Flawed Viability Statements

Southwark Council after resisting years of campaigning from the people at 35% and Lib Dem colleague Cllr Adele Morris have agreed a new policy of publishing viability reports about whether a developer can afford to provide 35% social housing in any proposed development, some reduced amount or none at all.

For years developers appeared to hood wink Southwark Council and the council appeared to collude by keeping everything secret. So it is a huge positive step forward to publish such statements in future.

These statements are produced as per Royal Institution of Chartered Surveyors guidelines. But they’re flawed and the concept is flawed. They look at the viability of a proposed scheme but take no account of whether the developer is a UK or foreign investment company that won’t pay the same tax levels. So effectively it penalises any UK company and hugely encourages them to base themselves off shore.

What should happen is some kind of factoring to allow for whatever tax regime the developer is based in. It’s bad enough we have a global tax evasion industry but for our council to encourage it makes no sense.

It also means if people can prove a scheme un viable with social housing, social housing doesn’t proceed. It maximises the land value at the expense of providing social housing. IF developers HAD to provide 35% social housing then the value of land would fall enabling this. People wouldn’t buy land at a price they would make a loss on any development while providing 35% social housing.

So the whole concept of viability squeezes down the amount of social housing. And if we’re going to have such assessments then at least ensure they’re a level playing field for UK companies.

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