Why inspectors backed one council's policy requiring affordable housing contributions from small sites, but blocked another's

Conflicting decisions from inspectors over two constrained councils' attempts in their local plans to seek affordable housing contributions from developers of small sites has prompted some confusion about how far national policy allows authorities to adopt such policies.

Oxford: inspector blocks small sites policy (pic: Matt Buck, Flickr)
Oxford: inspector blocks small sites policy (pic: Matt Buck, Flickr)

Observers say the fact that Reading Council could only deliver affordable housing needs within its boundaries swung in its favour.

In a report last month, an inspector approved Reading Borough Council’s proposals in its local plan to seek affordable housing contributions from schemes of nine or fewer homes – despite national policy stating that local authorities should only make such requests for schemes of 11 or more dwellings. But only a few months earlier, inspectors had rejected similar proposals from Oxford City Council.

"If the government wants to change a stance set out in the NPPF [National Planning Policy Framework], it needs to issue a formal consultation and provide the industry with clarification," said Philip Campbell, head of policy and public affairs at the Federation of Master Builders, a lobby group that represents the interests of small- and medium-sized (SME) builders. The FMB says SME builders often lack the financial resources to contribute to affordable housing without it denting scheme viability. "It's not helpful if the goalposts are constantly changing," said Campbell.

The 2018 revised NPPF confirms earlier guidance from 2014 that local planning authorities should not require affordable housing to be delivered on development sites of 10 homes or less – unless in exceptional circumstances. But inspector Louise Gibbons declared as sound Reading’s proposal to seek an affordable housing contribution equating to 30 per cent of the development value of sites of ten or more homes, a 20 per cent financial contribution from developments of five to nine dwellings, and 10 per cent on sites of one to four homes.

In her report dated 24 September, Gibbons noted that around 25 per cent of homes built in Reading are on smaller sites and concluded that "specific local circumstances" existed to support the council’s policy. Among these were the borough’s lack of greenfield sites "that are not affected by constraints such as flood risk and strategic open space", along with "stable" completion figures for small windfall sites between 2012 and 2018. This suggested there are few barriers for builders of small sites in the town, Gibbons wrote, indicating "the potential for delivery of affordable housing from smaller sites even in challenging economic circumstances".

Her report also noted Reading’s assumption that small sites would continue to deliver around 120 homes per year, with contributions towards affordable homes totalling £12 million over the plan period from 2013 to 2036. It equates to around five per cent of total affordable housing provision, according to Mark Worringham, planning policy team leader at Reading Borough Council. "We get some grumblings from developers but there is no evidence it puts them off; on the contrary, our completion rates suggest it is not much of a burden," he told Planning.

According to Worringham, Reading has approved around 30 planning applications requiring affordable housing provision on small sites since 2015 – the year the authority, and neighbouring West Berkshire Council, won a landmark High Court case to overturn the previous 2014 policy (introduced via written ministerial statement and included in national planning practice guidance), which exempted developments of ten homes, or 1,000 square metres, or less, from the requirement to contribute to affordable housing provision. This "long history of success means Reading expects to continue requesting contributions of this nature," Worringham said.

Meanwhile, Oxford City Council was peeved by inspectors Jonathan Bore and Nick Fagan’s decision against its policy to seek a 15 per cent affordable housing contribution for schemes of four to nine homes, and a 50 per cent contribution for schemes of 10 or more homes. Oxford’s policy has been in place since 2013 when national guidance was more relaxed, and has secured up to £1.4 million from housebuilders - enough to fund around 10 new council homes in the city, the council says. For the plan period, contributions from small sites would equate to around three per cent of total need. But the inspectors asked for the policy to be dropped.

"We recognise the issues in Oxford in relation to both market affordability and affordable housing need, as well as the constraints to site availability, but there is a bigger picture," their report in July said. A substantial proportion of Oxford’s housing need is to be met in neighbouring authorities, therefore the proportion of affordable homes that would be delivered from sites of four to nine homes within the city would be small compared to that provided in the wider area. "The argument for the policy is less than compelling," the report said.

Oxford issued a strongly-worded statement on the decision on 2 October. "This is utterly frustrating and hugely disappointing," said Councillor Alex Hollingsworth, Oxford’s cabinet member for planning. "[The decision] takes no account of local circumstances faced by a constrained city like ourselves. The policy could have delivered hundreds of new council homes during the lifetime of the local plan."

The statement said council leader Susan Brown would write to the secretary of state requesting amendments to the NPPF. "We urge the government to reverse its policy, [to support] cities like Oxford, which rely on smaller sites to help meet their housing needs," Hollingsworth said. He told Planning: "We don’t frame the situation in terms of competition with Reading – our criticism is of the underlying national policy, which does not reflect the needs of cities with lots of small sites rather than large ones, which affects our ability to deliver affordable housing." The inspector’s word is final, he conceded, so Oxford has little choice but to seek support from other councils facing similar challenges and "try to get the policy changed at national level".

Few experts contacted by Planning agreed to comment on possible reasons for the inspectors’ contrasting decisions. "This is a very live issue at the moment and I do not wish to annoy the Planning Inspectorate," one said.

Andrew Somerville, an associate director in the Reading office of consultancy Nexus Planning, said the examination inspector's final report "goes to lengths to explain why Reading’s circumstances of a highly constrained urban area and reliance on smaller housing sites are unique". "But these are not so different to many other urban/metropolitan authorities," he added. Reading’s Worringham echoed the Oxford inspectors’ view that the city is highly dependent on its neighbours to deliver housing, whereas "almost all of Reading’s affordable housing needs would be delivered within its boundaries."

The decisions are another twist in the complicated history of this subject. Although the 2015 ruling overturned the previous policy, a Court of Appeal ruling the following year effectively reinstated the exemption while permitting councils to make the case for exceptional circumstances. The policy was carried forward into last year’s revised NPPF. Yet, for some, it remains unclear what "exceptional circumstances" would permit them to adopt this controversial policy.

Somerville suggested that the Reading local plan, which is yet to be adopted, may still face legal challenge. He also pointed out that it was examined under the previous 2012 version of the NPPF, while the revised version emphasises the ten-home affordable threshold. This creates "a potential situation where new policy could be considered immediately out of date", he said.

  • The Planning for Housing conference, organised by Planning, takes place in central London on November 12. Speakers include housing minister Esther McVey, MHCLG chief planner Steve Quartermain and Taylor Wimpey planning director Mark Skilbeck. For details, click here

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