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Good News For Small Site Developers

Recent Court of Appeal Ruling Brings Good News for Owners and Developers of Smaller Housing Sites

A Court of Appeal ruling on a case between the Secretary of State for Communities and Local Government and West Berkshire District Council and Reading Borough Council dated 11th May 2016 has brought good news on affordable housing for owners and developers of smaller housing sites.

The case, which hinged on a number of procedural points, overturns the previous judgement of the Administrative Court on 31 July 2015 which had resulted in the withdrawal of the ‘Small Sites Exemption’.  The Exemption, first announced in a Ministerial Statement in November 2014, required Councils not to seek affordable housing or certain types of developer contributions from small scale applications.  Depending on the location, in the context of the Statement, ‘small scale’ meant either proposals of 5 units and less or 10 units and less.

The Exemption was withdrawn after a court judgement following a legal challenge by West Berkshire District Council and Reading Borough Council. However, this judgement has now been overturned by the Court of Appeal on 11th May 2016.Immediately following the 11th May judgement it was unclear what would happen next, as despite the ruling by a quirk of law, the Exemption remained withdrawn.  However, steps taken by the Government on the 19th May to reintroduce the policy in the National Planning Practice Guidance now make it clear that affordable housing and tariff style planning obligations should not be sought from small scale and self-build developments.

Small scale means developments of 10 units or less and no more than 1,000 sqm but this threshold does not apply in every location. Where the 10 unit threshold does not apply a 5 unit threshold exists instead and even then, for developments of between 6 and 10 dwellings affordable housing and tariff style contributions should be only be sought from development in the form of cash payments.  The only main caveat to all this is that this exemption does not apply to affordable housing exception sites. 

With viability challenging on smaller sites Alister King-Smith of Stags is very pleased to be able to report this news and believes it will have important consequences for many landowners and developers, as since the Exemption was withdrawn, many Councils have been setting very low affordable housing thresholds.  Even where an application has been approved and a Section 106 agreement signed it may well be worth revisiting the matter as the impact on value could be significant.