the moment. Um, so you know, we really do need to see equivalent relaxation in that. I would

Nick: Yeah. Well, with the [00:32:00] consultation beginning in November, at some point, I'm sure the co-living, uh, sector will be putting their, their arguments forward as to why, why they should be included, um, in the protest. So Simon, thank you very much for your time this morning. We'll dub us an emergency podcast, uh, where we try to, uh, bring guidance to what.

I think it'll be quite a longstanding fundamental change because I, I come back to it in my own view. No developer's going to say the conditions are right to go back to how it was, and no mayor is going to want to give up additional powers that have been granted to them here. So I think this is a real fundamental change to the system.

Simon: I agree.

Nick: Brilliant. Simon, thank you very much for your time. Thank you.

Two, one.