Under the Mayor's early minor alterations to the London Plan, which were approved by the London Assembly last week, boroughs within the capital will be prevented from setting rent caps or targets for affordable rented homes in their local development frameworks. Southwark has announced that it, along with other councils including Islington, is considering potential court action once the amended Plan is published.
Southwark had submitted a joint response to the alterations to the Plan on behalf of nine London boroughs. It said that the proposals were too restrictive and not based on evidence of London's housing needs.
The Planning Inspector who carried out the examination of the proposed alterations agreed with the boroughs that they should be given more flexibility to use their own expertise to decide how best to seek to meet their housing need within their own borough-specific planning policies.
He recommended that the Mayor remove the restrictive wording from the alterations to allow boroughs to set rent caps or their own criteria for affordable housing if required. However, the Mayor rejected those recommendations and the alterations were approved as proposed.
"We are very keen to seek a judicial review of this decision," said Southwark's cabinet member for regeneration and planning Fiona Colley in a statement. "Councils need every power possible to ensure rent levels are appropriate and affordable for their residents."
Southwark sets its social rent at around 40% of market rent values. However, any new housing built in the borough is subject to provisions in the London Plan which allow developers to charge up to 80% of market rent for affordable homes.
"Maybe there are some areas of London where rent levels of 80% of market rent are affordable to most people, but they certainly aren't in Southwark. The implication of the Mayor's decision is that councils will have little power to make sure new affordable housing is really, genuinely affordable for local people," Colley said.
"This announcement signals a growing tension between a strategic planning authority which has publicly committed to delivering significantly more housing - across a range of entry levels - in London, and boroughs whose focus is primarily on affordability within their local context," said Iain Gilbey, planning law expert at Pinsent Masons, the law firm behind Out-Law.com.
"The Mayor's changes to his plan do, however, reflect a growing viability gap for schemes required to deliver a policy compliant level of affordable housing without any public subsidy. To diminish viability further with the imposition of rent caps is likely to erode delivery as a whole."
"It is clear that an appropriate balance needs to be struck between affordability, viability and developer returns. As such, this debate and potential legal challenge threat are likely to continue for some time yet," Gilbey added.