25th June 2016
In widely welcomed news, the 10-unit threshold for affordable housing obligations on sites, along with the vacant building credit (VBC), is once more part of national planning guidance. But developers should make the most of this certainty. Hannah Andrew explains why.
The changes follow the Government’s successful appeal against the decision to quash policy guidance for S106 contributions on small sites and the VBC following a joint Claim by West Berkshire District Council and Reading Borough Council in July 2015. The return of the policy guidance to the National Planning Practice Guidance (NPPG) restricts the ability to impose affordable housing and tariff style planning obligations on developments of 10 homes or less. It is ostensibly aimed at encouraging smaller builders to progress sites which otherwise would be unviable.
The caveat for designated rural areas, where the threshold is five units or less, has also been reinstated. Designated rural areas cover large parts of rural England and include National Parks and Areas of Outstanding Natural Beauty where affordable housing thresholds have typically been set at one or more units. In addition, in these areas, affordable housing and tariff style contributions should only be sought from developments between six and 10 units in the form of cash payments, commuted until after the completion of the units within the development. This gives rise practical concerns for authorities as to how affordable housing will be delivered in a way the meets the needs of local people. It also adds a layer of complexity for housebuilders as it is not always clear which areas qualify.
The reintroduction of these thresholds will undoubtedly be good news for smaller builders. It provides some certainty on development costs and reduces the need for costly viability negotiations, encouraging builders to bring sites forward. It will also be good news for landowners, particularly in rural areas, where even allowing for the lower threshold ,the resultant increase in land value will make smaller developments more attractive, encouraging the release of these sites.
Local circumstances, lower thresholds?
But a key area of discussion at the appeal centred on the lack of any exceptions in the policy guidance wording. The Court found that this was a misunderstanding of law and the requirements of S38 of the Planning and Compulsory Purchase Act 2004 and S70 of the Town and Country Planning Act 1999, which is to consider national policy in the decision-making process but does not preclude other material considerations. Whilst it was acknowledged that the Secretary of State considered very considerable weight should be attached to national policy, decision-makers are required when determining applications to consider local circumstances which may justify a lower threshold than that set by national policy.
Similarly, the policy-maker can also take account of local circumstances and evidence to justify a lower threshold, but must be able to fully justify this at examination. If adopted, this threshold can be afforded more weight than the new national policy in subsequent decisions on planning applications.
So the certainty afforded by the reintroduction national thresholds may only be a short term fix. Councils, particularly in rural areas, will seek to reintroduce a lower threshold through amendments to their Local Plan or by means of testing their case through the appeal process. On this basis, developers should take advantage of the current national policy position before local authorities are able to reintroduce locally set thresholds.
Vacant Building Credit
VBC has also been reintroduced. It allows developers to apply for a ‘credit’, equivalent to the gross floorspace of any relevant vacant buildings being brought back into use or demolished as part of the scheme, and deducted from the overall affordable housing contributions calculation. As with the threshold, this policy guidance will not be a ‘catch all', particularly as developers have always been able to argue against affordable housing provision on viability grounds. However, it will provide increased, and upfront, certainty for developers. Councils will need to take a more rounded view of development proposals which may not deliver affordable housing but have wider regeneration benefits.
The 10 unit threshold should unlock smaller sites whilst VBC will have a broader impact in urban areas and particularly those where values are marginal. VBC could have a positive impact on regeneration. Both changes to national guidance aim to reduce the overall financial burned on developers and increase certainty around development costs, encouraging development. This, along with other initiatives, including Starter Homes, is a clear statement by the Government that increasing overall housing delivery takes priority. But will the changes have a real impact or will they be watered down by local planning authorities? Developers should act quickly.
Contact Hannah Andrew, Associate, on 0113 219 2250 or email@example.com.