High Court declares mayor's late stage viability review requirement unlawful for short-term schemes

London boroughs and the mayor will no longer be allowed to impose late-stage viability reviews on developments that do not take 'many years' to build, according to a High Court order issued following a legal challenge by a group of retirement housing developers.

The Royal Courts of Justice, London
The Royal Courts of Justice, London

However, the requirement will be restored for all schemes of more than ten homes, if policies in the new draft London Plan are adopted. The final London Plan is due to be published in winter 2019/20. 

In late May, judge Mr Justice Ouseley found that a key element in mayor Sadiq Khan’s affordable housing and viability supplementary planning guidance (SPG) was unlawful, following the developer's judicial review challenge.

Retirement living developers McCarthy & Stone, Churchill Retirement Living, PegasusLife and Renaissance Retirement launched a judicial review against the guidance on the grounds that it had been unlawfully introduced.

In his judgement, Mr Justice Ouseley said that the SPG, which was adopted in August 2017, was inconsistent with the existing London Plan in its requirement for late stage viability reviews on all developments over ten units.

Instead, the London Plan states that late stage viability reviews can only be imposed on schemes "which are likely to take many years to implement".

However, the judge rejected the housebuilders' arguments that the SPG's adoption of a 35 per cent affordable housing threshhold was inconsistent with the London Plan. He also rejected two other grounds of the developers' legal challenge.

Following further arguments from both parties, the judge issued a declaration yesterday which clarifies his findings and specifies those parts of the August 2017 SPG that have been found unlawful, which he states as the "last sentence of paragraph 10".

However, the declaration does not quash that element of the SPG and the judge did not issue a cost order against the mayor.

According to the developers, retirement housing schemes typically take 12 to 18 months to complete and would rarely be subject to the London Plan requirement limiting late stage reviews to schemes taking "many years" to complete.

In a statement, they said the requirement for such reviews on all schemes, once the development has been completed, "would have increased development risk and prejudiced the delivery of retirement developments significantly".

They added: "The decision is essential as the current SPG would have made it economically impossible to build retirement developments in London."

A spokesman went on to say: "We made it clear that the late stage review blanket provision was the main point of the SPG that we found unacceptable, and that the mayor had ignored our concerns. The High Court has agreed that the provision was unlawful and now neither the mayor nor any decision maker can rely on that provision in the SPG."   

The SPG introduced a "fast-track" process for all residential schemes built without public subsidy, including specialised retirement housing developments, that offer at least 35 per cent on-site affordable housing.

Under the guidance, developers offering less than this level have to submit a viability assessment to the Greater London Authority (GLA) at three stages of the scheme, under the late stage viability review, but those providing a higher amount of affordable housing do not.

The retirement housing developers have argued that their products do not typically include affordable housing and are therefore subject to the requirement.

However, the requirement that all sites of over ten homes should be subject to at least three viability appraisals is included in the new draft London Plan, which is set to be examined at the end of the year.

Jules Pipe, the GLA's deputy mayor for planning, regeneration and skills: said: "This judgement supports the mayor’s threshold for affordable housing and will have no impact on the mayor’s plans to increase significantly both the number of genuinely affordable homes delivered in London, and the number of retirement properties.

"The judge noted that the mayor’s draft London Plan includes the same requirement for late stage reviews on shorter term development as the SPG and has weight as an emerging plan."


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