GLA : Planning and Housing Practice Note

Accelerating Housing Delivery

The GLA, just before Christmas, issued a new Practice Note on the delivery of affordable housing.  It is a material consideration in the determination of planning applications and effective from 20 December 2024.  It proposes short-term changes to current GLA affordable housing policy – which may change or be withdrawn as the market improves and the replacement London Plan is progressed – to help the delivery of affordable housing.  There is an overall emphasis on the delivery of social and intermediate rent in line with the revised NPPF (also published December 2024) to help low-income families and reduce costs associated with temporary accommodation needs.

The Practice Note includes updates on grant subsidy available through the Affordable Homes Programme 2021-2026 and the different subsidies available for different types of tenure.  This note, however, focusses only on changes proposed to London Plan affordable housing policy, and in particular, changes to affordable housing review mechanisms (secured through section 106 agreements).

The following new measures are proposed:-

Promotion of Social Rent

1. The Fast Track Route (FTR) approach can be utilised (i.e. avoiding late-stage review assessments) for schemes delivering less than the 35% (private land) or 50% (public sector land) affordable housing thresholds (as applicable) where:-

• • affordable housing provision is social rent only (or the majority of provision); and
  • social rent provision is “equivalent” to the relevant affordable housing threshold level at the Local Plan tenure split.

A “principle of equivalence” must be met to rely on this Social Rent FTR (see Appendix 1 to the Practice Note for the relevant calculation).  It can be utilised on current and new applications.  Existing permissions may also be varied to utilise this Social Rent FTR with an associated S106 Deed of Variation.  This may be an option where shared ownership units are challenging to dispose.

2. For Estate Regen Schemes, the GLA will also consider the Social Rent FTR (see paragraph 1 above). And, where the uplift above the re-provided affordable housing within the scheme comprises an uplift of 50% affordable housing, the GLA may not require mid or late-stage reviews.

Supporting Intermediate Rent

3. The GLA will promote discount market rent (DMR) to support the delivery of intermediate rent tenures – its preferred tenure is DMR at London Living Rent annual benchmark levels. The GLA is consulting separately on Key Worker Living Rent Homes as a new tenure.
4. The maximum annual housing income threshold for intermediate rent may rise again above the current £67,000 threshold – to be reviewed in the London Plan AMR for 2025.
5. The GLA will permit, for DMR homes, where total housing costs are above London Living Rent benchmarks, but below the maximum income threshold (£67,000), that housing costs can be indexed. This is provided that the total housing costs do not exceed the maximum level (i.e. 40% of annual household income at the income threshold of £67,000).
6. To further help with viability of DMR homes, if total housing costs (including rent and service charges) are set at new monthly benchmark levels set out in the Practice Note for 1, 2, 3 and 4-beds, then monthly costs can be indexed annually, based on the higher of:-

• • the average annual change in CPI over the previous 12 months; or
  • 2%.

A cap will be applied to respond to periods of high inflation.

Supported Housing and Accommodation for Homeless Households

7. The GLA will (where supported by the Borough) encourage and accept applications that provide supported housing or accommodation for homeless households as an alternative to the intermediate tenure as part of the relevant 35% / 50% threshold level. This housing should be secured in the S106 with nomination rights in favour of the Council with such units reverting to social rent or intermediate rent where that use ceases.  The total housing costs for a unit provided as supported housing or accommodation for homeless households is not to exceed the lower of:-

• • Local Housing Allowance rates; or
  • 80% of market rent.

This may be utilised on current and new planning applications or to replace the shared ownership component in consented schemes where it can be shown there is limited demand for the shared ownership tenure, and subject to a S106A variation.

8. To support use of meanwhile sites or phases for temporary modular housing for homeless households, the GLA will consider accepting costs and values of this provision as part of review mechanisms in the S106 agreement. This may apply to current, new or consented schemes provided nomination rights are given to the Council, there is access to amenities and support for those residents.  Alternatively, where the provision equates to 10% of the scheme as a whole or of a phase and is provided for a minimum of 5 years, then the applicant may retain a higher proportion of the surplus profit in a late-stage review or exclude that relevant phase from a mid or late-stage review provided that overall, the scheme provides 25% affordable housing onsite (35% threshold) or 35% onsite (50% threshold).

Encouraging Early Build Out for Viability Tested Schemes providing over 25% affordable onsite

9. A new measure to incentivise early delivery of small and medium sites (undefined) for Viability Tested Route (VTR) schemes. Here the applicant may retain 70% of the surplus profit (currently 40%) in a late-stage review provided that:-

• • the planning permission is granted after 20 December 2024; and
  • the scheme provides 25% (minimum) affordable housing by habitable room on site (where the 35% threshold applies); or
  • the scheme provides 35% (minimum) affordable housing by habitable room on site (where the 50% threshold applies); and
  • the scheme complies with the relevant Local Plan tenure split; and
  • the scheme achieves practical completion within 3 years of 20 December 2024 (i.e. by December 2027).

10. For large, phased VTR schemes, (undefined) the applicant may retain 70% of the surplus profit (currently 40%) in a late-stage review provided that:-

• • planning permission is granted after 20 December 2024; and
  • 25% (minimum) affordable housing is provided onsite across the scheme as a whole; and
  • the first phase or a later phase achieves practical completion within 3 years of 20 December 2024 (i.e. by December 2027); and
  • the practically completed phase includes at least 100 units.

11. A new measure to expand the scope of review mechanisms for larger phased schemes, outline permissions or residential investment schemes where the applicant may adopt a full viability review (i.e. including all costs and a review of the GDV) instead of the current GLA formulas which assess the change in GDV and build costs (though this remains the Mayor’s preferred approach). This measure may be applied where a scheme can demonstrate significant uncertainty about some elements of its values or costs.

The GLA has not provided an updated section 106 template draft as part of the issue of the Practice Note.  It will, however, be necessary to depart from the template draft to capture a relevant measure set out above.  This will inevitably result in variations in drafting from borough to borough and scheme to scheme.  It will also require more detailed review of S106s for schemes permitted after December 2024 to identify the extent to which any of the above measures have been adopted.