Inspector removes affordable homes requirement for 111-home Lincolnshire development

Planning permission was granted in 2012 for developer Langridge Homes Ltd's (LHL) plans for a development of 111 homes in the seaside town of Skegness. A planning agreement relating to the planning permission required 33 of the homes to be affordable.

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. LHL applied to East Lindsey District Council to remove the requirement under the new procedure in September, and appealed to the Planning Inspectorate when the Council refused the application.

In a decision dated 14 January (8-page / 104 KB PDF), planning inspector Philip Major allowed the appeal, ordering that the planning obligation be modified to remove the affordable housing requirement entirely. The inspector disagreed with the Council that the scheme should be excluded from consideration under the new procedure because LHL's evidence suggested it could not go ahead even without affordable housing and should not therefore be regarded as having "stalled" due to the requirement.

The inspector said he preferred LHL's evidence in relation to how much the completed homes were likely to be sold for. Major agreed with LHL that planning application fees could be included in the estimate of the costs of development, noting that there was "probably no right or wrong approach [to whether the fees should be included], but in this case the final outcome is not likely to be materially altered by either approach".

The inspector disagreed with the Council's belief that a contingency figure not be included in viability calculations because the developer's site investigations should have minimised the risk of unexpected difficulties. He said LHL's explanation that it had not carried out intrusive site investigations was "entirely understandable" and he accepted that the 5% contingency figure put forward by LHL was appropriate.

Major found "no justification" for the Council's suggestion that a 12.5% profit margin would be acceptable on market housing and found it "very surprising" that the Council claimed to have been involved in cases in which a nil profit was expected on affordable housing. The inspector agreed with LHL that "a 20% starting point on market housing is reasonable, and a 6% return on affordable housing is similarly reasonable".

The inspector concluded: "the development is not viable if it includes any affordable housing element at all. It follows that the appeal must succeed if development is to proceed in the short term on this site."