On 19 May, the controversial affordable homes small sites exemption and vacant building credit policies were re-introduced in the National Planning Practice Guidance. Unchanged from its original wording in November 2014, this second coming in national guidance follows the Court of Appeal’s decision on 11 May to overrule the High Court in quashing the policies last year.

Affordable Homes Small Sites Exemption

Under this policy, the Government seeks for no affordable housing contributions from developments of 10 or less residential units, and which have a maximum combined gross floorspace of no more than 1,000sqm. In rural areas, the threshold can be 5 residential units or less.

With the small site affordable housing exemption back in play, this leaves a number of local authorities re-evaluating how to apply their own planning policies. In London, Lambeth, Richmond upon Thames, Islington and Merton are just some of the boroughs with some form of adopted policy that have affordable housing contribution triggers on sites for less than 10 units; the validity of which will now be brought into question. Whilst the likes of Southwark, who has emerging development plan documents featuring similar affordable housing policies, will now have to reconsider their policy direction.

Given its reaction to the policies when they were first introduced in 2014, it is likely that one of the key battlegrounds in London will be set in Islington. This local authority was previously vocal in objecting to the new policy and was reported as being in the process of preparing its own legal challenge against it when the High Court’s decision was made. In this context, it is anticipated that Islington will again resist the policy and rely on the argument that its local development plan should take priority. The time will eventually come when a small developer will appeal and the Planning Inspectorate will have to rule.

Furthermore, developers will no doubt be seeking to revisit their planning permissions and S106 agreements in light of the Court of Appeal’s decision. Some of the most notable cases fall within Camden, who after the High Court’s decision last year called the likes of 25-27 Ferdinand Street and 317 Finchley Road back into Committee to secure contributions after both applications had already received resolution to grant with no affordable housing.

Vacant Building Credits

Under this policy, the Government seeks to incentivise brownfield development by allowing floorspace within vacant buildings either brought back into lawful use or redeveloped to be used as a financial credit to off-set affordable housing contributions. For many critics, this offers another measure that will see a reduction in the delivery of affordable housing. More concerning to developers, however, is the number of unknowns in how the Credit is to be applied, including how to define a vacant building and how it relates to the application of CIL.

As currently worded, it is at the discretion of the local authority as to how to apply the Vacant Building Credit, which could lead to inconsistencies across borough boundaries. RBKC is one of the local authorities to firmly state its position, whereby for a building to benefit from Vacant Building Credit it cannot also benefit from being an existing floorspace CIL credit, and vice versa. In short, developers cannot have their cake and eat it too; an approach that is bound to prove popular with other local authorities. With RBKC’s CIL for residential development ranging from £110 to £750 per sqm (in addition to the £50 per sqm Mayoral Charge), it is most likely that it will be to developers’ advantage to seek a CIL credit rather than a vacant building credit where possible. However, it is in the strategic areas with large amounts of vacant buildings, which often have low or nil CIL liability (e.g. the Kensal Strategic Site), where the real fun is to be had.

Short Term Uncertainties

As is often the case in such times of sudden national policy change, we now face a period of uncertainty, with a number of items remaining unclear and to be closely monitored in the near future:

1. Will the case will be taken to the Supreme Court?

2. How much weight will local authorities give to the re-enacted small site affordable housing exemption policy in determining planning applications?

3. For those local authorities that resist the national policy, how will this play out at appeal?

4. Will DCLG offer further guidance on the application of Vacant Building Credit or will it remain to be up to the interpretation of local authorities?

5. With our new London Mayor and potentially James Murray as the new Deputy Mayor having both taking clear stances on the priority of affordable housing delivery, how will they react to and interpret these national measures that at their heart limit the opportunities to deliver affordable housing?