Yesterday the new Mayor, Sadiq Khan, made what he considered to be a major announcement to ‘speed up home building’.
Part of the announcement is a new team of viability experts who will scrutinise viability assessments.
Building greater expertise on viability assessments is essential to holding developers to account, but is this new team all it is cracked up to be?
Scrutinising the fantasy figures
As has been covered frequently on this blog, the figures submitted by developers to councils are often a work of fiction, and the performance so far by Local Authorities in scrutinising them has often (but not always) ranged from bad, to appalling.
The press release from the Mayor is far from clear on the details. As the team is put together in the following weeks and months there are several issues which will be key to determining whether this new panel will be an effective tool of scrutiny, or just a smokescreen which will allow the development industry to continue to screw Londoners.
Picking the team
According to the Mayor’s press release, the team will be based at City Hall and “drawn from finance surveyors and property consultant experts”.
Let’s be frank. As an industry, property experts and surveyors have hardly covered themselves in glory. They have spent the last ten years telling us that every development site in London is ‘financially unviable’, when at the same time their clients have been making obscene profits selling off London to the offshore pound.
Mr Khan’s announcement reads almost like setting up a commission of bankers to scrutinise the finance sector in the wake of the financial crisis.
The reality is that often, financial viability ‘experts’ are far from what they claim to be. Many come into the viability game without an educational background in finance or economics and are trained by their firm. The training they get teaches them how to build a model that provides the least possible affordable housing. Good for the firm’s clients but bad for the public interest.
There are a number of people from outside the industry from whom Mr Khan could draw expertise.
Campaigns like the 35% Campaign in Southwark have done a far better job scrutinising viability assessments in that borough than the council’s own consultants, and their work taking Southwark to court over their failure to disclose the viability assessment in the application to demolish the Heygate Estate has to a large extent forced open the issue to public scrutiny.
Along the way they have received assistance from academics like Professor Bob Colenutt, who has given expert evidence on viability assessments to the GLA’s planning committee, which has helped form the Mayor’s policy in this area.
Finally, some councils, notably Islington, have started to develop their own in-house teams of viability experts who, as with the battle over Mount Pleasant, have been successful in holding developers to account for some of their aggressive gaming of the viability system.
If the Mayor were to draw his panel of experts from people like Colenutt, John Wacher at Islington and some of the campaigners who have deconstructed the viability myth, it would send a strong signal to the development industry that the free reign they have been given is coming to an end.
Stopping the revolving door
A second problem the Mayor faces is how will these experts be employed. The big issue with established viability consultants is that they very often work for both sides, developers and planning authorities. When working for the council, this conflict hardly encourages them to hold their future employers’ feet to the fire.
If the Mayor wants to win the trust of Londoners it is essential that any service scrutinising viability assessments should be made up of people employed directly by City Hall, with strict conflict of interest provisions that prevent individuals from taking up work in the private sector after they leave. If external consultants are employed, they should only be firms that work exclusively for the public sector.
Finally, as campaigns from the Heygate, to Shell and the Greenwich Peninsula have demonstrated, the primary tool developers have used to get out of their affordable housing obligations has been secrecy. The litmus test for any process being set up by the Mayor is whether it will be open to public scrutiny.
Housing campaigners await in hope for answers.