Joanna Bourke
Evening Standard
09 April 2015

London's luxury flat developers lose out in planning policy rethink

The Government has dramatically watered down a controversial planning policy that threatened to allow the developers of luxury London flats to avoid more than £1 billion a year in affordable-housing payments.

Housing minister Brandon Lewis unveiled the “vacant building credit” at the end of 2014, but it immediately incurred the wrath of several councils in the capital which were experiencing chronic housing shortages.

The credit allowed developers planning to convert vacant office buildings into flats to pay only an affordable-housing contribution on new space created. Prior to its introduction, developers paid according to the full size of the building.

Westminster council sounded the alarm in January, claiming it could lose £1 billion a year from its affordable-housing pot. As a result of the credit, it cited Abu Dhabi Investment Council and developer Finchatton seeing a potential affordable-housing payment of £17.6 million shrink to just £8.6 million on its project to redevelop the former US Navy HQ in Grosvenor Square, Mayfair.

The policy also angered Southwark, Islington and the City of London.

Daniel Farrand, joint head of planning at law firm Mishcon de Reya said: “The Government has now corrected a loophole to stop property developers exploiting the policy, meaning some councils will be able to resist some of the more-unacceptable losses to their affordable-housing pots.”

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