Affordable housing S106 contributions limited to schemes of more than 10 units
On 11th May 2016, the Court of Appeal overturned a ruling by the High Court on 31st July 2015 that quashed the December 2014 change in planning policy that affordable housing contributions would not be payable on sites where the schemes are for 10 or fewer units, subject to a maximum proposed area of 1,000 sq m.
This means that the change in planning policy which came into force in December 2014 now applies again: affordable housing contributions are not payable on schemes of 10 or fewer units.
In our experience affordable housing contributions for small schemes have the opposite effect to the one intended: they limit the supply of new housing because developers find the contributions make schemes insufficiently profitable and because of the bureaucracy involved in trying to negotiate these contributions. Local authorities do not deal with these contributions in a consistent way, and in some cases use consultants without any relevant independently verified academic or professional qualifications to negotiate these, knowing that they have the power to delay the grant of planning permission or force an appeal which will cause the developer to lose valuable time. This is akin to bullying of developers of small schemes.
We strongly believe that if the affordable housing contributions cannot be agreed for larger schemes on the grounds of viability, this point should be capable of referral with a speedy turnaround time to an expert tribunal, not the Planning Inspectorate where the inspectors typically also do not have any expertise in assessing the viability of development schemes and or valuing development land.
There is a serious need for affordable housing, however the responsible parties are national and local government: the private residential development industry should not be made the scapegoat for the failure of successive governments to provide sufficient housing for the people that need it and who can't afford it.
Back in December 2014, Eric Pickles said 'small builders are being hammered by charges, which have undermined the building industry, cut jobs and forced up the cost of housing.... By getting rid of these five and six-figure charges, we will build more homes and help provide more low-cost and market housing'.
A quote from the Government's consultation response:
'After careful consideration of these responses we are making the following changes to national policy with regard to section 106 planning obligations:
• Due to the disproportionate burden of developer contributions on small scale developers, for sites of 10-units or less, and which have a maximum combined gross floor space of 1000 square metres, affordable housing and tariff style contributions should not be sought. This will also apply to all residential annexes and extensions.'
It is possible that the Court of Appeal will be challenged in the Supreme Court so the flip flopping of planning policy is potentially not over yet.