Barratt pulls four planning applications over 50% affordable housing viability concerns

Britain’s largest housebuilder has pulled four planning applications in the last few weeks due to concerns about the government’s proposed 50% affordable housing rule on green belt developments.

The government plans to increase development on "low quality" green belt land, termed "grey belt", as part of its ambition to build 1.5 million homes.

Its draft National Planning Policy Framework published earlier last month sets out several “golden rules” to ensure the public benefits from such development, including schemes having “at least 50% affordable housing, with an appropriate proportion being social rent, subject to viability”.

Philip Barnes, group land director at Barratt Developments, raised concerns about the policy in a blog this week.

He warned existing sites within the green belt in draft local plan applications for housing “will not be able to provide 50% affordable housing.”

He said: “Since [the] draft NPPF, Barratt has already pulled four in-flight planning applications on draft allocated sites because the spectre of 50% renders the scheme unviable due to the unacceptably reduced (or removed) land value for the landowner.”

He said schemes will have been viability tested against a lower affordable housing percentage, so a switch to 50% would "upend" the whole plan.

He said: “The landowner expectations of value are contractually set, based on planning credentials, and such sites will therefore need to be withdrawn from the market and planning process, either temporarily or permanently.”

He added: “While the ‘subject to viability’ caveat is helpful, landowners and housebuilders need far more confidence than that to invest hundreds of thousands of pounds promoting a scheme which is now financially underwater with a 50% affordable housing requirement.”

Barnes also raised concerns about the government’s plan to set a benchmark land value for use in viability assessments, saying it would lead to adverse outcomes because land values differ from region to region.

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He said that the NPPF is a “great starting point” but the provisions around 50% affordable housing and benchmark land value “perhaps need tweaking otherwise the ambition for a rapid increase in new homes could be weakened”.

Rachael Williamson, head of policy and external affairs at the Chartered Institute of Housing, said the institute welcomes “the government’s focus on boosting the supply of much needed affordable housing.”

She added: “We’re currently considering the detailed proposals set out in the NPPF consultation, including the proposed target of 50% affordable homes for major developments on grey belt land.

“As always, there’s a balance to strike to ensure the ambitions set out can be delivered at the necessary pace and scale.“

A spokesperson for the Ministry of Housing, Communities and Local Government, said: “We are facing the most acute housing crisis in living memory, which is why we will deliver 1.5 million homes including the biggest increase in social and affordable housing in a generation.

“The government will work with housebuilders to achieve this, and our golden rules will ensure development on green belt land creates the genuinely affordable housing that people need. We are currently consulting on these measures and will respond in due course.”