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Court overturns relaxed planning requirements for smaller English housing sites

Out-Law News | 07 Aug 2015 | 9:48 am | 3 min. read

The UK government has been forced to withdraw the exemption from affordable housing contributions and the vacant building credit (VBC) for small housing developments in England after the High Court ruled it was unlawful.

West Berkshire District Council and Reading Borough Council had challenged the policy, which came into force in November 2014. They had argued that the relaxation of affordable housing requirements would drastically reduce the amount of new social housing built by private developers, particularly in areas where land was at a premium and housing projects tended to be smaller.

The Department for Communities and Local Government (DCLG) has said that it intends to appeal against the decision. However, it has already removed the relevant requirements from official its planning guidance documents.

Planning law expert Rebecca Warren of Pinsent Masons, the law firm behind Out-Law.com, said that the High Court had upheld "the basic premise of the planning system that ministerial statements are guidance and cannot supplant local plan policies" with its decision.

"Ministers should take on board lessons learned here that there needs to be a holistic review of the consequences of policy changes; justification and evidence must be provided to support their decisions; and above all to listen to their advisers who it appears from the evidence before the court counselled against proceeding in the way the minister ultimately did," she said.

"This is an important decision as the matter has been challenging for local authorities and developers alike resulting in delay in decision-making and some refusals given lack of affordable provision, notwithstanding the ministerial statement. The decision puts affordable housing back on a level playing field with market housing; essentially saying that the ministerial statement failed to consider the ramifications for those in society who rely on affordable housing provision and their need for a home," she said.

"We expect that decision-making will return to reviewing viability on a site-by-site basis to determine whether policy-compliant affordable housing or indeed other contributions are viable," she said.

In a written ministerial statement published in November 2014, the government announced that housing developments with 10 units or fewer or that were smaller than 10 sq m in area, including annexes and extensions, would be excluded from affordable housing levies and tariff-based contributions. A lower threshold of five units or fewer would apply to developments in designated rural areas, National Parks and Areas of Outstanding Natural Beauty.

The statement also announced the creation of the VBC, which would allow developers to offset affordable housing contributions by the total floorspace of a vacant building that they brought back into use or demolished for redevelopment. Both policies were designed to reduce the "disproportionate burden" of developer contributions on small-scale housing developers.

The High Court heard evidence that the policy changes had "profound consequences" for LPAs, making it harder for them to comply with their responsibility to provide affordable housing under the statutory planning system. DCLG was told that the new threshold would reduce developers' annual affordable housing contribution by 21% across England, with the numbers likely to "vary quite substantially from one authority to another" depending on the characteristics of the land in that area.

As part of their challenge, the local authorities also raised concerns that the new national thresholds had been introduced with "immediate effect" and with no transitional provisions in place. It also did not address the effect of the new policy on LPAs' existing affordable housing policies, and on their responsibility to develop such policies in future.

"It is most surprising that, in a plan led system, the Secretary of State's new policy failed to deal with these matters, especially in view of the continuing responsibility placed by the [National Planning Policy Framework] upon LPAs to promote local plan policies which meet objectively assessed needs for affordable housing," said Mr Justice Holgate in his judgment.

"[T]he written ministerial statement purported, with immediate effect, to create exemptions from affordable housing requirements contained in adopted local plans. It purported to do so for all small housing developments in England, without distinguishing between existing or future local plan policies. [It] was not devised so as to be taken into account alongside local plan policies in development control decisions or as guidance when new local plan policies come to be formulated. The purported effect of the exemptions ... does not envisage that LPAs may prepare, justify and adopt local policies departing therefrom," he said.

This made it incompatible with the existing statutory scheme, which "presumes that planning applications will be determined in accordance with local plan policies", he said.

The judge also found that the government had not taken into account the "obviously material" potential harmful consequences of the policy changes; and had failed to take into account the likely effect of the changes on specific groups of society protected by the equalities legislation, he said.