High Court block efforts to slash affordable housing levy

// HA News

A controversial proposed Tory planning policy called the ‘vacant building credit’ has been stopped by High Court after fears that some landlords could avoid paying over £1bn per year in affordable housing payments.

Housing Minister Brandon Lewis revealed the plan in the latter stages of last year and immediately met disapproval from a multitude of councils that were already experiencing critical housing shortages.

The concept allowed housing developers who had bought vacant office buildings with a view to converting them into flats to pay only an affordable housing levy on new living space created, rather than on the whole building in its entirety. Prior to the ‘vacant building credit,’ house builders were legally required to provide affordable homes within all new developments or instead pay a contribution to the council allowing them to build affordable homes elsewhere within the area.

Sickened by the idea that some developers would be freed of their obligations to help tackle the housing crisis, West Berkshire District council and Reading Borough council decided to challenge the policy and demand a judicial review. Following a judge ruling, it was decided by the High Court that part of the policy was incompatible with the statutory planning framework, and was ordered to be removed from the government’s national planning practice guidance going forward.

In addition, a separate policy that excluded developments of 10 homes and sites under 11,000 square feet from contributing to the affordable housing provision was also quashed.

The Department for Communities and Local Government expressed disappointed with the ruling and confirmed that they will be seeking permission to appeal the decision. A spokesman said “We’ve got Britain building and we’re determined to maintain this momentum, including by reducing the red tape and extra costs that prevent smaller developments from getting built.”

Industry comments:

The HBA has always regarded the small sites exemption policy as crucial to ensuring that SME developers compete on a level playing field with larger companies.

Policy Advisor at the House Builders Association, Rico Wojtulewicz commented “Although appreciating the High Court’s effort in providing an objective judgement, this ruling does not appear to consider many practical challenges which SME house builders face on a daily basis. SME developers stimulate their local economies by training and employing local skilled labourers, and benefit local communities. Local authorities should seek to work alongside small and medium-sized developers, rather than discouraging them from contributing to the very targets that the local authorities want to achieve.”

Chief Executive of the FMB, Brian Berry said “This decision threatens 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. In the 1980s, there were more than 10,000 small and medium-sized (SME) house builders in the UK building two thirds of all new homes. There are now fewer than 2,500 SME house builders  and between them they build less than one third of all new homes. The reasons for this decline are complex, but the burden of planning obligations which has been placed on small sites and added to over time, is a significant contributory factor to this.”

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