Affordable housing exemptions criticised by high court

Affordable housing exemptions criticised by high court


Author: Aaron Richardson

Applies to: England and Wales

A recent high court case, involving West Berkshire District and Reading Borough Councils, provides a fascinating insight into the workings of the Department of Communities and Local Government (CLG), and the formation of National Planning Policy.

The Councils challenged the CLG's changes to national Planning Policy Guidance (PPG), unveiled on 28 November 2014, which included the following main provisions;

  1. Developments of 10 units or 1,000 square metres or less (including annexes and extensions) would be excluded from affordable housing levies and tariff based contributions; and
  2. Floorspace of existing properties on a site, brought back into use or demolished for redevelopment, could be set off against affordable housing provision/contributions (the so called 'vacant building credit').

These changes were incorporated into the PPG as paragraphs 12 to 23.

The overarching purpose of the changes appears to have been to encourage the development of smaller housing sites; which would otherwise have been unviable due to various onerous financial and other obligations arising under Section 106 Agreements and /or Community Infrastructure Levy.

By removing the need for provision of affordable housing on a small site or allowing a reduction of affordable housing on others through vacant building credit, the hope was to stimulate growth and contribute towards 5 year housing land supply targets.

However, the practical and legal flaws of introducing 'blanket' exemptions on a national basis were exposed by the councils in this case.

The grounds of legal challenge, included procedural fairness and failures to carry out adequate consultation or take into account material considerations in formulating and introducing the policy changes;

The central point both councils were making however, was that the 'one size fits all' approach to policy making in this case was irrational and unrealistic. It was also unlawful in the sense that the changes effectively overrode the affordable housing policies as set out in statutory Local Plans.

Critically, West Berkshire DC raised concerns that, given the level of small site development in its area 23% of expected affordable housing units would not now be delivered as a result of the new policy.

The CLG argued that local authorities had a discretion as to how they applied these new provisions in their respective areas.

In a judgement which was highly critical of the CLG's approach to the introduction of the policy, Holgate J agreed with the councils' arguments and gave judgement in their favour on the grounds sought identifying that the inflexible wording of these paragraphs meant that the changes were to be applied on a National basis; notwithstanding any conflict with individual local plan policies.

The CLG immediately deleted paragraphs 12 to 23 of the PPG; although it is understood that an appeal to the Court of Appeal is being considered by CLG.


Short term

The deletion of the Paragraphs is a material change in circumstances which in the short term means:

  • Relevant planning applications already submitted and pending decision will have to be amended to reflect the current position;
  • Officer Reports to Committee will need to be updated and/or deferred to allow the necessary changes to be made;
  • Committee Resolutions to approve development subject to a Section 106 Agreement will need to be reviewed and potentially a new resolution obtained.

Planning permissions granted before the decision of the High Court could also be subject to legal challenge, providing that is submitted within the statutory 6 week period from the date of the planning permission.

Long term

Subject to the result of any appeal, the High Court current decision is a significant blow for developers wanting to bring forward small scale developments.

The Chief Executive of the Federation of Master Builders has already issued a statement stating 'large numbers of small commercial sites with low current use values which could be more productively turned over to housing, will now not come forward without this policy in place.'

While it may be of little consolation, it should be noted that such developers only have to pay financial contributions towards affordable housing where it is viable to do so (see paragraph 173 of the NPPF and specific local plan policies).

Developers/landowners also continue to have recourse to Section 106BA, BB and BC of the Town and county Planning Act 1990, which provide an application and appeal procedure to review affordable housing contributions on the grounds of viability.


This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.