GLA’s New Guidance: What It Means for Affordable Housing Delivery

Within its recently published ‘Accelerating Housing Delivery Planning and Housing Practice Note’ (December 2024), the Greater London Authority (GLA) sets out various measures geared towards better incentivising, optimising and streamlining the delivery of affordable homes within London.

In tone and substance, the Note complements many of the housing-related principles of the 2024 Autumn Budget, with the alignment between the GLA and Central Government on affordable housing priorities made clear. The Note introduces several new initiatives that are particularly relevant to planning applicants and developers.  

Increasing Social Rent Delivery

There is now potential for schemes which propose affordable housing as fully (or predominantly) social rent to qualify for the GLA’s Fast Track Route at a lower provision than the current London Plan threshold of 35% (or 50% on public/industrial land).

No fixed alternative threshold figure is provided, with the acceptable adjustment of affordable housing under the Fast Track Route to be determined on a case-by-case basis and will be based on an ‘equivalency test’ (with the calculation set out in Appendix 1).

In order to still qualify for the Fast Track Route, the GDV of a scheme proposing affordable housing as fully (or predominantly) social rent must be equivalent to its GDV in the scenario where 35% (or, where relevant, 50%) affordable housing is provided at a policy-compliant tenure split.  

The calculation allows for increased CIL and marketing/disposal costs to be deducted from GDV. However, no allowance is made for other potential costs (i.e. development finance and/or profit). 

Whilst this move aims to widen the number of schemes that can qualify for the Fast Track Route (and thereby not requiring any viability information to be submitted), the requirement to prove ‘equivalency’ still requires an exchange of technical viability information. Also, as this is only guidance, there is no guarantee that LPAs will agree or adopt the GLA’s approach (which could lead to decision-making delays).

Overall, developers might be justifiably sceptical whether the GLA’s ‘equivalency test’ will, in fact, deliver ‘equivalency’ or, indeed, incentivise the much-needed delivery of homes on-site.

In reality, the alternative Fast Track Route is likely most attractive to developers experiencing issues delivering shared ownership homes within their schemes. Otherwise, the existing London Plan Fast Track Route arrangements may prove more popular. 

Supporting Intermediate Rent

Whilst no specific detail is provided, the Note indicates that the income thresholds for intermediate rent housing could be subject to further changes (beyond the 2024 reduction of £60,000 to £67,000).

In some instances, the Mayor may allow for the total housing costs for Discount Market Rent (DMR) accommodation to exceed the relevant maximum level if “over time the indexed costs rise above this, where he is satisfied that the homes will be affordable, with initial costs set at benchmarks published by the GLA”. Therefore, there may be scope for DMR accommodation to exceed current maximum thresholds (providing overall costs are still ‘affordable’) – hopefully resulting in greater flexibility at the S106 stage.

Changes to Late-Stage Reviews

The GLA is keen to better incentivise the delivery of small and medium-sized sites by potentially allowing developers to retain 70% of any surplus profit in late-stage reviews (which is a significant increase from the current arrangements, which allow for developers to retain 40% of the surplus profit). This will only apply to applications granted planning permission after December 2024 and completed within three years from this date. To qualify, schemes will also need to deliver a minimum of 25% on-site affordable housing (or 35% on-site affordable on public/industrial land) at a policy-compliant tenure mix.

A similar approach could also be applied to ‘larger phased schemes’, providing that the relevant phase includes at least 100 residential units, delivers at least 25% affordable housing across the scheme as a whole and is granted permission after December 2024 (if the initial or a subsequent phase is certified as reaching practical completion by December 2027).

This may prove attractive to developers with qualifying schemes which can be delivered quickly. However, in many cases, developers may question whether practical completion can be achieved within these timescales (given ongoing delays with the Gateway 2 process and other associate issues).

The minimum of 25% on-site affordable requirement would also need to be viewed on balance by developers (as it may prove difficult to viably meet these requirements, given ongoing challenges to the development sector, including build cost and indexation issues). The GLA may also collaborate with LPAs to identify interventions that could help unlock stalled sites (i.e., these arrangements could, if agreed, also apply to consented schemes).  

Grant funding

The GLA is introducing a new grant offer to assist developers in switching shared ownership accommodation to either social rent or intermediate products. The GLA is also exploring the use of grants to more generally convert homes to ‘more affordable tenures’ – providing that planning permission has been secured prior to December 2024.

This may bolster the delivery of social rent housing within schemes, providing that the GLA provides greater transparency around the eligibility for new grant funding (and providing that these matters can be agreed quickly between the parties involved).

Conclusions

Overall, the GLA’s Note is a welcome acknowledgement of the viability and delivery challenges currently faced by residential developers, with any initiatives aimed at easing these pressures to be recognised. However, while the initiatives reflect a proactive effort to encourage affordable housing delivery, questions remain about their practical implementation and their potential to significantly accelerate housing growth, given the reliance on the effective collaboration between the GLA and LPAs to drive meaningful progress. 

For developers and other planning applicants, understanding the implications of the key points outlined above will be essential in navigating the evolving planning and development landscape. In addition, the success of these measures will rely on clear guidance, effective collaboration between the parties involved, and the resolution of ongoing viability concerns.

For more information, please contact Will Seamer or Sarah Gibbs on Viability and Simon Marks and Colin Sinclair on Planning.