London Planning Authority accepts Brexit impact on viability of residential development
It is well recognised that the viability of any particular development can be highly sensitive to a wide range of variables. Everything from the level of potential contaminants on site, to the proposed electrification of a nearby railway line, can have an impact on whether the numbers on a particular scheme will add up.
That said, it is unusual for uncertainty in the market to be accepted as a reason, in and of itself, for altering the payment arrangements for contributions on a scheme. That is, until we voted to leave the European Union.
Earlier this week, Westminster Council agreed to phase the payments of the affordable housing contribution for a new residential development, purely because of the "uncertainties in the financial and debt markets created by Brexit".
This appears to be a pragmatic way of enabling at least some of the development to come forward during a time when investors, and development companies, are likely to be cautious.
Such arguments and compromises may well become more common over the coming months. We are all still getting to grips with what the vote to leave means for the development industry. Whilst we do so, creative approaches to minimise the impact of uncertainty on otherwise promising schemes are to be applauded.
A report to the planning committee said that the applicant had offered to provide a commuted sum of £8.8 million towards off-site affordable housing.
But the report added that property firm GVA - commissioned by the council to review the applicant’s financial viability case - had found that the scheme can support an affordable housing payment of £9 million.
"The applicant has agreed to this payment, however, they have asked that, given the current uncertainties in the financial and debt markets created by Brexit , that the payment is made on a phased arrangement," the report said.
The arrangement proposed by the applicant would see one-third of the contribution paid on the commencement of the development, one-third after 18 months, and the final third on first occupation, according to the report.”