Change to planning guidance on affordable housing contributions

The provision of affordable housing has been a hot topic both in the media and Government for many years. Local Planning Authorities seek to control the provision of affordable housing through their planning policy. The standard position has been to require a 30% provision of affordable housing in larger developments, or to require a payment, (known as a s.106 contribution), to allow the affordable housing provision to be provided off site.

The problem is that the requirement for affordable housing, or the s.106 contributions, can make development sites unviable, particularly for the smaller sites where there are less market value homes to soak up the contributions. There is usually nil, and often negative, financial value to the developer in providing affordable housing.

In November 2014, the Government issued an advisory policy stating that developments of 10 units or less, which had a combined gross floor space of no more than 1000 square metres, would be excluded from affordable housing levies and other tariff based contributions.

West Berkshire District Council and Reading Borough Council brought a judicial review to challenge that new policy on the basis that it has profound implications for local authorities in discharging their responsibilities under the planning system to provide affordable housing. That judicial review was upheld by the High Court in February 2015, but the Court of Appeal overturned the ruling in May 2016.

The effect of the Court of Appeal decisions means that local authorities will now need to have regard to the policy guidance and that local authorities will not be seeking contributions towards local community and leisure projects (as well as affordable housing contributions), unless there is clear and robust evidence to justify an exception.

The Court of Appeal decision will be welcomed by smaller developers and may well open a series of sites which have, until now, been unviable due to the requirement of contributions. However, it will leave local authorities with yet a further hole to fill in their attempts to provide sufficient amounts of affordable housing.

If you have any questions or queries about the above or any commercial property matter in general, please contact the Commercial Property team to discuss how we can help you.

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