London borough boosted by Government comments on land prices and viability

The London Borough of Islington has welcomed the Government’s view that the value of land should reflect planning requirements.

The council had sent a letter before claim to the Department for Communities and Local Government, threatening judicial review over a recent planning appeal decision relating to the Parkhurst Road ‘Territorial Army’ site in the borough.

A planning inspector had refused planning permission on amenity grounds. But he had accepted the developer’s argument that only 14% affordable housing was viable because of factors including the price paid for the land.

Islington sent a letter before claim to the Department for Communities and Local Government because the developer could not demonstrate it had taken the council’s affordable housing policies into account when bidding for the site.

In response the Government Legal Department argued that it was not appropriate for Islington to bring a judicial review claim as the inspector had decided that planning permission should be refused.

The local authority noted, however, the GLD’s response that it was the Communities Secretary’s “own unambiguous policy position” in the Planning Practice Guidance that in all cases land or site value “should reflect policy requirements and planning obligations”. The GLD added that the inspector’s decision was case-specific.

Islington said that there was “growing concern that developers and landowners are manipulating the development viability process to build fewer affordable homes”.

It claimed that councils had seen that developers “sometimes disregard planning policies about building affordable homes when bidding for land. They later claim they cannot afford to build affordable homes because they have paid so much for the land.”

Islington said it intended to strongly argue its case on viability in future applications, as appropriate.

The authority revealed that it had received support from Brent, Hackney, Merton, Southwark, and Tower Hamlets councils, and the homelessness charity Crisis, in relation to its concerns over the inspector's decision on viability.

Cllr James Murray, Islington Council's executive member for housing and development, said: "Londoners desperately need more affordable housing, and we need to make sure developers are making a fair contribution. However we, and many other councils across London, are concerned that developers are using the viability process to argue they can’t afford to provide much or any affordable housing because they paid too much for land.

"We are therefore pleased to have a clear confirmation from the Government's legal department that the value of land should reflect policy requirements, which of course includes affordable housing."

Islington also claimed to have recently received public support from the Mayor of London. When asked about the case at Mayor's Question Time, Boris Johnson reportedly confirmed that his draft guidance "supports the use of the 'Existing Use Value Plus' approach to viability assessments which ensures that the price paid for the land is not factored into viability calculations".

"If 'Market Value' is used as a benchmark" he said, "it must take full account of policy requirements and obligations.”