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Planning Inspectorate clarifies approach to small sites affordable housing exemption

Government policy exempting small housing schemes from affordable housing contributions does not automatically override local policy, the Planning Inspectorate (PINS) has confirmed.

PINS had been asked to respond to an apparent "lack of consistency" in its approach to five decisions involving the London Borough of Richmond on Thames, in which affordable housing contributions were a 'material consideration'.

The letter showed "the continued fall-out" from then-housing minister Brandon Lewis' written ministerial statement (WMS) of November 2014, said planning law expert Tom Edwards of Pinsent Masons, the law firm behind Out-Law.com. The WMS exempted housing developments in England of 10 units or fewer or that were smaller than 1,000 square metres in area from section 106 affordable housing contributions.

"The WMS was subject to judicial review by West Berkshire District Council and Reading Borough Council, which the councils won at first instance but was subsequently overturned by the Court of Appeal," Edwards said. "It is our understanding of the decision of the Court of Appeal that the content of the WMS is a material consideration in any planning decision, and one which the decision making authority must weigh against the development plan as per section 38(6) of the 2004 Planning and Compulsory Purchase Act."

"PINS has accepted that the effect of the WMS was not to require the decision maker to attach less weight to planning policies where they are inconsistent with the WMS and that the development plan remains the starting point for decision making. The correct approach is therefore to consider development proposals against the affordable housing policies in the development plan, as well as evidence submitted of housing need, and only if it is found that the proposals conflict with the development plan must the decision maker consider the weight to be attached to the WMS as a material consideration," he said.

The November 2014 WMS was challenged in the courts by two local planning authorities: West Berkshire District Council and Reading Borough Council. They had argued that relaxing affordable housing requirements for small sites 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.

Their challenge was originally upheld by the High Court in August 2015, in a decision which was overturned by the Court of Appeal in May 2016. The small sites exemption was subsequently reintroduced to the National Planning Policy Guidance (NPPG).

In its letter to the London Borough of Richmond upon Thames, PINS said that the nature of planning law meant that there would "always likely be some material differences between proposals that are outwardly similar, which are capable of resulting in different outcomes". However, it identified "errors in approach and judgement" in two of the five decisions cited by the local planning authority in its complaint.

"[T]he effect of the WMS was not to reduce the weight that should be given to the statutory development plan, or automatically to outweigh relevant development plan policies," PINS said in the letter.

"Local policies still have weight as the starting point … and the WMS comes into play as a material consideration which post-dates the plan, and which has to be balanced against the plan and the evidence base supporting the LPA's application of the policy. The decision maker therefore has discretion in applying his or her judgement as to where the balance should lie, drawing on the evidence presented," it said.

"The correct approach ... would be for an inspector to start with the development plan and any evidence presented by the LPA supporting the need for an affordable housing contribution, establish whether the proposal is in conflict with those policies if no contribution is provided for and, if there is conflict, only then go on to address the weight to be attached to the WMS as a national policy that post-dates the development plan policies. An inspector would then be entitled to find in the balancing exercise that the WMS outweighs the development plan policies, as opposed to discounting the development plan's weight at the outset," it said.

In three of the appeal decisions referred to in the letter, the planning inspectors concluded that the local evidence of affordable housing need outweighed the WMS. Affordable housing requirements imposed by the local planning authority were therefore justified in these cases.

Planning law expert Tom Edwards said these decisions could be contrasted with a recent appeal against an Oxford City Council planning decision.

"In that decision the inspector found, in the absence of evidence on affordable housing need, that the WMS was a significant material consideration and justified a departure from the development plan," he said.

"Therefore, it is clear that if an LPA is seeking to depart from the provisions of the WMS, it should provide evidence to justify this approach - and this will be vital in any appeal proceedings," he said.

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