Committee
PLANNING COMMITTEE C
Report Title
Ward
Contributors
Class
Land rear of 15-17 Tyson Road & 39-53 Honor Oak Road, SE23
Forest Hill
Suzanne White
Part 1
18th June 2015
Reg. Nos.
DC/15/91696
Application dated
7th April 2015
Applicant
Frost Planning on behalf of Loromah Estates
Ltd.
Proposal
Application submitted under Section 106BA of
the Town and Country Planning Act 1990 for the
modification of the affordable housing
requirements of the Unilateral Undertaking
(dated 24th February 2010) attached to the
planning permission DC/09/71953 granted on
appeal (PINS reference:
APP/C5690/A/09/2114438) dated 22 April 2010
(as amended) for the demolition of the existing
buildings on land to the rear of 39-53 Honor Oak
Road and 15-17A Tyson Road SE23, and
construction of 9 blocks (variation proposed)
comprising from 67 and up to a maximum of 71
units, together with associated landscaping and
infrastructure.
Applicant’s Plan Nos.
Review of Viability Report (by Levvel, dated
March 2015), Application cover letter (by Frost
Planning, dated 7th April 2015), evidence of
notification (received 24th April).
Background Papers
(1) Case File LE/69/15/TP
(2) Local Development Framework Documents
(3) The London Plan
Designation
PTAL2/3
Local Open Space Deficiency
Screening
N/A
1.0
Introduction
1.1
This application applies for the discharge of the affordable housing planning
obligations, contained within a unilateral undertaking dated the 24 February 2010.
It is the subject of an appeal against the Council’s failure to determine the
application within the statutory determination timeframe of 28 days. It is therefore
no longer within the Council’s powers to determine the application.
1.2
However as this is a site which generated a lot of interest in the past, and as it is a
type of application not previously received by the Council, it is considered
appropriate to inform Members of the current proposals and seek endorsement for
the case to be submitted by the Council at the appeal.
2.0
Site description
2.1
The site comprises of a backland area measuring 0.92 hectares bordered by
residential properties and commercial and institutional properties fronting Honor
Oak Road to the west, Dunoon Road to the north, Fairlie Gardens, to the east,
and Tyson Road to the south. It also encompasses the sites of Nos. 15, 17 & 17a
Tyson Road, since demolished, and a narrow strip of land between 53 Honor Oak
Road, and the building known as the Christian Fellowship Centre, which also
faces Honor Oak Road.
2.2
The site has been vacant and cleared of structures for some time. It is enclosed
by hoarding across the frontage on Tyson Road.
2.3
The site is not located within a Conservation Area, and there are no listed
buildings within the immediate vicinity.
3.0
Planning history
3.1
With the exception of applications for the discharge of conditions, the relevant
applications are outlined as follows:
3.2
DC/08/70207 - The demolition of the existing buildings on land to the rear of 39-53
Honor Oak Road and 15-17A Tyson Rd SE23 and construction of 9, three/four
storey blocks, incorporating balconies/terraces, comprising a total of 74 units (25
one bedroom, 37 two bedroom & 12 three bedroom, self-contained flats), together
with associated landscaping, provision of an electricity sub-station,
refuse/recycling stores, 76 cycle spaces & 72 car parking spaces at undercroft
levels with access onto Tyson Road. Dismissed on appeal 16 April 2010 (linked
appeal with DC/09/71953).
3.3
DC/09/71953 (Outline Planning Application) - The demolition of the existing
buildings on land to the rear of 39-53 Honor Oak Road and 15-17A Tyson Road
SE23, and construction of 9 blocks (variation proposed) comprising from 67 and
up to a maximum of 71 units, together with associated landscaping and
infrastructure. Refused, but allowed on appeal 22 April 2010 (linked appeal with
DC/08/70207).
3.4
DC/10/75632 - Cond 2 Reserved matters (details of landscaping) submitted in
compliance with Condition (2) of the Secretary of State's decision notice granting
outline planning permission dated 22 April 2010 (DC/09/71953) for the demolition
of existing buildings on land to the rear of 39-53 Honor Oak Road and 15-17A
Tyson Road SE23 and construction of 9 blocks comprising up to a maximum of
71 apartments; together with associated landscaping and infrastructure. Approved
24.02.2011
3.5
DC/13/83081- Application submitted under Section 73 of the Town and Country
Planning Act 1990, for a Minor Material Amendment in connection with the
planning permission DC/09/71953 dated 22 April 2010, in order to fell (T1) Ash
Tree on boundary with 13 Tyson Road and remove a fallen tree (T60) Norwegian
Spruce on the western boundary of the site.
