How to prepare a valid planning application

Other supporting documents – for small schemes (1 - 9 new homes)

Our planning policy (Policy P1) requires any development which creates one or more homes to contribute to the provision of affordable housing in Southwark.

Where affordable housing cannot be provided on or off site, a payment in lieu is usually the most realistic and deliverable option. The financial contribution will go towards the provision of affordable housing in the borough. 

How does the policy requirement apply?

The affordable housing contribution is calculated on the basis of 35% of the habitable rooms of the entire development. The payment required will be the maximum viable amount with a 35% minimum expectation, unless the viability of the scheme demonstrates otherwise. The following minimum payments apply, subject to viability:

• Viability Appraisal

  Where the fast track route is being followed viability appraisal is not required.

  In all other cases, a financial viability appraisal will need to be submitted with an application and independently reviewed. The financial viability appraisal should be prepared in accordance with the Development Viability SPD. 

  A legal agreement is required in all cases which will include a late-stage viability review clause to check if the viability has improved once the new homes have been built.

  What you need to do	When is it needed?	Why is it needed?	Further guidance
  Step 1: Provide a detailed viability appraisal to include: an executive summary outlining the key conclusions being drawn from the appraisal in plain English a fully testable editable electronic or software model which explicitly shows the calculations and assumptions used in the planning application   Step 2: You must pay for the review of the financial viability appraisal or provide a solicitor’s undertaking to pay.   Step 3: An independent review of the financial viability appraisal is undertaken on behalf of the Council    Step 4: A legal agreement will be completed to secure on-site affordable homes or a financial contribution towards the delivery of affordable homes in the borough.  Provide up to date title information (register and plan) for the red-line site and a solicitor's costs undertaking to cover the council's cost of negotiating, agreeing and completing the s106 legal agreement.	All schemes proposing nine homes or fewer where the fast track route is not being followed. Please see the table above.	To ensure a transparent and accurate assessment of the viability of the proposed scheme. To demonstrate that planning policy requirements are being met for affordable housing.    Relevant planning policy: Southwark Plan 2022 policies SP1, P1, IP3, P9	Refer to the council's Development Viability SPD Refer to more information about Section 106 agreements      Refer to further information on Land Registry (external website)

  Make sure you: 

  • see Southwark Plan 2022 policy P1 for a detailed definition of a habitable room
  • where on-site affordable housing provision is proposed, the applicant will need to confirm in writing that they have a Registered Provider who agreed to deliver the affordable homes 
  • where on-site affordable housing is proposed, the provision will be rounded up to the nearest whole number for habitable rooms where required
  • meet the cost of the council's legal fees for confirming and finalising the agreement, title and dealing with completion; this is charged at £250 an hour for non-GLA referable schemes. VAT is not payable
  • Submit the correct self-build documentation when proposing a self build property

  Your viability assessment should include: 

  1. A scheme specific elemental build cost summary setting out preliminaries, demolition/site clearance/site preparation, base build costs, abnormal costs, contractor’s overheads and profit and exclusions and assumptions. It must also include GIA floor areas with gross to net ratio.
  2. The residual cash flows submitted must calculate the residual land value (RLV). Residual profit with a fixed land value inserted will not be acceptable. 
  3. The RLV must be cross-checked against market site transactions for sites that have been sold with planning consent including a schedule of site comparables to be included with fully justified analysis to facilitate a cross-check. 

  How do we define a habitable room?

  A habitable room is a room in a house that has a window and is intended to be used for sleeping, living, cooking or dining. This is regardless of what it is actually used for. This definition excludes enclosed spaces such as bathrooms or toilet facilities, corridors, landings, hallways, lobbies, utility rooms or kitchens smaller than 11sqm. Any floor area where the ceiling height is less than 1.5m will not count as habitable floor space. 

  Payment in lieu examples (In CIL zones 1 & 2); 

  for CIL zone 3 apply £82,000, for self build apply £30,000:  

  Worked example 1

  Development proposes 1 new 1-bed home on a previously developed site.

  • Habitable rooms = 3 (kitchen, lounge, bedroom)
  • 35% requirement:
  • 35/100 x 3 = 1.05
  • 1.05 x 100,000
  • £105,000 payment due

  Worked example 1A: Small Site Fast Track (not in Aylesbury) 

  Development proposes 1 new 1-bed home on an empty site 

  • Habitable rooms = 3 (kitchen, lounge, bedroom) 

  • 40% requirement: 

  • 40/100 x 3 = 1.2 

  • 1.2 x 100,000 

  • £120,000 payment due 

  Worked example 1B: Self-build 

  Development proposes 1 new 1-bed home on an empty site 

  • Habitable rooms = 3 (kitchen, lounge, bedroom) 

  • 35% requirement: 

  • 35/100 x 3 = 1.05 

  • 1.05 x 30,000 

  • £31,500 payment (due on completion if the property is sold within 3 years of first occupation) 

  Worked example 1C: Self Build - Fast Track (not in Aylesbury) 

  Development proposes 1 new 1 bed home on an empty site 

  • Habitable rooms = 3 (kitchen, lounge, bedroom) 

  • 40% requirement: 

  • 40/100 x 3 = 1.2 

  • 1.2 x 30,000 

  • £37,800 payment due (due on completion if the property is sold within 3 years of first occupation) 

  Worked example 2

  Development proposes the subdivision of a three bed flat into 1 x 2 bed flat and a studio flat. The studio has a floorspace of 39sqm, which under policy P1 (factbox) equates to 2 habitable rooms.

  • habitable rooms = 4 (kitchen, lounge, 2 bedrooms) + 2 (studio of 39sqm) = 6
  • 35% requirement
  • 35/100 x 6 = 2.1
  • 2.1 x 100,000
  • £210,000 payment due

  Worked example 3

  Development proposes a roof top extension to provide 5 new 2 bed homes (net increase of 5 homes).

  • habitable rooms = 20 habitable rooms (kitchen, lounge and 2 bedrooms in each)
  • 35% requirement
  • 35/100 x 20 = 7
  • 7 x 100,000
  • £700,000 payment due

Page last updated: 21 November 2023