Last week the Court of Appeal quashed a landmark High Court ruling that had overturned the government's affordable housing exemption policy last year. The policy stated that sites of under ten units or less than 1,000 square metres of floorspace should not be eligible for affordable housing contributions.
In their High Court challenge, West Berkshire and Reading Councils had successfully overturned a 2014 ministerial statement that introduced the exemption into national Planning Practice Guidance (PPG) and the policies were removed.
However, following an appeal by the government, the Court of Appeal has now quashed the grounds on which the High Court case was won. The Department for Communities and Local Government (DCLG) said the ruling "restores" the policy, which would help smaller builders. The two councils said they are "considering their options with regard to appeal". Stuart Crickett, associate director at planning consultancy WYG, said: "The government can once again amend the PPG to bring the former policies back into force."
Experts said a key aspect of the latest judgment was its suggestion that, despite the positive outcome for the government, authorities have the power to resist the national exemption through their local plans. Court of Appeal judges said the councils' argument that the wording of the 2014 policy meant it should be applied in a "blanket fashion" was misplaced, and that the High Court judge had wrongly "conflated what the policy says with how it should be deployed".
Crickett said: "It's for decision-makers to take a view on how much weight to attach to national or local plan policy." He added that the judgment would lead to uncertainty among authorities about how much weight should be applied, which the DCLG needed to clarify "very quickly".
Niall Blackie, a member of the Law Society's specialist planning panel and senior partner at law firm FBC Manby Bowdler, said: "I'd expect appeal inspectors to favour national policy, unless there is good evidence for a local departure from it." Lisa Tye, partner at law firm Shoosmiths, said the judgment gives authorities "more ammunition to say why this policy shouldn't be applied". She added that councils that have adopted policies requiring affordable housing on small sites in the past year would not necessarily have to revise them as many "should already have that justification".
Graham Jones, the Planning Officers Society's section 106 specialist, said authorities would have to accept the policy in the short term. He said: "They will want to consider whether local circumstances allow them to propose a lower threshold through the local plan process. With the government policy in place, they are going to have to make a very good case."
Sarah Davis, senior policy and practice officer at the Chartered Institute of Housing, said that it feared an impact on affordable housing provision in rural areas, where many developments are on small sites. Davis said that authorities looking to implement affordable housing policies on such sites would have to make amendments to their emerging local plans, which "might cause delays" to the preparation of the documents.
Jones said the ten-unit threshold is "a very blunt instrument" that would "deny the opportunity for many authorities to secure much-needed affordable housing in circumstances where there are no issues of viability". He added: "It's clear that the government does not trust local authorities or examiners to produce balanced affordable housing policies through the local plan process."
However, Crickett said the "positive" judgment was "good news for small sites developers". He and Blackie expect applicants to be able to challenge local plan policies that call for affordable housing on small sites. Blackie added that applicants could argue that such policies are out of date because they do not take into account the Court of Appeal judgment. He said this could even leave recent planning permissions made on the basis of such policies open to challenge.
Councils that currently require affordable housing on smaller sites include Oxford City and Shropshire. The latter supported the judicial review. According to the Local Government Association, 80 per cent of housing delivery in Shropshire is on sites of five units or fewer. Its planning services manager, Ian Kilby, said the council was "considering its position in light of the judgment".
Oxford City Council requires residential sites of four to nine units to contribute to affordable housing provision elsewhere, and about 50 per cent of its developments are on sites of ten or fewer homes. Its leader, Bob Price, said the judgment could "undermine our ability to provide the affordable homes that Oxford needs".