Majority of affordable homes lost because of legal loophole

New research has revealed that property developers are avoiding building thousands of affordable homes each year due to a legal loophole.

Freedom of Information requests, collated by housing charity Shelter, show that a ‘viability assessment’ means that developers have avoided building 79 per cent of social homes they had initially committed to.

The loophole sees developers win planning permission by promising to build a required number of affordable homes, but later retract that promise by claiming they can no longer honour the pledge because it would reduce their profit margin. Viability is used most frequently on larger developments, which are generally managed by the country’s biggest developers.

Polly Neate, chief executive of the charity, said: “What this research reveals is the scale at which developers are able to use legal loopholes to protect their profits and dramatically reduce the numbers of affordable homes available for people. The government needs to fix our broken housing system – and it must start by closing this loophole to get the country building homes that are genuinely affordable for people on middle and low incomes to rent or buy.”

A spokesperson for the Department for Communities and Local Government said: “Affordable housing is a top priority for the government. That’s we have confirmed that funding for affordable homes will be increased by a further £2 billion to more than £9 billion and since 2010, we have delivered almost 333,000 affordable homes.

“Where a local authority recognises the need for affordable housing they should set policies for meeting this as part of their local plan. We are currently consulting on a proposed changes to the approach to viability assessments. Our measures would speed up decision-making and increase transparency, so that local communities know what is expected from developers on new sites.”