Court of Appeal upholds Secretary of State’s Affordable Housing Exemption for Small Sites and Vacant Building Credit, overturning High Court Decision

24 May 2016

On 28 November 2014, Brandon Lewis MP introduced the following into national planning policy by way of a Written Ministerial Statement (“WMS”) and then the National Planning Policy Guidance (“NPPG”), preceded by a consultation paper of March 2014:

  • Developments of 10 units or 1000sqm or less (including annexes and extensions) would be excluded from affordable housing levies and tariff based contributions;
  • A lower threshold would apply in designated rural areas, National Parks and Areas of Outstanding Natural Beauty (as defined in section 157 of the Housing Act 1985), with developments of 5 units or less to be excluded from affordable housing levies and tariff based contributions. Development of between 6 and 10 units would be subject to a commuted sum payable on or after completion;
  • Where a vacant building is brought back into use or demolished for redevelopment, local authorities will provide a "credit", equivalent to the floorspace of the vacant building, to be set against affordable housing contributions.

West Berkshire District Council and Reading Borough Council were successful in their Judicial Review of the policy, with Holgate J in his judgment of 31 July 2015 declaring that the policy was unlawful.  The relevant paragraphs were promptly removed from the NPPG.

The Secretary of State appealed the judgment in the Court of Appeal, with Treacy LJ and Laws LJ (Master of the Rolls) giving judgment on 11 May 2016.  The Court of Appeal upheld the appeal on all four grounds, ultimately finding that the policy was lawful.  The NPPG was updated on 19 May 2016 to re-instate the policy. The local authorities seek to appeal this judgment in the Supreme Court, although the Court of Appeal’s judgment (and the policy in the WMS and NPPG) will stand unless the higher court rules to the contrary.

An interesting point in the Court of Appeal’s judgment comes within the argument as to the effect of the policy and its relationship with the statutory scheme.  The local authorities argued that the terms of the WMS constituted an instruction to planning decision-markers to depart from established local plan policies.  It was, after all, in mandatory terms stating that affordable housing obligations “should not” be applied to small sites.

The local authorities argued that this was contrary to section 38(6) of the Planning and Compulsory Purchase Act 2004 which requires planning applications to be determined in accordance with the development plan unless material considerations indicate otherwise.  Further, section 70(2) of the Town and Country Planning Act 1990 provides that local planning authorities should have regard in determining planning applications to the provisions of the development plan, local finance considerations and any other material considerations.

The Court of Appeal held that the principle against fettering discretion (that a decision maker should consider any exceptions without blindly following a pre-existing policy) and the liberty to express a policy without making exceptions (as this would be idle and confusing if added to each policy) meant that the Secretary of State was not required to provide a general reference to exceptions and nor could he countermand or frustrate the provisions of sections 38(6) and 70(2).

As such, it is up to the decision-maker to decide how much weight to give to the national policy in light of local circumstances.  The judgment confirms that this is not a blanket policy and there will be cause for exception in some circumstance – although its precise effect is unclear.

The question therefore is how will local planning authorities or the Planning Inspectorate weigh up the local policy against the national policy. Will there be more exceptions to the policy in areas where there is an under provision of affordable housing or where viability confirms that there is no disproportionate burden on the developer? It seems that this decision may result in more uncertainty for both developers and local authorities with more small site decisions potentially being appealed. This is contrary to Brandon Lewis MP’s press release which suggests a firm application of the policy, “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.”

It should also be noted that the Housing and Planning Bill, which received Royal Assent on 12 May 2016, allows the Secretary of State to make regulations restricting the enforceability of affordable housing planning obligations. The Government had confirmed to the House of Lords that it would specifically exclude rural exception sites, national parks and areas of outstanding national beauty. 

For more information on how the potential impact of this decision please contact our Planning and Environment team.

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