3.6
DC/13/84186- An application submitted under Section 96a of the Town & Country
Planning Act for a non-material amendment in connection with the planning
permission DC/09/71953 dated 22 April 2010, in order to fell (T59) Pine (T7 listed
within the TPO) and replace with root- balled Silver Birch.
Current status
3.7
All pre-commencement conditions relating to the appeal scheme have been
discharged and the permission implemented by virtue of demolition of 15-17A
Tyson Road. The 2010 permission is therefore extant.
3.8
The applicant states that further works have not progressed because the scheme
viability came into question following the receipt of tenders for building contracts.
4.0
Legislative and Policy context
4.1
The Growth and Infrastructure Act 2013 inserted a new Section 106BA, BB and
BC into the 1990 Town and Country Planning Act. These sections introduced a
new application and appeal procedure for the review of planning obligations which
relate to the provision of affordable housing.
4.2
The application and appeal procedure is designed to assess the viability of
affordable housing requirements only. It cannot be used to reopen any other
planning policy considerations or review the merits of the permitted scheme.
4.3
A guidance note prepared by DCLG “S106 Affordable Housing RequirementsReview and appeal” sets out the purpose of the procedure and the process by
which obligations can be amended.
4.4
The guidance identifies that “unrealistic Section 106 agreements negotiated in
differing economic conditions can be an obstacle to house building. The
Government is keen to encourage development to come forward, to provide more
homes to meet a growing population and to promote construction and economic
growth. Stalled schemes due to economically unviable affordable housing
requirements result in no development, no regeneration and no community
benefit. Reviewing such agreements will result in more housing and more
affordable housing than would otherwise be the case.”
4.5
An application may be made to the local planning authority for a revised
affordable housing obligation. The application should contain a revised affordable
housing proposal, based on prevailing viability, and should be supported by
relevant viability evidence.
4.6
The developer will need to demonstrate to the planning authority, and to the
Planning Inspectorate on appeal, that the affordable housing obligation as
currently agreed makes the scheme unviable in current market conditions.
4.7
The test for viability is that the evidence indicates that the current cost of building
out the entire site (at today’s prices) is at a level that would enable the developer
to sell all the market units on the site (in today’s market) at a rate of build out
evidenced by the developer, and make a competitive return to a willing developer
and a willing landowner.
4.8
The local planning authority has 28 days in which to make a determination under
Section 106BA unless both parties agree, in writing, to extend this period.
4.9
Where the local planning authority does not agree with the developer’s revised
proposal for affordable housing, or does not determine the application, Section
106BC provides a right of appeal to the Secretary of State.
4.10
If allowed, the outcome of a successful appeal would be a revised affordable
housing requirement in the Section 106 agreement for three years, starting on the
date when the appellant is notified of the appeal decision. If the development is
not completed in that time, the original affordable housing obligation will apply to
those parts of the scheme which have not been commenced.
5.0
Application proposals
5.1
The application is submitted under Section 106BA of the Town and Country
Planning Act 1990 and seeks to remove the affordable housing provision which
formed part of the scheme approved on appeal in 2010.
Existing Affordable Housing Obligations
5.2
Before detailing the proposals, it is important to give an overview of the affordable
housing provision secured on appeal.
5.3
Affordable housing was secured within a Unilateral Undertaking dated 24th
February 2010, which formed part of the appeal scheme. The provisions of the
undertaking are:
5.4

to make provision for 24 affordable homes of which at least 14 were to be
affordable rent

tenure split predicated on the availability of £1,722,500 of Social Housing
Grant

should that grant not be available, all the affordable homes to revert to
intermediate rent or shared ownership

further contributions to be made in the event that more than 66 dwellings in
total are delivered, up to £227,000 in the event that 71 dwellings are brought
forward
Together with contributions in respect of education, health, transport and play
facilities, the Inspector concluded that these affordable housing obligations were
necessary to make the development acceptable, related to the development and
commensurate with its scale and kind.
Proposals
5.5
The applicant proposes to remove all affordable housing obligations from the
Unilateral Undertaking for a period of 3 years from the date the application is
determined.
5.6
In support of their application they have submitted a report, prepared by Levvel
viability consultants (dated March 2015), which reviews the viability of the
permitted scheme. This report concludes that the scheme, with affordable housing
included, is not viable, primarily on account of: the inavailability of social housing
grant; abnormally high construction costs not foreseen at appeal stage; and the
costs of the appeal process. As the report is commercially sensitive, it is treated
as confidential for the purposes of the application but is available to Members.
6.0
Consultation
6.1
There are no set requirements in respect of consultation on Section 106BA
applications. The 2013 Guidance suggests that, in accordance with the limited
scope of these applications, publicity is expected to be limited and proportionate.
