Subject:
Oaklands, Old Oak Common Lane, NW10 6DU (application
reference number 15/0091/FULOPDC) – amendment to approved
heads of terms (affordable housing tenure mix)
Meeting date: 1 February 2017
Report to:
Planning Committee
Report of:
Director of Planning
FOR DECISION
________________________________________________________________________
This report will be considered in public
________________________________________________________________________
1
Summary
1.1
On 13 July 2016, the Planning Committee resolved to approve application
15/0091/FULOPDC for:
‘Demolition of existing structures and redevelopment of the Oaklands House site to
include 3 mixed-use blocks, ranging in height from 6-26 storeys. The combined
scheme comprises 605 (reduced from 611) residential units (Use Class C3) and
3,500 sqm of in part double height commercial floorspace, providing a flexible
range of uses (Use Classes A1, A2, A3, A4, B1, D1 and D2). The scheme provides
120 underground car parking spaces, 1,080 cycle spaces, amenity space,
landscaping and associated public realm. A new site access road is proposed linking
the existing access road and Old Oak Common Lane.’
1.2
The resolution to grant planning permission was subject to planning conditions and
the completion of a legal agreement under Section 106 of the Town and Country
Planning Act 1990 (as amended) to secure affordable housing and other
contributions towards social infrastructure.
1.3
During negotiations on the detail of the legal agreement it became apparent that
the applicant’s financial viability appraisal did not satisfactorily account for the
necessary payment for the Mayor’s Community Infrastructure Levy (MCIL). This has
an impact on the viability of the proposals, which needs to be addressed.
1.4
The applicant has requested an amendment to the tenure mix of the affordable
housing in order to generate enough value to offset the MCIL payment whilst
ensuring the overall percentage of affordable housing is retained at 40%. It is
proposed to convert sixteen 2-bed units from affordable rent to intermediate
(shared ownership).
1.5
The figures have been reviewed by independent financial viability consultants
(appointed by OPDC) who have confirmed that the assessment provided by the
applicant is accurate and that switching the 16 units would not result in any surplus
and that the applicant will not gain any additional benefit over and above the
amount required to offset the MCIL payment.
2
Recommendation
2.1
The Committee is requested to agree an amendment to the previously
approved affordable housing tenure mix at Oaklands (application reference
15/0091/FULOPDC) , subject to referral to the Mayor of London, from:

242 affordable housing units (equal to 40%) comprising:
o 61 social rent units;
o 61 affordable rent units;
o 120 intermediate units.
to:

