Government wins appeal to exempt small sites from affordable housing contributions

A Court of Appeal judgment on 11 May has endorsed Government policy to exempt sites of 10 dwellings or 1,000sqm or less from affordable housing contributions. The judgment overturned a High Court decision in favour of West Berkshire District Council and Reading Borough Council, following an appeal by the Secretary of State for Communities and Local Government.

The previous decision had backed the Authorities’ claim that the policy set out in a Written Ministerial Statement of 28 November 2014 was unlawful. This policy stated that developments of 10 units or 1,000sqm or less would be excluded from affordable housing levies and tariff based contributions.

Ministers had criticised the decision of West Berkshire District Council and Reading Borough Council to bring legal action as ‘a total waste of taxpayers’ money’. 

In welcoming the Court of Appeal decision, the Housing & Planning Minister Brandon Lewis said the ‘judgment by the Court of Appeal restores common sense to the system, and ensures that those builders developing smaller sites – including self-builders - don’t face costs that could stop them from building any homes at all. This will now mean that builders developing sites of fewer than 10 homes will no longer have to make an affordable homes contribution that should instead fall to those building much larger developments.’

He added that he hoped the decision would mean that councils would now ‘focus their time and money on delivering the front line service that their residents rely on and helping support new housebuilding in their areas that is very much needed.’

Housing Bill adds complications says HBF

However, in its response to the judgment, the Home Builders Federation (HBF) noted that the effect of the judgment may be more complicated than first envisaged. The HBF said that ‘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 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 Secretary of State 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 Written Ministerial Statement of November 2014.’

Three concerns

The HBF raised three chief concerns. The first surrounds the potential for West Berkshire District Council and Reading Borough Council to make an application to take the decision to the Supreme Court.

The second issue, the HBF says, relates to the very clear conclusion in the judgment that the policy set out in the Written Ministerial Statement does not override the statutory requirement in the Planning and Compulsory Purchase Act 2004, in that decisions on planning applications should be made in accordance with the development plan unless material considerations indicate otherwise.

The third concern raised by the HBF 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 Written Ministerial Statement in making decisions in the interim period, prior to the regulations coming into force. This could create appeal decisions where an inspector might also place little weight on the Written Ministerial Statement, 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 Written Ministerial Statement.

There is as yet no clear statement from the Secretary of State for Communities and Local Government on how he might respond to this Court of Appeal decision. As such, there remains some uncertainty about how the policy of the Written Ministerial Statement should be applied by local planning authorities.

Many councils have now adopted development plan policies which are in conflict with the original national policy. Housing policies in the development plans are inevitably now out of date and liable to be set aside in planning decisions and appeals. Councils will be obliged to demonstrate why their development policies should prevail over any newly adopted national policy. Additionally, there are likely to be many sites where developers have signed up to these affordable housing contributions in planning agreements or undertakings. They may now wish to seek permissions which do not have those payments.

Like the HBF, Planning Potential would urge its clients to exercise caution in citing the Written Ministerial Statement policy in their negotiations with local planning authorities. It is, at present, unsafe to assume that the policy set out in the Written Ministerial Statement can automatically be applied to all proposed development of 10 units or 1,000sqm or less.  

Footnote: Housing and Planning Bill receives Royal Assent

During the recent Housing and Planning Bill debates, Labour peers attempted to remove the affordable housing requirement exemption for small sites. However they were unsuccessful. On 12 May, the Housing and Planning Bill has received Royal Assent after Lord Bob Kerslake withdrew the remaining opposition amendment.