UK council justified in seeking affordable housing from retirement living scheme

Out-Law Analysis | 04 Nov 2020 | 10:56 am | 3 min. read

An English High Court judgment handed down at the end of July could lead to councils requiring extra care retirement living operators to make affordable housing contributions.

Mr Justice Holgate supported the decision of an inspector to dismiss a planning appeal which was seeking permission for the development of a ‘Housing with Care' scheme comprising 78 units in Thame, Oxfordshire. An important issue in the case was the inspector's conclusion that very substantial harm arose from the failure of the developer, Rectory Homes, to provide affordable housing on site.

South Oxfordshire District Council's Core Strategy Policy CSH3 required, subject to viability considerations, the provision of 40% affordable housing “on all sites where there is a net gain of three or more dwellings”.

Rectory Homes and the council agreed at the planning appeal that the use class of the site was C2, for residential institutions. However, the council considered that the units were dwellings ancillary to the C2 use, meaning policy CSH3 applied and affordable housing should be provided. The developer argued that the units were C2 units rather than C3 dwellings, and so should not be caught by policy CSH3.

Mr Justice Holgate considered the use of the word “dwelling” in the relevant policy section of the core strategy and found that no reference was made expressly or by implication to the 1987 Use Classes Order at all. He also found that the words “dwelling”, “house” and “unit” were used interchangeably and not in a technical or restrictive manner.

The judge said: “I have come to the clear and firm conclusion that policy CSH3 does not use the word ‘dwelling’ as a term restricted to the C3 Use Class.” He concluded that the units were “dwellings” because they had their “own front door, between one and four bedrooms, a living room, bathroom and kitchen allowing for independent living”.

Mr Justice Holgate therefore decided that the inspector had not erred in deciding that the council's 40% affordable housing policy applied.  

Future implications

While the decision provides some clarity on the long debated topic of whether self-contained units of accommodation within later living schemes fall within use class C2 or C3, the decision will have implications for the future delivery and viability of later living schemes.

Given the judgment, local planning authorities should give careful thought to their policies in respect of later living developments. Later living developments generally have much higher build costs than traditional build-for-sale developments, and therefore if they are forced to provide affordable housing in the same manner as a traditional C3 scheme many may be unviable and therefore not deliverable.

It is also relevant that Mr Justice Holgate refused to delve into the issue that the core strategy's 40% target was tested for general market housing only, and not in relation to extra care housing. The judge said he did not want to go back into the history of the development plan; that viability testing of policies in the preparation of a plan is carried out at a generic level; and that the scope of an individual development plan policy should not be interpreted according to whether each variant of the type of development has been the subject of such viability testing.

Rectory Homes also sought to rely on the exemption in paragraph 76(b) of the National Planning Policy Framework 2019 (now 64(b)) which provides an exemption to the requirement for major development schemes to provide at least 10% affordable housing. The exemption applies to specialist accommodation such as purpose-built accommodation for the elderly.

Mr Justice Holgate rejected this argument on the basis that the exemption post-dated the core strategy which was adopted in 2012, finding that it was therefore irrelevant to the interpretation of policy CSH3.

Deliverability of much needed high-quality senior living schemes in the UK is hugely affected by planning policy and all stakeholders must be alive to the potential pitfalls.  Local authorities must also appreciate the benefit of such schemes, lessening the burden on the NHS and freeing up local family housing.

Developers of self-contained later living housing should keep a careful eye on the wording of affordable housing policies in areas where they have, or are looking to acquire, sites.

Where an affordable housing policy is worded such that it may catch later living housing, the developers must make sure they make representations into the local plan process at the time of review or new plan formulation, with the aim that the policy can be shaped in such a way that it does not threaten deliverability on the grounds of lack of viability.