Affordable housing and small sites

The Communities Secretary has won his appeal over a High Court ruling that a key government policy on affordable housing and small-scale sites was unlawful. Harriet Townsend, Martin Edwards, Ashley Bowes and Andrew Lane explain why.

On 11 May the Court of Appeal allowed the Government’s appeal on all four grounds against Mr Justice Holgate’s judgment in West Berkshire District Council and Reading Borough Council v Secretary of State for Communities and Local Government [2015] EWHC 2222 (Admin).

A return of the previously quashed text within Planning Practice Guidance can be expected imminently to give effect to the ruling. The Court of Appeal has held that the national planning policy on minimum thresholds for affordable housing and on the vacant building credit was lawfully made when promulgated by Written Ministerial Statement in November 2014, and within amendments to the PPG early in 2015.

The policy in question contains the following elements:

(i) Developments of 10 units or 1000 sq m or less (including annexes and extensions) are excluded from affordable housing levies and tariff based contributions;

(ii) A lower threshold applies in designated rural areas, National Parks and Areas of Outstanding Natural Beauty, with developments of 5 units or less excluded from affordable housing levies and tariff based contributions. Development of between 6 and 10 units are subject to a commuted sum payable on or after completion;

(iii) 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.

The ruling is expected to provide a significant boost to developers of relatively small, particularly brownfield, housing sites. It was the “disproportionate burden” which the Government believes affordable housing policy requirements place on their shoulders that was said to justify the policy, a justification accepted fully by the Court of Appeal. On the other hand, there is widespread concern about its impact on the ability of local authorities across the country to meet the need for affordable homes.

Holgate J had quashed the decisions to make the policy and the relevant text within the PPG on four grounds, namely:

1. Inconsistency with the statutory scheme;

2. Failure to take into account material considerations;

3. Inadequate consultation;

4. Breach of the Public Sector Equality Duty.

The Court of Appeal have, in allowing the appeal:

1. Emphasised that the policy must allow exceptions even if expressed in unqualified terms [paragraph 17] and held that Holgate “conflated what the policy says with how it may lawfully be deployed.” [paragraph 30]. Lawful application of the policy must, therefore, allow for exceptions in individual cases;

2. Held that there is no “systematic primacy” to be accorded to the development plan [paragraph 20]. In other words, the statutory presumption in favour of the development plan does not confer greater weight on the development plan – only that it is the first port of call until another material consideration (eg. a change in national policy) “indicates otherwise”;

3. Relied on the fact the Secretary of State was exercising a common law power to find that he should not be faulted for failure to have regard to material considerations [paragraph 37]. This might open up an argument that those very material considerations to which he did not have regard are, in the circumstances of a particular local planning authority’s area, sufficiently important to justify imposing an affordable housing contribution below 10 units notwithstanding the mandatory terms of the policy. On the other hand, some might argue that it is unrealistic to believe an inspector will depart from a policy drafted by the Secretary of State in such directional terms in the absence of the most exceptional local considerations;

4. Generally applied a very light touch when considering the rigour of the Secretary of State’s analysis of the evidence underpinning the policy, and of the responses to consultation;

5. Held that compliance with the public sector equality duty was achieved (albeit late) by a report which “takes a relatively broad brush approach” compared to the exercise adopted by Holgate J.

This judgment will have a direct effect on local authorities and developers across England. It is also of considerable legal significance for its endorsement of the process and effect of the Secretary of State’s highly controversial policy intervention.

Separately, and given that the Government’s broader affordable housing policy was taken into account as part of the equality impact assessment of this policy, the impact of the 10-unit planning policy will surely have to be taken into account when assessing the impact on people with protected characteristics of the voluntary right to buy policy currently being explored with a number of pilot housing associations.

This note was prepared by Harriet Townsend, Martin Edwards, Ashley Bowes and Andrew Lane of Cornerstone Barristers.