When “policy compliant” means undeliverable, something has to give

There is a growing reality in residential development that is still sometimes treated as uncomfortable: not every scheme can carry the full weight of planning policy and still be built.

That does not mean policy requirements are unimportant. Affordable housing, infrastructure contributions, carbon reduction, design quality and public realm improvements all matter. They are central to creating better places. But there is a hard commercial edge to planning decisions that cannot be wished away. A consent that cannot be implemented is not a housing delivery outcome. It is a paper permission.

A recent scheme we were involved in illustrates the point. Members had previously approved our first scheme with a financial contribution for affordable housing, but that consent was not viable. The contribution had been offered at that stage to secure approval, despite the viability position already being challenging.

The scheme was then revisited. We returned with a smaller and more efficient proposal, reducing costs and following a less onerous regulatory route, while maintaining the same number of homes and commercial units. The agreed viability position remained “underwater”, with no surplus available to provide an affordable housing contribution. Planning permission was secured on that basis, even though Members had previously approved the larger scheme with a contribution.

That example captures a wider issue now coming through on many sites. A previous consent may exist. A contribution may have been offered or agreed. A viability position may have been accepted. But none of that means the scheme is deliverable today.

The key issue is that previous offers, even where agreed, cannot simply be treated as the benchmark for future decision-making. If a scheme was previously marginal, or if market conditions have since moved, Members need to be alive to the fact that contributions may have to be revisited. A contribution that was once accepted may still sit within an “underwater” viability position, with no genuine surplus available to support affordable housing or other obligations.

The wider policy context is now moving in the same direction. The Government and Mayor of London’s emergency housing measures are an acknowledgement that viability is constraining delivery in the capital. The confirmed package includes targeted, time-limited support intended to improve viability and accelerate housebuilding, including temporary CIL relief for eligible schemes, a new fast-track planning route, changes to Mayoral planning powers, removal of guidance that can constrain density, and investment support for stalled delivery.

Whether those measures will be enough remains to be seen. There is a legitimate question about how far they will assist schemes that do not neatly fall within the qualifying criteria, particularly smaller or more marginal projects where the viability gap is already acute. But the direction of travel is important. The system is beginning to recognise that policy-compliant permissions are of limited value if they do not translate into starts on site.

This is not about accepting weak viability arguments or allowing obligations to fall away without scrutiny. Proper viability evidence is tested through the planning process, often independently reviewed, and considered by Officers before recommendations are made. Where that evidence shows that a contribution cannot be supported, the issue should not be dismissed as a developer preference. It goes directly to whether the development can proceed.

The question for decision-makers is therefore not simply whether a scheme meets every policy requirement on paper. It is whether the balance struck allows the development to be delivered.

That is particularly important for smaller and medium-sized residential schemes. These projects are often expected to absorb a growing list of obligations, standards and abnormal costs, while also dealing with higher build costs, more expensive finance and uncertain sales values. The margin for error is limited. If too much is loaded onto the scheme, it does not become more policy compliant in practice; it becomes less likely to happen.

There is also a risk in treating past contributions as fixed reference points. A contribution offered on an earlier application may have reflected a commercial compromise, a different market, or an attempt to secure a permission in difficult circumstances. It may not have reflected what the scheme could genuinely sustain. If that same scheme comes back with updated evidence, the earlier offer should be understood in context, not treated as a floor below which the applicant cannot go.

For Members, the practical point is straightforward: viability is not static. Costs move. Values move. Policy requirements move. Finance costs move. Regulatory requirements move. A scheme that was marginal two years ago may be unviable now. In some cases, it may have been unviable then. Deliverability should therefore be given significant weight in decision-making. That does not weaken planning. It makes planning more realistic.

A fully policy-compliant permission that never starts on site delivers no affordable housing, no infrastructure payment and no new homes. A viable scheme with reduced obligations may not be perfect, but it may be the only outcome that delivers anything at all.

That is the reality now confronting planning committees. The choice is not always between a scheme with contributions and a scheme without them. Increasingly, it is between a viable scheme and no scheme at all.

Writer: Anthony Frendo, Planning Director