Islington Council in north London has won a landmark case against a property developer over affordable housing.
The Planning Inspectorate upheld the council’s refusal of planning permission for a site in Parkhurst Road in Islington, on the grounds that the application does not provide the maximum reasonable amount of affordable housing.
The developer applied to build 96 homes on a former Territorial Army Centre and initially sought to avoid providing any affordable housing.
The council’s policy requires developments to provide the “maximum reasonable” amount of affordable housing, with 50% affordable housing provision being the starting point.
The council refused planning permission on 13 May 2016, but the developer appealed the decision and eventually increased its offer of affordable housing to 10%. The Planning Inspectorate has now dismissed the developer’s appeal.
The Planning Inspectorate’s decision centres on how the viability of the development was assessed – and, in particular, how the price of land should be determined.
Viability appraisals are a tool increasingly used by developers and their viability consultants in recent years to enhance profits and/or minimise risk at the expense of delivering affordable housing, as required by the council’s planning policies on affordable housing.
The council said that this “extremely important appeal decision” confirms that a “…landowner is required to have regard to the requirements of planning policy and obligations in their expectations of land value”.
The Planning Inspectorate also considered the developer’s market value methodology – which relied on transactional evidence not comparable to the development site – as an inappropriate approach.
The appeal decision follows an extended application process on the site, with very low levels of affordable housing proposed by the developer.
The initial planning application was submitted in 2013 by developers First Base Limited, with Gerald Eve retained as viability consultants – and the council refused planning permission for the development twice on the grounds of not providing enough affordable housing, as well as other matters.
The low levels of affordable housing provided on the scheme was being justified by the developer based on factors such as the purchase price paid for the site and land transactions of other schemes.
Islington Council’s Executive Member for Housing & Development, Councillor Diarmaid Ward, said:
“Islington, like all boroughs in London, faces a significant shortage of affordable homes.
“A viability process in planning that allows developers to rely on a flawed approach to market value that delivers little or no affordable housing makes this problem worse – and means developers are not making a fair contribution to the community.
“The decision from the Planning Inspectorate sends a strong signal that developers need to take into account planning policy requirements when bidding for land – and that they cannot overbid and seek to recover this money later through lower levels of affordable housing.
“This decision will ensure the maximum reasonable amount of affordable housing is provided and strongly discourage developers and landowners from manipulating the development viability process to deliver fewer affordable homes.”
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