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Councils win affordable housing battle against Secretary of State

Words: Laura Edgar
Homes / iStock_000020788340

Two councils have won a High Court challenge over government proposals for affordable housing requirements for small-scale developments.

In November last year, housing minister Brandon Lewis announced in a written ministerial statement that for developments of 10 homes or fewer, local councils would not be able to impose affordable housing contributions through section 106 agreements.

West Berkshire Council and Reading Borough Council joined forces to challenge this proposal.

Mr Justice Holgate quashed the secretary of state's decision to adopt the new policy by way of written ministerial statement and the relevant parts of the National Planning Practice Guidance.

Tony Page, lead councillor for strategic environment, planning and transport at Reading Borough Council, said the ruling was “excellent news” for everyone looking for affordable places to live.

“There is an acute and increasing need for affordable homes in Reading, which is demonstrated by the fact there are around 10,000 people on our housing waiting list, and the changes to the planning system would have made matters worse.

"The judge's decision also means an estimated £650,000 per year will be saved for community benefit, including improvements to local roads, schools and playgrounds," Page said.

Alan Law, West Berkshire Council’s executive member for planning said the decision to challenge the government was not taken lightly.

“The judgement handed down confirms that the council were fully justified in challenging this policy change in order to deliver much needed affordable housing and safeguard funding for critical infrastructure such as education.”

Writing on the No.5 Chambers blog, barrister Jenny Wigley outlined the reasons for the Mr Justice Holgate's decision. These included:

- the policy was inconsistent with the statutory scheme

- an "unfair and unlawful" consultation process

- a failure to take into account “obviously material” considerations, including the full implications for the supply of affordable housing land

- breach of the public sector equality duty, particularly surrounding the impacts on disabled people and ethnic minorities who disproportionately rely on affordable housing

- "irrationality".

A PDF copy of the full judgement can be downloaded from the No.5 website.

Reaction: (NB - we will be adding more reaction as we receive it)

“Recent research published by the Joseph Rowntree Foundation shows that s.106 is still an effective measure for delivering affordable housing. S.106 allows planning to adhere to the principle of delivering affordable alongside market housing, and the introduction of a threshold has had a detrimental effect on the delivery of much needed affordable housing, particularly in rural areas and areas where many housing completion are on small sites.”

Joe Kilroy, policy officer, Royal Town Planning Institute

“We’ve got Britain building and we’re determined to maintain this momentum, including by reducing the red tape and extra costs that prevent smaller developments from getting built.

“We are disappointed by the outcome of the judgement and will be seeking permission to appeal against the judge’s decision.  This will have a disproportionate impact on smaller builders who are important in providing homes for local communities.”

A Department for Communities and Local Government spokesman

“This change in legislation will undoubtedly make smaller developments less viable. It’s no secret that Britain is in desperate need of more homes, so it is disappointing to hear that smaller builders who make an important contribution to the country’s housing provision are being discouraged from doing so.

“The challenge was brought about as West Berkshire District Council and Reading Borough Council were concerned about the impact the policy would have on affordable housing provision on small sites. However, the ruling means that, in fact, in many areas, developers will be discouraged from bringing smaller developments forward at all as they will not be viable.

“We welcome the Government’s decision to appeal this ruling.”

David Ramsay, director at property consultancy JLL in Southampton

"Because the approach is set out in a Ministerial Statement of Government policy, the Judge did not quash the policy; instead the effect of the judgement is to remove the tools by which the policy was brought into effect.  In practice, this has meant the Government announcing the intention to remove the relevant paragraphs of guidance from the online Planning Practice Guidance.

"At the heart of the judgement is a conundrum that many practitioners recognised at the time that the policy was announced – the attempt to alter statutory and policy provisions through hasty adjustment of the online Practice Guidance.  The Guidance is just that – guidance. It isn’t statute and it isn’t policy."

Ian Tant, senior partner Barton Willmore, writing on the Barton Willmore blog. Click here to read the full article.

"The High Court's decision is a pivotal statement to ministers, local authorities and the wider property community. In this case, political expediency and desire failed to adhere to the basic premise of the planning system that ministerial statements are guidance and cannot supplant local plan policies.

"Ministers should take on board lessons learned here that there needs to be a holistic review of consequences of policy changes, justification and evidence must be provided to support their decisions and, above all, to listen to their advisors who, it appears from the evidence before the Court, counselled against proceeding in the way the minister ultimately did.

"This is an important decision as the matter has been challenging for local authorities and developers alike, resulting in delay in decision making and some refusals given lack of affordable provision, notwithstanding the ministerial statement.

"The decision puts affordable housing back on a level playing field with market housing. The judgement essentially says that the ministerial statement failed to consider the ramifications for those in society who rely on affordable housing provision and their need for a home.

"We expect that decision making will return to reviewing viability on a site-by-site basis to determine whether policy compliant affordable housing or indeed other contributions are viable."

Rebecca Warren, planning partner at Pinsent Masons

"The decisions of the courts is important for a couple of reasons.

"Firstly, the decision safeguards the use of s.106 agreements to deliver small-scale affordable housing developments. This applies particularly in rural areas where affordable housing is generally delivered through small-scale developers below the threshold that was being proposed in national guidance.

"Secondly, and in some ways of more significance, the reasoning behind the High Court decision emphasises the importance of government policy being evidence based and not arbitrary. The concerns expressed in the court’s ruling clearly point to the need for all government policy guidance to be evidence and not just policy based, and to have a genuinely participatory consultative process."

Vincent Goodstadt, strategic planning advidsor

“This decision is a major blow for smaller residential developers looking to bring forward schemes in urban environments.

“The economic viability of small schemes is often on a knife-edge, and this decision is likely to pull the rug from underneath those difficult to develop sites.  It is also likely to have a negative effect on land values for future deals, exacerbating the housing crisis in the South East further.  Nobody wins from this decision.”

Nick Leavey, partner and head of commercial property at law firm Coffin Mew

“The decision seems logical as the government cannot change planning law by planning policy. Whilst small residential developers may be disappointed they shouldn’t lose sight of the fact that the affordable housing requirements across local authorities varies, for example in Bolsover District Council the threshold is 25 dwellings. Also the opportunity to argue for a reduction in affordable housing on viability grounds remains. DCLG has said it will appeal the decision and it will be interesting to see how the situation develops”.

Amanda Beresford, head of planning, Shulmans