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Sat, 25 May 2024

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Sadiq Khan's new planning rules are 'only a starting point', say SME builders

Federation of Master Builders

3 min read Partner content

The Federation of Master Builders comments on London Mayor Sadiq Khan's new planning rules. 


We’ve expressed our concerns in the past about what Sadiq Khan’s affordable housing requirements might mean for SME house builders. Imposing a one-size-fits-all 50% target had the potential to be very difficult for smaller developers, hitting the viability of small scale housing schemes across London.

So the compromise announced by the Mayor today, as part of his ‘Supplementary Planning Guidance’, is welcome and demonstrates a level of flexibility that will be vital in tackling the capital’s chronic shortage of homes.

For smaller developers, there will be two important questions – will the affordable housing exemption for small sites, introduced by the Government into planning guidance, be applied in London, and will there be the necessary flexibility on the 35% figure when it comes to delivering challenging sites?

By exempting sites of ten units or fewer from mandated affordable housing requirements – a decision that was upheld by the high court earlier this year – the Government tackled what had been a strong disincentive to build for small scale house builders.  

When it’s a matter of five or six homes, the requirement to contribute even one affordable property in that mix can render a scheme unviable. Given that small infill sites have a crucial part to play in addressing the capital’s housing crisis, SMEs need to be encouraged to bring these forward free from the fear that they will be stung for affordable housing requirements that quickly lead to the numbers no longer adding up.

A 35% affordable housing requirement, while obviously preferable to the 50% initially touted by the Mayor, may still represent a difficult target for a smaller developer. The alternative – the threat of being “properly interrogated” if a home builder is unable to raise their affordable housing share – could act as a disincentive for small site development, especially given the troubles SMEs already have with a planning system that is regularly slow, inconsistent and unresponsive to their needs.

These smaller projects will also more often than not be located on brownfield sites, meaning they will be technically challenging and expensive to deliver. On such sites, when the volume of homes being built is low, there must be flexibility. Otherwise, an insistence on either agreeing to 35% affordable homes, or being subjected to a potentially protracted viability assessment, could lead to less homes being built – and all homes becoming less affordable.

There’s a tendency to consider house building to be the sole preserve of larger house builders in London and it would seem that Sadiq Khan has drafted his housing policy with bigger schemes in mind. Yet, what we desperately need is diversity, both of the type of firms building homes and the type of homes we’re building. That’s why it’s important that today’s announcements are only a starting point and that the Mayor fully engages with the SME sector ahead of next year’s London Plan.

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