Planning inspector removes affordable housing obligations from s106 agreement

Out-Law News | 16 Mar 2016 | 3:21 pm | 2 min. read

A planning inspector has removed the affordable homes obligations from an agreement between a developer and an Oxfordshire council after finding that they rendered the proposed development economically unviable.

The decision comes amid uncertainty over whether the UK government will extend the temporary right to apply to alter affordable housing obligations on viability grounds before it is repealed at the end of 30 April. 

The coalition government used the Growth and Infrastructure Act in 2013 to introduce a temporary 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. The power currently exists in S106BA and S106BC of the Town and Country Planning Act.

Developer SGR (Faringdon) Ltd applied to Vale of White Horse Council to modify obligations in a January 2014 section 106 agreement that required the provision of 40% affordable housing at a proposed development of up to 200 homes on fields adjacent to the built up area of Faringdon.

When the Council refused the request, the developer appealed to the Planning Inspectorate using S106BC. Planning inspector Phillip Ware allowed the appeal (7-page / 160 KB PDF) and modified the s106 agreement to remove the entire affordable housing requirement.

The inspector said there was "an acknowledged need to boost housing delivery" in the area and that "despite the grant of planning permission [in January 2015], there has been no progress at the appeal site or on paper, and no market or affordable housing has been produced".

Ware said he was more convinced by the developer's evidence than that produced by the Council. He found that "a viable scheme does not exist" and that "there is nothing before me to convincingly demonstrate that [imposing a lower percentage of affordable housing] would result in the development progressing and provide any affordable housing."

The present government said in its November spending review (154-page / 1.4 MB PDF) that it would "… extend the ability to appeal against unviable s106 agreements to 2018". However, in the absence of an order from the communities secretary amending the Growth and Infrastructure Act, the provisions will be repealed from the end of 30 April 2016.

At the time of writing, no such order had been laid before parliament. An article from planning consultancy Turley said last week that the Department for Communities and Local Government was yet to decide whether to extend the provisions, but had informally  "confirmed that where an application is made ... to the appropriate authority before the end of 30 April 2016, subsequent appeal to the [communities secretary] will generally still be considered".

Planning expert Lucy Close of Pinsent Masons, the law firm behind Out-Law.com, said: "It is surprising that the government is now even considering not extending the right under section 106BA for a further period. This is especially so given that the aim of the provision was to help unlocked stalled development and it is clear that the England still faces serious housing supply issues. It is of course still possible for the communities secretary to extend the deadline and this is something that many are seeking to clarify as the 30 April deadline looms ever closer."

"Given that there are no transitional provisions clarifying whether applications for appeals submitted before the deadline would still be determined after 30 April, it seems sensible for landowners and developers who have viability concerns in relation to already consented sites to submit applications to the relevant LPA under section 106BA before the deadline," said Close.

"However, it is interesting that DCLG has informally said that subsequent appeals to applications made before the deadline 'will generally still be considered'. As this comment has not been made in a formal statement by DCLG the position could change. As it stands, any application or appeal left underdetermined on 1 May will not be capable of being determined as the power will cease to exist. Nevertheless, it would seem a pragmatic approach to submit applications to LPA as soon as possible so that the possibility of determination and appeal can be preserved should transitional arrangements be put in place to allow determination of outstanding applications and appeals," Close said.