What is going on?
Developers and property owners take note, although the Coalition Government may be limping to the finish line of its 5 year term it seemingly isn’t afraid of making late-term and potentially far-reaching changes to the planning system, in particular, to affordable housing planning guidance.
Following on from a consultation earlier in 2014, the current Housing and Planning Minister Brandon Lewis MP made a statement on 28 November 2014 amending Planning Practice Guidance (PPG) in regard to affordable housing and, amongst other things, introducing the concept of a ‘vacant building credit’.
The resultant stir has been building up in many local authorities at the start of 2015 whilst digesting the changes and determining planning applications. They stand to loose out on, what are for some, significant sums of money generated from affordable housing contributions. The stir is becoming increasingly interesting because the development lobby (specifically in London) doesn’t really seem to be behind the changes either – changes that it could potentially benefit from. It rather begs the question whether the consultation process is operating as it should do.
In our view, the change is a clear intention of Government and is likely to be reflected in appeal decisions. If councils refuse a planning application with the only reason being that it does not provide enough of an affordable housing contribution to reflect the gross development, it is very likely that any subsequent appeal would be allowed and costs awarded against the council. It is therefore very likely that councils will now consider any existing buildings as a ‘vacant building credit’ and that contributions will be calculated on the net additional development, not gross.
What are the changes to policy?
The general thrust of the ministerial statement is that regeneration through the redevelopment and reuse of buildings is being held back by affordable housing requirements. Subsequent changes to PPG creates what is in effect a ‘vacant building credit’. The PPG now states:
“Where there is an overall increase in floorspace in the proposed development, the local planning authority should calculate the amount of affordable housing contributions required from the development as set out in their Local Plan. A ‘credit’ should then be applied which is the equivalent of 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 contribution calculation” (PPG, Planning Obligations, Paragraph 022).
The PPG is clear that any relevant building being brought back into use or demolished as part of new housing development can class as a ‘credit’ against the affordable housing contribution required.
What is being said in some quarters
Taken from the Guardian (1 February 2015) British Land, Land Securities, the Crown Estate and Grosvenor Estates are noted as being among the property companies represented by the lobby group, The Westminster Property Association, which said the policy was deeply flawed, and wrote to the Minister urging him to scrap it as it stands. They said: “The unintended consequences of such policies will actually lead to a further erosion of the ability of people from a wide range of backgrounds to live in the heart of the capital.”
A case in point is Westminster City Council’s recent decision made at 20 Grosvenor Square where the affordable housing contribution was revised downwards following the changes from £17million to £8.55million (Source: Westminster Planning, No.291 January 2014) - and approved at Committee in January 2015.
John Walker, Director of Planning at Westminster City Council has sounded the alarm over the rule change who described it in The Guardian (1 February 2015) as “A government gift [to developers]”, that it has “Sent shockwaves across all the boroughs” noting that “There will be some sites where we get absolutely nothing”. He is also reported as saying “On a forthcoming scheme we agreed that £9.1m was viable and we would lose all of that as a result of the vacant building credit. On just three schemes we consented [in a planning meeting] on 13 January we lost £29m. It is insane.”
Emma Reynolds, the Labour shadow housing spokesman, said the government’s behaviour was shameful stating in The Guardian (1 February 2015) that “This is yet another example of the government giving developers an opt-out from providing affordable housing”, and that “This government has consistently and repeatedly watered down affordable housing requirements, depriving local communities of badly needed affordable homes.”
The operation of the new rules in practice
Councils may seek to amend local plan policies but is likely that they will not - retaining the status of up-to-date adopted development plan policies under s38(6) of the Planning and Compulsory Purchase Act 2004 - but they will acknowledge the likely effect of the amended national Planning Practice Guidance in planning application determination and the risks associate with refusals, defending subsequent planning appeals and the award of costs against the council.
The PPG does not alter the core approach to determining planning applications in accordance with the Development Plan unless material considerations indicate otherwise (under s38(6) of the Planning and Compulsory Purchase Act 2004).
We are almost sure that further guidance will be issued by DCLG in due course and we will provide a further update when it does. Until then, please contact Kieron Hodgson, or your usual Iceni contact if you have any questions relating to this.