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High Court decision quashes policy on affordable housing contributions

On 28 November 2014, the government announced that: "due to the disproportionate burden of developer contributions on small-scale developers, for sites of 10-units or less, and which have a maximum combined gross floor space of 1,000 square metres, affordable housing and tariff style contributions should not be sought." A lower threshold of "5-units or less, beneath which affordable housing and tariff style contributions should not be sought" would apply in rural areas.  

The government went on to say that "a financial credit, equivalent to the existing gross floor space of any vacant buildings brought back into any lawful use or demolished for re-development, should be deducted from the calculation of any affordable housing contributions sought from relevant development schemes. This will not however apply to vacant buildings which have been abandoned." 

The changes were brought in with immediate effect.

The decision of the High Court in West Berkshire District Council & Reading Borough Council v Department for Communities and Local Government, has quashed these policy decisions.

The National Planning Policy Framework (NPPF) provides a framework within which local people and their accountable councils can produce their own distinctive local and neighbourhood plans. These plans are intended to "reflect the needs and priorities" of individual communities. In preparing local plans, the local planning authority (LPA) must have regard to national policies and advice contained in guidance issued by the Secretary of State. The NPPF requires LPAs to set policies for meeting affordable housing needs on site. Local plan policies which require affordable housing to be provided are subject to viability testing before they are adopted. In addition, the Secretary of State has a broad power to intervene if he considers a local plan, or a policy in a local plan, to be unsatisfactory. In such circumstances, he may direct the LPA to modify the plan. The LPA must do this, unless it opts to withdraw the plan.

Both Reading Borough Council and West Berkshire District Council had followed the correct procedure for the adoption of their local plans. These were adopted prior to the decision, in November 2014, to apply an exemption from affordable housing to sites with less than 10 units and a maximum combined floor space of 1,000 square metres. The adopted local plans did not comply with this new exemption. Did the LPA have to apply the local plan or the exemption set out in the Ministerial Statement (and subsequently the amended National Planning Policy Guidance (NPPG))?

In giving the judgment, Mr Justice Holgate stated that the new national policy did not purport to give guidance to LPAs which should be considered alongside local plan policies. Instead, it gave thresholds below which affordable housing (and tariff style contributions) should not be sought when any planning application for housing development in England is sought. He said that "Those thresholds are to be applied directly, and with immediate effect, in the determination of planning applications, notwithstanding any local plan policy inconsistent therewith. To that extent the policy has been drawn up so as to displace adopted local plan policies on affordable housing requirements." 

In relation to vacant building credit, there was no evidence that DCLG had any information to justify either the need for the credit or its impact. 

The result was that the new national policy on exemptions from affordable housing contributions was unlawful.
In addition, Mr Justice Holgate decided that the consultation process was unfair.

The impact

As a result of the decision, LPAs will no longer have to adhere to the exemption from providing affordable housing for sites of 10 units or less (5 units or less in rural areas). 

The level of provision will be determined by what is set out in the local plan. Developers could, therefore, find themselves paying out more in affordable housing contributions. Furthermore, developers will no longer be able to take advantage of vacant building credit. This enabled them to offset floorspace from empty buildings against the requirement for affordable housing in circumstances where they were going to be bringing that building back into lawful use or demolishing it and replacing it with a new building as part of a development.

Contributor: Alexandra Holsgrove Jones

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com

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