Request to remove entire £1.9m affordable housing commitment over viability disagreement withdrawn

Sheffield City Council's planning and highways committee resolved in October to grant planning permission for an 88-home development at the site of the former Dysons ceramic factory in Stannington. Permission was to be conditional on a planning agreement under which £1.9m would be put towards the provision of affordable housing in the area.

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. Only two weeks after the necessary agreement was signed and planning permission was issued, developers Avant Homes applied to the Council to have the entire affordable housing obligation removed.

A report from the Council's director of regeneration and development services (4-page / 90 KB PDF) said the procedure for amending or removing affordable housing obligations was intended "to unlock 'stuck sites' where legal agreements had been completed in more profitable times and to help facilitate development".

The report suggested that "the legal provisions … are not being used by Avant Homes for the purpose initially intended, i.e. this is not a long term stalled development site". It said officers would have recommended refusal of the planning application in the absence of the affordable housing contribution and that the agreed provision "was clearly a material consideration for members in the determination of the application".

According to the report, the developer said it had always maintained that its scheme was not viable with an affordable housing contribution. The developer told the Council that its application "should not be seen as 'playing the system' but rather as a house builder respectfully asking for a fresh set of eyes at the District Valuer's office to 'take a second look' and advise the Council accordingly".

However, in a letter dated 26 February (2-page / 310 KB PDF), Avant Homes said it had decided to withdraw its application. The developer said it had always considered the scheme to be unviable and had decided to agree to the affordable housing obligation and then attempt to renegotiate as an alternative to "tak[ing] a refusal on the point and [submitting a planning] appeal".

The letter said it was "clear that we misjudged the approach in terms of how it would be received by members". The developer said it would now "take a step back, start with a clean slate, and seek to work with [the Council] towards an alternative solution for the site that is acceptable in planning, and viable".  It requested "face to face sessions with the District Valuer and Council officers ... to make sure that all points are fully aired and understood by both sides".

Planning expert Helen Stewart of Pinsent Masons, the law firm behind Out-Law.com, said: "The rationale behind the provisions introduced by the Growth and Infrastructure Act 2013 was to introduce an earlier right to renegotiate affordable housing requirements which in the current market would now render schemes economically unviable. Previously, developers had to wait five years before they could appeal against such requirements without the agreement of the local planning authority and this was leading to stalled developments."

"Since its introduction, a number of developers have sought to use the new mechanism to renegotiate affordable housing requirements as opposed to appealing against refusal," said Stewart. "This will be a familiar quandary for many developers who face the threat of refusal in the event that planning obligations cannot be agreed and can be a particularly thorny issue where councils are especially keen to determine applications within the statutory or agreed timescales in order to achieve a positive score for the purposes of measuring planning performance.  However, the developer in this instance clearly recognised that open discussions would be more favourably received by members than invoking a statutory procedures not necessarily originally intended for this purpose."