Everyone should welcome the Government’s intent around the emergency measures for London and the wider ambition to get Britain building. Unfortunately, whilst the sentiment is there, the measures amount to a complex set of new rules, snakes and ladders.
It appears Britain is stuck. Jammed between a progressive movement afraid of unfettered growth and a conservative one that distrusts Government intervention and building too near local people’s lawns. The result is rationing, messy compromise and resultant scarcity.
As a sector we must communicate better and empower those who genuinely want to solve Britain’s housing dilemmas. That starts with the whole sector responding to the consultation before it closes this Thursday here.
Here are the five key points that the sector should make throughout the consultation:
- Time and lack of
The consultation ends on Thursday 22nd. We won’t know the conclusions for some months. Investors in the main will wait and watch.
The planning window only lasts until March 2028. That’s circa two years to get planning including your Section 106 signed. You then have another two years to get to first floor on construction.
In a system which is discretionary, expensive and reliant on clearing third party vetoes that is not enough time. Promoters need runway to attract, organize capital and project manage. Let’s also not forget the whole host of other macro political impacts which may give pause in the journey.
Recommendation: Simple, add an extra year to each stage to give the sector a realistic chance of remobilization.
2. Cost
The more something costs to produce, the less affordable it is to get into production. Build cost has risen significantly since the pandemic, fire regulations require more gross area and development taxes have remained at the same levels. Consequently, margins have shrunk.
The new time-limited route requires at least 20% affordable by hab room with at least 60% at social rent. Social rent is significantly lower value than other tenures. The net value implications may be limited as a consequence.
Recommendation: Be brave, zero rate CIL across both Mayor and Borough. What’s important is protecting jobs and maintaining resilience. This tax is not a significant contributor to London compared to the taxes raised by development activity.
Moreover, build to rent is being extinguished but there is no lack of demand when the doors open on these schemes. Build to rent should not be tied to social rent obligations. If a development can achieve 10% discount market rent then it should meet the new route.
Finally don’t be tied to just social rent. If the affordable can be delivered as a different tenure why not allow it?
3. Simplicity
Review mechanisms remain at large. They are pushing capital out of high-density development and there is no evidence they are raising money for London. There is also no detail about the new “gain-share” review.
Back in 2025 the GLA offered a significant loosening of Review Mechanisms but there now appears to be a u-turn with the “sharing” at the same level as before.
The marginal rate of tax is now in the mid-80s. Private capital will not invest into a complex market where this is the end result of the risks it takes.
Recommendations: A review mechanism should only ever be triggered if a site takes more than 3 years to come forward after planning permission. This will act as an incentive to get things built. At the moment it’s a punishment. This should apply to all residential development that is single phased, temporary measures or not. Something simple is better than nothing.
4. Stalled sites
The measures are silent on stalled sites. Yet this represents a sizeable number of projects. Is it their fault that the world has changed since the pandemic. Rules should help them not hinder them.
Recommendation: The measures should reintroduce Section 106BA alongside this new approach. Economic activity is more important than standing on ceremony. Section 106BA is tried and tested.
5. SMEs
The temporary measures do little for SME developers but its clear from the questions that the Government wishes to help.
In addition to the measures consulted, bring in a temporary threshold where a scheme is 100 homes or fewer, there is no onsite affordable housing requirement. Currently few if any RSLs wish to invest in S106 deals of fewer than 20 homes on site and normally brownfield sites of this size cannot accommodate the space for a separate building.
Recommendation: A payment in lieu provided based on the same thresholds set out in the current proposals, i.e. 10% minimum on site.
