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Member Briefing: Government wins appeal to exempt small sites from affordable housing contributions

Date: 12/05/16

Government wins appeal to exempt small sites from affordable housing contributions

Following a recent Appeal Court judgment that backed the government’s policy to exempt sites of 10 dwellings or 1,000sq.m or less from affordable housing contributions, members should be aware that there is still some uncertainty with regards to the application of the policy over the next few months.

In a judgment issued by the Court of Appeal on 11 May 2016 the Master of the Rolls, Lord Justice Laws and Lord Justice Treacy allowed the appeal made by the Secretary of State for Communities and Local Government against West Berkshire District Council and Reading Borough Council. The full judgment can be found here.

The previous decision made by Justice Holgate on 31 July 2015 had backed the Authorities’ claim that the policy set out in a Written Ministerial Statement (WMS) of 28th November 2014 was unlawful. This policy stated that developments of 10 units or 1,000sq m or less would be excluded from affordable housing levies and tariff based contributions and that where a vacant building is brought back into use or demolished for redevelopment, a credit, equivalent to the floorspace of the vacant building would be set against affordable housing contributions. A lower threshold of 5 dwellings or less and a commuted sum for schemes of 6-10 dwellings was applied in designated rural area.

The legal effect of this appeal decision is that the policy as set out in the WMS still stands.

However, since the original Court decision quashing the effect of the new policy, the government has introduced a new clause through the Housing and Planning Bill (H&P Bill) allowing the Secretary of State to make regulations to “impose restrictions or conditions on the enforceability of planning obligations entered into with regard to the provision of affordable housing, or descriptions of affordable housing. It allows the SoS to impose different restrictions or conditions (or none) depending on the size, scale or nature of the site or the proposed development to which any planning obligations would relate”. In effect, these new regulations will place into secondary legislation the provisions of the policy set out in the WMS.

It is understood that the government is, therefore, considering how to align the decision of the Court of Appeal and the WMS with these new legal provisions set out in the H&P Bill (soon to be granted Royal Assent).

The effect of this appeal decision is, therefore, slightly more complicated than it might have been. There is no doubt that the legal status of the WMS (and the policy therein) is as if there had been no legal challenge at all. However, there are three concerns that members should be aware of:

The first is that West Berkshire and Reading Borough Councils may make an application to take the decision to the Supreme Court. Such a challenge would create some uncertainty as to whether or not local authorities should apply the policy set out in the WMS to current applications.

The second issue relates to the very clear conclusion in the judgment that the policy set out in the WMS does not over-ride the statutory requirement of S38(6) of the Planning and Compulsory Purchase Act 2004, that decisions on planning applications should be made in accordance with the development plan unless material considerations indicate otherwise. While the Court of Appeal agreed that the SoS might place considerable weight on the policy set out in the WMS as a material consideration when making decisions the policy did not carry any absolute primacy in the decision making process. This suggests that local planning authorities may wish to place greater weight on their own development plan policy with regard to thresholds at which affordable housing contributions will be sought. Whether the SoS agrees with them would, of course, be a matter to be determined at appeal.

The third concern (related to the second above) is that, now that he has the potential to address this issue through legislation, the Secretary of State may place little weight on his own WMS in making decisions in the interim period, prior to the regulations coming into force. This would, of course, manifest itself in the form of appeal decisions whereby an inspector might also place little weight on the WMS particularly where the local planning authority has an adopted local plan policy requiring affordable housing contributions on sites smaller than the threshold set out in the WMS. Unfortunately, therefore, until the SoS makes a clear statement as to how he is going to respond to this Court of Appeal decision, there remains some uncertainty of how the policy of the WMS should be applied by LPAs.

HBF will, of course, keep members up to date with any such Ministerial statements but, in the meantime, members should be cautious in their approach to citing the WMS policy in their negotiations with local planning authorities. Members should be aware of the three concerns set out above rather than assuming that the policy set out in the WMS can automatically be applied to all proposed development of 10 units or 1,000 sq. m or less.