A government decision to let housing developers scrap affordable homes to maintain profits is “storing up trouble for the future” and fuelling nimbyism, a leading Tory council has warned.
The leadership of Milton Keynes has complained that the decision to water down the requirement for developers to include affordable homes in their plans was a reaction to “squeals” from the construction industry.
Twelve months ago ministers amended planning laws to make it easier for developers to renegotiate deals with town halls over the number of affordable homes they must supply. Now, in an act of open rebellion, Milton Keynes’s Tory leadership claims the policy has “swung the balance much too far in favour of the developers”.
If the policy persists, the town will build 500 fewer affordable homes over the next five years, according to its figures. For example, the developer of 211 homes at Bletchley that was due to include 63 affordable homes recently successfully resubmitted plans with no affordable homes at all, on profitability grounds.
The attack will be particularly embarrassing for George Osborne, who last month used Milton Keynes, earmarked for a 28,000-home expansion, as an example of how “our predecessors had the ambition to build for Britain”.
“We are trying to build a city that is sustainable and we are not being allowed to,” said David Hopkins, deputy leader of the council. “They are setting up problems not today or next year but in five years time, and there will be a shortage of affordable housing. That will lead to problems in the service sector and public sector because people won’t be able to afford to live in Milton Keynes.”
Hopkins claimed the problem has been caused by ministers treating builders as “poor lambs” after they “squealed” about the viability of developments where they were required to build 30% or more affordable homes. He has written to the planning minister, Nick Boles, demanding he drop a policy “that unfairly and inappropriately favours the interest of developers over the needs of present and future residents”.
The policy was introduced in reaction to falling property values, and councils have been told they must take account of commercial viability calculations in order to prevent schemes stalling.
But with rapidly rising house prices – up 9.5% on the same time last year, according to Nationwide – there is growing pressure to drop it.
Boles told the Guardian that planning deals negotiated during the last housing boom are “economically unrealistic, meaning no development, no regeneration and no community benefits”.
“The latest figures show that as a result of our measures, the number of stalled sites with planning permission is falling,” he said. “Since 2010, the government has helped deliver 170,000 new affordable homes, and we have a £20 billion investment programme in affordable housing up to 2015, and a further £23 billion after it.”
But since 2010 the construction of affordable homes nationwide has fallen sharply from 60,480 to 42,830 in 2012-13, well short of the equivalent of 55,000 a year the government plans to build between 2015 and 2018.
Labour’s shadow housing minister, Emma Reynolds, called for the policy to be scrapped.
“There is a massive shortage of affordable homes across the country,” she said. “Now even leading Tory councillors are attacking their own government for their failed housing policies. David Cameron is presiding over the lowest levels of house building in peacetime since the 1920s, and he has no answers to tackle the shortage of affordable homes.”
An investigation last autumn found that of the 82 biggest housing developments in 10 cities, 60% fell short of local affordable housing targets. Last week the launch of 600 flats designed by the architect Frank Gehry at Battersea Power station was engulfed in controversy after it emerged none would be “affordable”.
Milton Keynes has threatened to mount legal challenges to developers who insist they can only build homes profitably if social housing is cut.
“The development control committee is frequently confronted with applications where developers have submitted viability assessment that show a development is only viable if affordable housing is greatly reduced often to a level of less than 20%,” Hopkins said. “Why is it that those in need of affordable accomodation … should bear the cost of the difficult market conditions rather than the developers and lenders … taking a reduced profit?”
Andrew Whitaker, planning director at the Home Builders Federation which represents housebuilders, said: “Private housebuilders deliver the majority of affordable housing in this country. In a few cases, sites where planning permissions were negotiated some years ago are no longer viable to develop in the current market. Renegotiating the level of affordable housing on such sites allows the site to come forward, and much needed housing – including some affordable homes – to be built.”