Smaller scale housing developments could become unviable following a High Court judgement overturning affordable home exemptions introduced by ministers last year
In November 2014 a ministerial statement from planning minister Brandon Lewis announced that developments of fewer than 10 homes – five in some rural areas – would be exempt from requirements to provide affordable homes.
But on Friday Reading Borough Council and West Berkshire Council won their legal challenge, which quashes relevant parts of national planning policy guidance.
Tony Page, Reading’s lead councillor for strategic environment, planning and transport, said: ‘This judgement is excellent news not just for Reading and West Berkshire councils but for all the people looking for affordable places to live.’
However, Brian Berry, chief executive of the Federation of Master Builders said the decision threatened to ‘accentuate the housing crisis by casting a dark cloud on small local builders at just the time when these firms are beginning to show signs of real growth’.
He said the government’s introduction of the threshold ‘recognised that the small firms which invariably build out small developments have proportionately higher costs and do not necessarily have the muscle or inclination to challenge local authority demands for affordable housing.
‘The likely response is that they will avoid attempting to build on certain sites full stop and because of this, there will be less homes of all descriptions.’
Ian Crane, director at Fletcher Crane Architects, agreed that the viability of smaller schemes would be hit by the ruling.
He said: ‘There are lots of sites in London and the South East where the opportunity exists for developments that are just on the threshold of stacking up.
‘We recognise the benefits of the mechanism to provide affordable housing, but not at the expense of delivering any homes at all. When you add it up across the nation this could have a big effect.
A spokesman for the National Custom & Self Build Association said that the ruling could harm the government’s drive to encourage self-build housing schemes.
He said: ‘Given the series of other rulings in favour of individual self-builders upholding their exemption from s106 contributions, we are surprised and disappointed to learn of more uncertainty for people wishing to build their own homes in the UK.
‘Planning ahead is key to the financial viability of projects and we strongly feel that self builders who, until the late 2000s we never considered appropriate for such payments, may yet again find themselves having to pay thousands of pounds simply to build their own homes.’
However Paul Templeton director at developer Baobab told AJ: ‘I have always flown against the wind on this one. I don’t have a particular problem with affordable home requirements.
‘If it is rationalised then it is a contribution rather than a stealth tax.’
Alex Ely, partner at Mae Architects, agreed: ‘The extra costs will hurt initially but eventually they will be absorbed into land values and shouldn’t hit developers’ profits or the viability of schemes.’
The Department for Communities and Local Government said in a statement that it would appeal against the decision of the High Court.