The Government has withdrawn a policy change in relation to section 106 affordable housing restrictions on small sites.
Last November, the Government announced a number of changes to national planning policy in relation to section 106 planning obligations in an attempt to remove what was considered to be a disproportionate burden imposed on small scale developers and self-build developments. Hence, for residential property development sites of 10 units or less (and with a maximum combined gross floor space of 1000 square metres), policy was changed so that affordable housing contributions were not to be sought. In designated rural areas, authorities were advised they could choose to implement a lower threshold of 5 units or less, beneath which affordable housing contributions again should not be sought. These policy changes were therefore introduced into the National Planning Policy Framework (Planning Practice Guidance on Planning Obligations). In addition, the Government announced that a financial credit, equivalent to the existing gross floor space of any vacant buildings brought back into lawful use or demolished for re-development, should be deducted from the calculation of any affordable housing contributions sought from relevant development schemes.
However, following the judgment in the case of R (on the application of West Berkshire District Council and Reading Borough Council) v Secretary of State for Communities and Local Government [2015] EWHC 2222 (Admin) on 31 July 2015, in which the High Court ruled that the introduction of the exemption of small development sites from affordable housing contributions, and the new vacant building credit, were both unlawful, the Government has now removed paragraphs 012 to 023 from the policy guidance on planning obligations. Accordingly, unless the case is successfully appealed, or the Government introduces further policy in a manner not so susceptible to judicial challenge, developers of smaller sites are faced with an exposure to affordable housing contributions (as provided for in existing local plans) that the Government was seeking to discourage.