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Landmark Legal Case for Small Developers

Reading Borough Council and West Berkshire District Council recently brought a joint challenge to quash the planning practice guidance (PPG) which exempts small development sites from the need to have affordable housing included on them. This has resulted in a landmark case at the High Court which ruled that the planning policy to exempt small developments from affordable housing contributions and the vacant building credit are unlawful. As a result the Government's national planning practice guidance has been updated from 1 August 2015.

Reading Borough Council and West Berkshire District Council objected to paragraphs 012 to 020 in the PPG which had the effect of preventing authorities from seeking affordable housing requirements for development of 10 dwellings or fewer (five dwellings in designated rural areas), or a maximum gross floor space of 1,000sqm. They also objected to paragraphs 021 to 023 which provided for a vacant building credit to be applied equivalent to the gross floor space of vacant buildings renewed or demolished as part of the development and deducted from the overall affordable housing contribution.

The key issues in the case were whether the policy was unlawful on grounds of inconsistency with the statutory scheme for local plans. Much of the argument therefore related to the interaction between the Secretary of State's policy for exempting small sites from affordable housing contributions and the statutory code for the adoption of local planning policies and the determination of planning applications.

The Councils argued that the policy had profound consequences for local planning authorities up and down the country in discharging their responsibilities under the planning system for the provision of affordable housing. An example was Westminster Council who agreed to reduce the developer's contribution for affordable housing from £17.9m to £8.9m for the redevelopment of 20 Grosvenor Place London.

The Councils felt the existing policy would have the general effect of significantly reducing the amount of affordable housing across the country and particularly in their areas where they estimated a reduction of 15% of expected annual affordable housing completions in Reading and a loss of 23.5% in West Berkshire. The Councils also contended that in some instances the policy would result in providing a windfall to landowners and/ or developers.

In the current absence of replacement or revised national guidance there will now be some uncertainty pending clarification from the Government of its full response to the decision. It has however stated publicly that it is disappointed with the judgment and intends to appeal the decision.

We now have a position where applicants at different stages of seeking planning permission for residential development have either benefited financially from the guidance pre 1 August 2015 if planning permission has been granted, or will be denied the benefit of the guidance from now until the Government clarifies how it will respond to this important ruling.

We asked Planning Barrister Dr Ashley Bowes for his thoughts on the judgment and its consequences, “The immediate implications are, first, the need for urgent modifications to Plans which are in examination and contain policies based on the revoked guidance. Second, the generation of further litigation challenging decisions made on the basis of the revoked guidance. Daventry District Council for example, have already launched a legal challenge to a decision to allow an appeal without an affordable housing contribution. Third, developers who have applications in the pipeline which were previously exempt from an affordable housing contribution will now face a sudden financial sting."

In order to provide coherence and consistency in the planning process the Government will need to act quickly to publicise how it will respond to the judgment.

Chris Baggs, Commercial Property Partner, Clifton Ingram LLP Solicitors


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