Affordable Housing Supplementary Planning Document (Spd)
Introduction
The Affordable Housing Supplementary Planning Document (SPD) is a crucial policy document published by Southwark Council. It replaces the older 2008 and draft 2011 versions and provides detailed guidance on how the council implements its Southwark Plan 2022 regarding the delivery of new homes. The overarching goal is clear: to maximise the provision of genuinely affordable housing for residents, particularly those on lower incomes, key workers, and families struggling to find a place to live in the borough.
With over 18,000 households on the waiting list, the council has made the delivery of social rented housing an immensely pressing priority. This SPD is not a new policy itself but a material consideration in planning decisions, explaining how policies like SP1 'Homes for all' and P1 'Social rented and intermediate housing' will be applied. It applies to all housing development, including new builds, changes of use, conversions, and extensions, and covers everything from small sites to purpose-built student accommodation.
What Counts as Genuinely Affordable Housing?
One of the most important functions of this SPD is to set clear definitions. Southwark Council only accepts two primary types of affordable housing: social rented housing and intermediate affordable housing.
Social Rented Housing
This is the council’s highest priority. Social rented housing is typically needed by households on lower incomes who cannot afford market prices. Rents are set by the Regulator of Social Housing’s Rent Standard, usually around 40-50% of private sector rents. Crucially, these homes must be provided in perpetuity (unless purchased through Right to Buy) and allocated based on housing need. This type of housing can be provided by the council itself (council housing), a registered provider, or another approved affordable housing provider.
Intermediate Affordable Housing
This category fills the gap between social rent and the open market. It includes several products that the council deems acceptable:
London Living Rent (LLR): A genuinely affordable option funded by the Mayor’s programme. Rents are based on a third of average local household incomes. Tenancies last a minimum of three years, helping tenants save for a deposit to buy a share of their home.
Discount Market Rent: Only accepted where the rent level is equivalent to London Living Rent (typically up to 30% below market rates). If the discount is smaller and rents exceed LLR levels, it is not accepted.
Shared Ownership: Buyers purchase an initial share (minimum 25%) and pay rent on the remainder. Households earning no more than £90,000 are eligible, following GLA thresholds.
Key Worker Housing (KWH): Rental homes reserved for specific occupations (NHS clinical staff, firefighters, teachers in non-fee-paying schools, social workers, police officers). Household income must be between £26,000 and £67,000. Rents are capped at London Living Rent levels, and tenancies are short-term (2-5 years) with ongoing eligibility checks.
Community Land Trusts (CLTs): Non-profit, community-led organisations that develop land for permanently affordable housing. The council supports CLTs provided they remain affordable in perpetuity.
Discount Market Sale: Homes sold at least 20% below open market value to eligible households (earning ≤£90,000).
What is NOT Accepted?
The council explicitly rejects London Affordable Rent (LAR), Affordable Rent, and Discount Market Rent that exceeds London Living Rent levels. These are not seen as genuinely affordable for Southwark residents because rents can be set at or above 80% of market levels.
Securing Affordable Housing: On-Site, Off-Site, or Payments
The SPD establishes a clear hierarchy for delivery. The general presumption is that affordable housing should be delivered on-site. This ensures mixed and balanced communities.
On-Site Delivery
For developments creating 10 or more homes, the council expects affordable housing to be integrated within the scheme. A legal agreement (Section 106) will secure:
The total number of affordable homes (by units and habitable rooms).
The split between social rented and intermediate tenures.
The location, size, and any wheelchair-accessible units.
Local authority nomination rights.
A key clause: no more than 50% of market units can be occupied before the affordable homes are completed and handed over.
Off-Site Delivery
This is only acceptable if on-site delivery is genuinely impossible, justified by an open-book viability appraisal. The off-site provision must result in a net gain of affordable housing, and no financial benefit to the applicant is permitted.
Payments in Lieu
For developments creating 10+ homes, a financial contribution in lieu is only accepted in exceptional circumstances where on-site or off-site provision is not possible. The payment is calculated using a formula based on habitable rooms.
Fact box formula: Total habitable rooms × 0.35 (minimum 35% provision) × per habitable room in the CIL value area.
For developments creating 9 homes or fewer (inclusive), applicants can provide a financial contribution without needing to justify why on-site delivery is impossible. This simplifies the process for small sites.
Viability Assessments and the Fast Track Route
Viability is central to negotiations. A scheme is financially viable when its value exceeds development costs, including a reasonable land value and developer return.
