Council refuses request from London hospital trust to remove s106 agreement

Out-Law News | 30 Aug 2013 | 4:34 pm | 2 min. read

Camden Council has refused a request from University College London Hospital's NHS Foundation Trust (UCLH) to remove a planning obligation that relates to the provision of affordable housing.

In 2004 Camden Council had granted planning permission, under the terms of a section 106 agreement, to allow for the redevelopment of a new University College Hospital, car parking and community health facilities across a number of different sites in north London, providing new affordable housing was also built.

The agreement was originally in relation to a hospital on Euston Road prior to being attached to the Middlesex Annexe in Fitzrovia.

UCLH had stated that "it is unlikely that any affordable housing will ever be built out on the site" unless the obligation to build affordable housing is lifted, according to a report by Inside Housing.

However, the council said that the removal of this obligation "would mean that no housing or affordable housing would have to be delivered as a result of its removal". It ruled that "no such evidence has been submitted to demonstrate the affordable housing requirement is economically unviable" and refused the request for its removal.

There is a penalty clause in the agreement which provides that Camden Council may pay a nominal £1.00 sum for the transfer of the land on which affordable housing is to be built if work was not completed by 1 June 2010. UCLH asked for the clause to be removed because it said its existence was impacting on its ability to sell the land on which the affordable housing is to be built. However, the council, which has not yet sought to rely upon the clause, rejected the move.

"What was envisaged by the agreement was that either the housing would be provided by the Trust or the site be sold for £1 to enable the Council or a Housing Association to deliver the obligation," the ruling said. "That has not changed, being an obligation freely entered into by the Trust. The listing may affect how the housing could subsequently be provided, but the Trust entered into the 2004 agreement freely and in full knowledge of its obligations. It is in the gift of the Trust to deliver on its obligations that it freely entered into."

"However, for whatever reasons, it took approximately two years for the Trust to nominate one of the two alternatives where affordable housing would be provided. Now, the Trust is in breach of its obligations and the £1 clause is supposedly putting off potential purchasers. But, this does not mean a viable housing development cannot be delivered. It simply affects who might deliver it if it is enforced," it said.

UCLH has argued that without planning permission, it was not possible to comply with the affordable housing requirements of the 2004 agreement, but the council has said that the issue arose because UCLH had failed to act quickly enough to meet its obligations.

UCLH is currently in pre-application discussions with the council about its new plans for the Middlesex Hospital Annex which will provide both affordable and private housing. The only "backstop" obligation which remains active, due to the fact that the sites in the original agreement were not developed for residential use, is for the provision of 30 units.

It is expected that a new planning application, which is in its development stage, will be submitted by UCLH this autumn.