Why solving the housing crisis means clearer planning policy

In an extract from our recent affordable housing report, Will Seamer of Montagu Evans argues that more clarity and flexibility of government policy are needed to meet demand.

It might sound like a long way off but 2023 is only seven years away. So we haven’t got time to totally tear up the rulebook. Instead what we need are some incremental changes.

Starting from the ground up, where do I see the position today in terms of affordable housing, development and delivery? And where is there potential to make some incremental positive changes between now and 2030?

The housing crisis is an affordability crisis

What does it mean when we say there’s a housing crisis? In short, it means there’s a significant imbalance between supply and demand.

For affordable housing, the crisis is deeper: we’re delivering about 10,000 new affordable homes in London per year, but we need to be delivering over 40,000. So the housing crisis is really an affordable housing crisis.

On top of this, we’re now facing a series of additional challenges:

  • construction cost inflation
  • nervousness about property prices
  • interest rate rises
  • planning delays.

To navigate these market headwinds, the two things we need from both regional and national government are clarity and flexibility.

We need clarity from national government level on planning policy, which we do not have at the moment. For example, is there going to be a new Infrastructure Levy that will completely change how affordable housing is going to be delivered? At the moment we just don’t know.

Flexibility is the key to delivering more housing

We also need flexibility in policy. A good example of this is the Mayor’s introduction of the FastTrack Route for affordable housing in London back in 2018. The Mayor conceded at the time that strategic targets of 50% affordable housing were unlikely to be met. Instead, he introduced a lower threshold of 35% for most sites which, if met, gave developers certainty of their current and future liability.

“If we get the right product, we can attract the right institutional investment to support the affordable housing sector up to 2030.”

This flexible approach to policy has been the main driver of improved affordable delivery in the capital – from about 15% of units to over 30% today.

We also need flexibility around tenure types. It’s a real alphabet soup at the moment: from London Living Rent (LLR) to London Affordable Rent (LAR) to Discounted Market Rent (DMR). But if we get the right product, we can attract the right institutional investment, which we are going to be hugely reliant on to support the affordable housing sector up to 2030.

Finally, we need flexibility on delivery structures. Public-private partnerships are going to be key, particularly with regards to levelling the playing field for local authorities and housing associations.

If the built environment sector starts focusing more on clarity and flexibility, then I believe we can make some really positive change to affordable housing delivery by 2030.

Will Seamer is a Partner at Montagu Evans, who co-sponsored the report Affordable Housing: Overcoming crisis through collaboration. Down the full report here.

Photo by Emily Wang on Unsplash