The Fast Track Route
To avoid a full viability assessment, developments must meet higher thresholds:
Provide 40% affordable housing (25% social rent + 10% intermediate) with no grant subsidy.
In the Aylesbury Area Action core, this rises to 60%.
These figures exceed the London Plan’s 35% minimum, reflecting Southwark’s ambition.
If a scheme meets these thresholds, it is not subject to viability testing. However, an early-stage review is triggered if construction hasn’t begun within two years.
The Viability Tested Route
All other schemes must submit a full financial viability assessment, including a public executive summary. The applicant must pay for the council’s review. The assessment must identify the maximum amount of affordable housing possible. Viability review mechanisms are also required to capture any uplift in value over time, ensuring that affordable housing contributions can increase (but never decrease) if the scheme becomes more profitable.
Self-Build and Custom Housebuilding
Self-build homes are exempt from affordable housing contributions unless the property is sold within three years of first occupation. If sold, a payment in lieu is calculated as: Number of habitable rooms × 0.35 × £30,000.
Non-Conventional Housing: PBSA, HMOs, and More
The SPD also tackles specialist housing types.
Purpose-Built Student Accommodation (PBSA)
All PBSA developments must provide affordable housing or a financial contribution. This balances student needs with wider housing demand. There are two routes: nomination schemes (linked to a university) and direct-let schemes. Both must include affordable student rent, defined as no more than 55% of the maximum Qualifying Maintenance Loan for a London student.
Houses in Multiple Occupation (HMOs)
Small HMOs (3-6 unrelated individuals) and large HMOs (6+ individuals) are not expected to deliver on-site affordable housing but are liable for financial contributions. A viability assessment is required to justify the maximum viable approach.
Other Forms
Older people’s housing (C2, C4, Sui Generis): Affordable housing delivery required, preferably on-site.
Co-living (over 100 units): Affordable housing required.
Build to Rent: Must provide Discount Market Rent at social rent equivalent.
Design and Management Standards
The SPD emphasises that affordable housing should be indistinguishable from market housing.
Tenure Blind Design
There must be no difference in appearance, design quality, or access to communal areas between affordable and private homes. Affordable tenants should have equal access to foyers, stairwells, amenity spaces, and parking.
Service Charges
Keeping service charges affordable is critical. Poor design can lead to high maintenance costs. The council encourages the GLA’s Service Charge Charter, promoting transparency and affordability. Developers must use reasonable endeavours to minimise charges, and the council may require annual notification of service charges for social rented homes.
Registered Providers (RPs)
Affordable housing must be delivered by a Registered Provider approved by the council. The council holds a list of RPs with a proven track record in Southwark. Legal agreements will ensure housing remains affordable in perpetuity.
Mortgagee in Possession Clause (MiPC)
This clause protects affordable housing in the event a Registered Provider defaults on loans. The GLA’s standard MiPC clause gives the council or another RP a 3-month moratorium period to purchase the homes before a mortgagee can sell them on the open market.
Monitoring and Legal Agreements
Monitoring ensures that affordable homes are delivered, retained, and remain compliant.
Legal Agreements (Section 106)
All requirements are secured via S106 agreements, including on-site delivery, financial contributions, viability reviews, and eligibility criteria.
Affordable Housing Monitoring Schedule (AHMS)
This mandatory template must be completed by developers, providing details on each unit: tenure, bedrooms, size, weekly rent, and service charge. An annual audit is undertaken by the council, with data published on its website. The deadline for submission is 31st March each year.
Key Definitions to Remember
Habitable room: A room with a window used for sleeping, living, or dining. Kitchens under 11sqm are excluded. Rooms over 28sqm count as two habitable rooms.
Major development: 10 or more dwellings, or site area 0.5 hectares or more.
Small sites: Below 0.25 hectares or 9 or fewer residential units.
Social rented housing: Rent set by national formula, allocated by need, in perpetuity.
Intermediate housing: Sub-market housing (LLR, shared ownership, key worker, etc.) above social rent but below market levels.
Conclusion
Southwark’s Affordable Housing SPD is a robust, detailed framework designed to maximise the delivery of homes that residents can genuinely afford. By prioritising social rented housing, setting clear definitions, demanding tenure blind design, and using rigorous viability testing, the council aims to tackle the housing crisis head-on. Developers, registered providers, and community groups must engage with this SPD early in the planning process, using the council’s pre-application advice service to navigate the requirements successfully. Whether you are dealing with a small conversion, a major mixed-use scheme, or purpose-built student accommodation, this SPD provides the roadmap for delivering affordable housing that meets Southwark’s pressing needs.
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