In a recent letter, the government’s legal department said it is the communities secretary's "unambiguous policy position" that land or site value "should reflect policy requirements".
The letter to the London Borough of Islington came after a recent appeal decision (see DCS No 200-004-148) on the Parkhurst Road Territorial Army site in the borough. An inspector refused permission on amenity grounds, but accepted the developer’s argument that only 14 per cent affordable housing was viable because of factors including the price paid for the land.
However, the developer could not demonstrate that it had taken Islington's affordable housing policies into account when bidding for the site, and so the borough issued a "letter before claim" to the communities secretary, as the first step towards a potential judicial review.
Maintaining that it was not appropriate for the council to bring a review claim in this case as the inspector had refused planning permission, the government instead directed the borough to argue its position in respect of viability in future applications.
Islington Council’s executive member for housing and development James Murray welcomed the government’s "clear confirmation" of its position. He said: "Londoners desperately need more affordable housing, and we need to make sure developers are making a fair contribution.
"However we, and many other councils across London, are concerned that developers are using the viability process to argue they can’t afford to provide much or any affordable housing because they paid too much for land."
The council said its position has been supported by London mayor Boris Johnson and the Boroughs of Brent, Hackney, Merton, Southwark and Tower Hamlets, as well as homelessness charity Crisis.