242 affordable housing units (equal to 40%) comprising:
o 61 social rent units;
o 45 affordable rent units;
o 136 intermediate units.
3
Background
3.1
On 13 July 2016, the Planning Committee resolved to grant planning permission for
the ‘Oaklands’ application (reference: 15/0091/FULOPDC). Since the decision was
made, Officers have been negotiating with the applicant on the detail of the Section
106 legal agreement in accordance with the heads of terms that were set out in the
Committee report.
3.2
The decision by the Committee gave delegated authority to the Director of Planning
to: ‘…negotiate, agree the final wording [of the legal agreement] (including any
minor amendments to the heads set out in 2.1(b))…’.
3.3
This report presents a proposed amendment to the affordable housing heads of
terms in 2.1(b) of the addendum report for consideration by the Committee. The
Director of Planning, in consultation with the Chair of the Planning Committee, has
exercised his discretion and decided that the amendment should be brought back to
the Committee for decision and not be dealt with under delegated authority. The
reason is that, in the context of this application, the Director of Planning considers
that the amendment is not a ‘minor amendment’ because it materially affects the
tenure split of the affordable housing.
4
Mayoral CIL
4.1
The revenue generated by Mayoral CIL (‘MCIL’) is used to fund Crossrail. The
charge is levied on the net additional floorspace created by development across
London, with some exceptions. The majority of the development at Oaklands will be
liable for MCIL, with the exception of the affordable housing floor space, which is
likely to qualify for mandatory social housing relief.
4.2
The applicant has recently advised OPDC that no allowance for MCIL was made in
the financial viability appraisal submitted with the planning application. OPDC
officers negotiated the affordable housing and other planning obligations set out in
the Planning Committee report based on this appraisal, which was subject to an
independent review by OPDC’s viability consultants. The package of affordable
housing and other planning obligations set out in the heads of terms was
considered acceptable for the reasons set out in the report to the Planning
Committee on 13 July 2016 and officers recommended approval on that basis. At
that time officers were unaware that the MCIL payment had not been accounted
for.
4.3
The applicant has estimated that the MCIL liability will be in the order of £2.5m.
Officers have reviewed the applicant’s calculations in this regard and consider them
to be broadly accurate, whilst noting that the final amount will not be confirmed
until after the permission has been issued. The size of the MCIL payment clearly has
a significant effect on the overall viability of this development and if not addressed
could jeopardise delivery of the scheme.
5
Amending the affordable housing tenure
5.1
In order to address the gap in viability resulting from the MCIL payment and to
ensure the scheme achieves an acceptable level of return that will allow it to be
delivered, the applicant has proposed converting sixteen affordable rented units to
shared ownership. This will create additional value to help offset the MCIL payment.
The newly proposed housing tenure is set out in the table below:
Unit
Private
type*
1B2P
66
2B3P
22
2B4P
272
3B5P
3
3B6P
0
Total
363
* B = Bed P = Person
5.2
Social
rent
15
0
21
23
2
61
Affordable
rent
6
18
21 (-16)
0
0
45 (-16)
Shared
ownership
42
26
68 (+16)
0
0
136 (+16)
Total
%
129
66
382
26
2
605
21
11
64
5
The applicant has calculated that by switching 16 of the 2-bed 4-person affordable
rent units to shared ownership, the development would create enough extra value
to offset the MCIL payment. This assessment has been reviewed by OPDC’s viability
consultants who have confirmed that the assessment is accurate and that the
applicant will not gain any additional benefit over and above the amount required
to offset the MCIL payment.
5.3
The change to the tenure of the affordable housing does not change the overall
number of affordable homes that will be provided. OPDC has consulted with the
GLA Housing and Land team on the proposals because GLA Affordable Housing
Grant Funding was used to increase the amount of affordable homes from 35% to
40%. The GLA Housing and Land team has confirmed that they are satisfied with
the approach and that the level of grant funding will not be affected.
5.4
The proposals would change the overall tenure split between intermediate and
social/affordable rented units from 50/50 to 56/44. London Plan policy 3.11 and
LBHF Draft Local Plan policy HO3 both prioritise a 40/60 intermediate and
social/affordable rented units split but the policies do note that provision is subject
to viability. In this case it has been demonstrated that the change proposed is
required to support the MCIL payment, so the tenure split is the maximum that can
be achieved whilst ensuring the development remains viable. In this instance the
overall tenure split is therefore considered to be acceptable.
5.5
Hammersmith & Fulham Council has been notified of the proposed change. The
Committee will be advised of any comments received at the meeting.
6
Next steps
6.1
Subject to the approval of the revised affordable housing tenure mix, OPDC officers
will seek to conclude negotiations with the applicant on the Section 106 legal
agreement and subsequently issue planning permission on the basis of the revised
affordable housing tenure.
7
Financial implications
7.1
There are no financial implications for OPDC arising from this report. The cost of
the review by the independent financial consultants will be met in full by the
applicant.
8
Legal implications
8.1
No legal implications arise from the report and it is consistent with the Corporation’s
legal framework.
List of Background Papers:


Planning Committee Addendum report – Oaklands, Old Oak Common Lane, London,
NW10 6DU – 15/0091/FULOPDC (13 July 2016)
Planning Committee report – Oaklands, Old Oak Common Lane, London, NW10 6DU –
15/0091/FULOPDC (28 April 2016)
Report originator:
Telephone:
Email:
Michael Drake, Senior Planner, OPDC
020 7983 5783
[email protected]