Will Mandatory Inclusionary Housing Create Mixed-Income Communities? Evidence From London, UK

ABSTRACT

Mandatory inclusionary housing, which requires market-rate housing developments to include a proportion of affordable housing units, has the potential to deliver affordable housing in more affluent neighborhoods and create mixed-income communities. This study evaluates this potential effect in London, United Kingdom, where mandatory inclusionary housing has been implemented in all local authorities since the early 2000s. Comparing the spatial concentration and average neighborhood characteristics of affordable housing delivered under inclusionary housing and those created via conventional means (i.e., in the public or nonprofit sector), we find that a higher percentage of inclusionary affordable units are concentrated in a small number of neighborhoods, and both types of affordable units are more likely to be placed in disadvantaged neighborhoods than market-rate units are. We explore the ways in which local implementation of inclusionary housing could have allowed developers to shift some of the inclusionary affordable housing toward disadvantaged neighborhoods.

KEYWORDS:

• affordable housing
• mandatory inclusionary housing
• mixed-income communities
• neighborhoods
• London

Acknowledgments

The authors are obliged to the London planners and developers who were interviewed, as well as the Greater London Authority (GLA) for their input and assistance in data collection.

Disclosure Statement

No potential conflict of interest was reported by the authors.

Notes

1. Since we do not know the identity of the developer of each site, this approach could misclassify some developments. For example, a site specifically used to provide the off-site affordable housing for another site would be classified as a conventional site. Considering that developers are more likely to provide off-site affordable housing in low-cost areas, this potential misclassification will probably bias our results toward finding fewer S106 affordable units and more conventional affordable units in these areas (i.e., we may underestimate the spatial concentration of S106 affordable units in less desirable neighborhoods).

2. These results are available upon request.

3. An average London MSOA has 7,296 residents. Greater London had 983 MSOAs in the 2001 UK census.

4. $dy/\left(dx/x\right)$, except for the binary variable existing housing on the development site, for which the marginal effect is $dy/dx$.

5. It should be noted that, because of our omission of off-site affordable housing provided under S106 agreements (see note 1), which are more likely located in low-cost areas, the results here may be a conservative estimate of the uneven distribution of S106 affordable housing.

Additional information

Notes on contributors

Fei Li

Fei Li is an assistant professor at the Urban Studies Institute, Georgia State University. She studies urban issues and policies related to housing, transportation, segregation and inequality, public health, and the social impacts of technologies.

Zhan Guo

Zhan Guo is an associate professor at the Robert F. Wagner Graduate School of Public Service, New York University. He is interested in the effect of regulations and innovative ways to produce better social outcomes in fields of transportation, land use, housing, and physical design.