6.2
The scope of the application is very limited, relating only to the viability of
affordable housing provision. The supporting information submitted by the
applicant is commercially sensitive and must be treated confidentially by the
Council. For these reasons and because the form of development would not
change as a result of the proposals, it was considered that consultation on this
case would not be beneficial. However, neighbouring occupiers have been
notified of the case’s consideration at Committee.
6.3
Under Section 106BB, the Mayor of London must be notified of applications made
under Section 106BA relating to developments of potential strategic importance
on which he was consulted previously. This does not apply in this case.
7.0
Planning considerations
7.1
At a regional level, the 2015 London Plan seeks mixed and balanced communities
(policy 3.9). Communities should be mixed and balanced by tenure and
household income, supported by effective and attractive design, adequate
infrastructure and an enhanced environment. Policy 3.11 of the plan confirms that
boroughs should maximise affordable housing provision. Though the Plan does
not set percentage targets for provision at Borough Level, it sets a strategic target
of 17,000 more affordable homes per year across London as a whole and
confirms that Boroughs should set their own targets. The policy also refers to a
strong and diverse intermediate sector, where 60% provision should be for social
rent and 40% should be for intermediate rent or sale and priority should be
accorded to the provision of affordable family housing.
7.2
Core Strategy Policy 1 confirms that the maximum level of affordable housing will
be sought by the Council, with a strategic target of 50%, as a starting point for
negotiations and subject to an assessment of viability. The policy also seeks
provision at 70% social rented and 30% intermediate housing, where 42% of
affordable homes are family housing (three+ bedrooms) in developments of more
than 10 units.
7.3
The Applicant has submitted a confidential viability review, by Levvel, for the
scheme. The Council has commissioned consultants, GL Hearn, to undertake a
review of the Levvel report. Their conclusions are summarised below.
7.4
Undertaking the appraisal based on the assumptions provided by Levvel, the
result is broadly the same, i.e. a 100% private residential scheme generates a
loss.
7.5
However, there are a number of assumptions that GL Hearn either disagree with
or do not consider are accurate:
i)
Levvel attribute most of the appeal costs to the successful appeal. Without
any evidence to support this approach, it is considered that the costs should
be apportioned equally between the appeals.
ii)
In respect of build costs, there appears to be a small level of double counting
and a cost for a seller’s agent to market the units is included.
iii)
The Levvel report states that, due to Loromah’s business model, VAT is
payable on professional fees. No explanation is provided and the report
indicates that VAT would be recovered on build costs. Moreover, should the
land be sold to another developer, they would be able to recover the VAT on
professional fees.
iv)
Interest on planning obligations appears to have been overestimated.
v)
Development value is based solely on the advice of a local agent and
appears to significantly underestimate current residential values in the area,
which are likely to rise over the build out period.
vi)
Levvel propose 20% profit on Gross Development Value. The previous
viability report prepared by JLL on the applicant’s behalf proposed 17% GDV
for private housing and 6% for affordable. GL Hearn have based their
calculations on 17% and 6% respectively, as per the applicant’s original
viability report, which is still considered generous given the present demand
for sites and the reduced risk of the project, which has the benefit of planning
permission and a fixed price tender for construction.
vii) Contingency of 2.5% is proposed, whereas GL Hearn advise that 1% would
be reasonable for a development of this nature.
7.6
If the viability appraisal is modelled using GL Hearn’s assumptions, the scheme
shows a surplus sufficient to bear approximately 21% affordable housing by floor
area assuming this is wholly intermediate. This figure is less than that previously
offered by the Applicant but nonetheless indicates that the scheme could support
some affordable housing. This is the case even with a modest value growth
applied over the build out period.
7.7
On this basis, it is considered that a reduction in the level of affordable housing
provision for the site can be justified on viability grounds, but that the scheme
remains viable with 21% intermediate affordable housing.
7.8
Moreover, given the potential value growth over the 3 year period, it is considered
entirely reasonable for the Inspector to impose a review mechanism whereby a
proportion of outturn profits in excess of 17% GDV for private residential and 6%
for affordable should be contributed to the Council for additional affordable
housing in order to bring the scheme up to a policy compliant position.
8.0
Conclusion
8.1
On the basis of the submitted viability evidence and its review by an independent
consultant, it is considered that the permission could be built out, including a
reduced proportion of affordable housing, at a level that would enable a willing
developer to make a competitive return.
8.2
This will be the basis upon which the Council’s case in the appeal will be made.
RECOMMENDATION: Members are asked to note the contents of the report and endorse
the case to be put forward by the Council at appeal.