Solutions

Close the viability loophole

Close the viability loophole

Stop private developers from evading affordable housing requirements.

Behind the massive decline in affordable housing are policy choices that have led to a greater dependence on private developers for housebuilding. These developers take advantage of the viability system, whereby developers are able to negotiate down their affordable housing contributions, to hold communities to ransom and evade affordable housebuilding.

Viability tests are a legal loophole within planning policy that means developers can reduce their affordable housing commitments if their profits slip below ​‘competitive’ levels – which the major housebuilders define as around 20%. It allowed developers to overpay for land, safe in the knowledge they could recoup the costs later by going back on their commitments and squeezing out affordable housing.

Reforming the planning system by closing viability loopholes and strengthening the obligations on developers are ways that land price increases can be collectivised. Developers would have to factor these more fixed contributions to affordable housing and other community benefits into their bids on land, making it cheaper overall.

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Key documents

Further reading

Policy in practice

Projects that demonstrate the benefits or may be helped by polices like this.

  • Lilac – Low Impact Living Affordable Community
    Lilac is a environmentally-friendly housing co-op with an innovative funding model.
  • Fossetts for the People
    Campaigners want to ensure former NHS land is used for publicly owned social housing.
  • Start Haringey
    Residents and workers aim to turn former hospital site into affordable housing.
  • London Renters Union
    Tenants are taking action against rip-off landlords to win lower rents and longer tenancies.
  • Save Druids Heath
    Residents fight council plans to rebuild their homes that ignore their community.
  • Walterton and Elgin Community Homes
    Tenant-controlled housing estate emerged from the struggle of residents against the sale of their homes to private developers.
  • Granby 4 Streets
    A determined group of residents saved their streets by taking them over.
  • Goldsmith Street
    Winner of the 2019 RIBA Stirling prize, these eco-friendly homes are one of the first new council housing projects in a generation.