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Reduction in Affordable Housing Obligations Filters through to Case Law

House Builders successfully use changes in legislation to reduce or remove affordable housing obligations.

In two recent decisions by the Planning Inspectorate House Builders have been successful in using section 106BA to dramatically reduce their affordable housing obligations. Section 106BA of the Town and Country Planning Act 1990 (“TCPA 1990”) was brought into force in April 2013, by the Growth and Infrastructure Act 2013.

Redrow Homes (“Redrow”) – Residential Development in Holsworthy, Devon (DCS 200-001-292)

This case concerned a developer (Redrow) who had entered into a section 106 agreement in 2010 in respect of a 151 dwelling development. Despite acquisition costs that were considered to be at a premium for the area, they committed to deliver 60 affordable dwellings (40%). Using section 106BA of the TCPA 1990, Redrow recently applied to have the affordable housing obligations reduced to 31 dwellings (20%) whilst also removing all obligations for shared ownership but Torridge District Council were only prepared to accept a slight reduction to 55 dwellings. With reference to viability, Redrow’s evidence was predicated on a development profit of 20%, while the Council proposed 17.5%. Redrow appealed to the Planning Inspectorate following the Council’s failure to determine their application within 28 days.

After consideration the Planning Inspector ruled that a compromise on the development profit of 18% was reasonable and that the affordable housing requirement should be reduced to 36 dwellings (24%). In addition, some (but not all) references to shared ownership dwellings were to be removed.

Mast Pond Wharf Limited (“Developer”) – Mast Pond Wharf, Woolwich (DCS 200-001-500)

In this case the developer (TDeveloper) was proposing to redevelop the South East London Aquatic Centre to provide 100 flats (among other regeneration initiatives). The original permission envisaged 20 affordable dwellings as part of the scheme. The Developer applied for the complete removal of this requirement and argued that the removal of the requirement would deliver a development profit of 10%. The Planning Inspector agreed with the Developer and removed all affordable housing requirements.

What does this mean?

The introduction of s106BA is seen as a positive move for the developer and is designed to encourage investment and kickstart the economy by making more development projects economically viable. However many local planning authorities are understandably nervous about the prospect of large numbers of applications and their duty to issue a decision within 28 days of receipt of the same. These two recent decisions have done little to calm troubled waters and now more than ever it is imperative that both Local Planning Authorities and Developers obtain sound advice on viability as this legislation can be used to advocate a reduction in much needed affordable housing.

For more information please contact Robin de Wreede on 01823 279279.

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