Developers are using a trick to get out of building affordable homes

Viability assessments allow housebuilders to dodge their responsibilities without being publicly questioned.

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Our housing crisis has been thrust into the spotlight in the worst way possible with the Grenfell Tower disaster. Hundreds have lost loved ones and many are without a home. While Shelter has been calling for those affected to be placed in good quality accommodation nearby, and hopes officials make good on their promise to do so, we know many local authorities simply don't have enough affordable homes.

The main reason for this desperate crisis? A generations-long failure of our housebuilding system to build enough homes that people on ordinary incomes can afford.

Over many years, house prices have continued to soar, while wages have stagnated. The average house price is now 7.6 times the average salary – it was about half that 20 years ago. 

Meanwhile, renters right across the country are having to shell out massive amounts of money every month to cover their rent, all for unstable, short-term contracts.

And at the sharp end, homelessness is on the rise, with a shocking 255,000 people finding themselves without a home at the last count.

Today we rely on private housebuilders to build most of our homes. But as profit-driven organisations they are, perhaps understandably, not very good at building affordable homes.

A favoured, and perfectly legitimate way of building fewer affordable homes is through something called a “viability assessment”.

When a housing developer gets planning permission they are normally required by the council to make a number of the homes they build officially "affordable". This number varies across the country but is usually between 30 to 50 per cent and developers will be aware of the requirement before they begin drawing up plans.

But the less affordable housing a developer builds, the more profit they could make, so the developer deploys the viability assessment. This allows them to go back to the council and say that the amount of affordable housing they originally agreed is no longer possible.

They’ll often blame changes in their costs or lower than anticipated house prices (as we’ve seen recently with the Battersea Power Station development), meaning they won’t make sufficient profits to build the number of affordable homes originally planned. Their case is strengthened by the fact the law was changed in 2012 to state that the developer must make “competitive returns” (in practice, 20 per cent profit) on the development.

The massive problem here is that we can’t scrutinise these really important decisions because, guess what, the viability assessment is private. So affordable homes are being denied to people who really need them right across the country in this way, but local communities, journalists, campaigners and charities like Shelter are not being allowed to question it. And of course, it’s those people desperate for an affordable place to live who lose out.

It can be argued that developers are simply following the instinct of most private companies in being competitive and taking the opportunity to make more money. The real issue is that they are allowed to do it so easily in the first place, and keep it a secret.

The viability assessment should only be used when circumstances have made the council’s requirements literally impossible. And in such a case, it should be published so the public can scrutinise it. After all, in such an eventuality – what does anyone have to hide, right?

This issue is among many being discussed in tonight’s housing special from Channel 4’s Dispatches which looks at the challenges we face in ending the housing crisis.

We need to get tougher and plug this leak of affordable homes, but this is just one symptom of a housing system that is letting the whole nation down.

There are ways to solve this, based around getting land at a cheaper price. Until the government takes bold action to commit to a whole new way of building homes like this, it will be ordinary families who continue to carry the burden of our broken system.

Steve Akehurst is head of public affairs and campaigns at Shelter. Channel 4 Dispatches is tonight, 10 July, at 8pm