Out-Law / Your Daily Need-To-Know

Affordable homes requirement removed from Yorkshire housing scheme

Out-Law News | 12 Sep 2014 | 3:32 pm | 1 min. read

A planning inspector has decided that the affordable homes requirement in a planning obligation for a stalled residential development in South Yorkshire should be entirely removed, after agreeing with a developer that it rendered the scheme unviable.

Barnsley Metropolitan Borough Council granted planning permission in December 2011 for Gleeson Homes and Regeneration's (GHR) plans to build 60 homes in the village of Bolton Upon Deane. A planning agreement relating to the permission required affordable housing provision of 13% at the site.

The Growth and Infrastructure Act introduced a procedure enabling developers to apply for affordable housing requirements in planning obligations to be modified, removed or replaced where they render a development economically unviable. GHR applied to the Council to remove the obligation under the new procedure in February, and applied directly to the Planning Inspectorate to determine the application when the Council failed to respond.

GHR had commenced construction on the site under the planning permission, but found that, even without having provided any affordable homes, the homes could only be sold at half the predicted sale rate of two homes per month. In a decision dated 9 September (8-page / 103 KB PDF), planning inspector Phillip Ware said that the development had "effectively stalled" due to the slow rate of progress and the fact that GHR was considering "mothballing" the project despite the potential financial consequences and damage to the developer's reputation.

The inspector agreed with GHR that the Council's appraisal of the value of the development site at the time of its purchase, and therefore the cost to the developer in acquiring it, was "significantly inaccurate". The Council's valuation of £263,250 had failed to take account of an existing planning permission for 50 homes, the inspector said, accepting instead GHR's "entirely reasonable" assessment that the value had been £450,000.

Ware preferred the developer's estimation of construction costs, which it based on the costs incurred at certain of its own sites in the region, to the Council's less detailed, lower figures based on unidentified sites. The inspector also agreed with GHR's "more convincing" assumptions about build rate, which he said were "based on specific evidence as to the slow rate of sales".

The inspector noted that the developer had used "in-house professional expertise" to identify an acceptable profit margin of 22%. This level was preferred to the Council's estimate of 17.5%, the evidence in support of which was "identified in general terms", Ware said.

Allowing the appeal, the inspector said: "It has been demonstrated on the available evidence that a viable scheme does not exist and that the development will not provide the affordable housing element. There is provision to enable me to impose a lower affordable housing element. However, there is no evidence to suggest that this would result in the development progressing and providing affordable housing."