Today’s judgement by the Court of Appeal restores common sense to the system, and ensures that those builders developing smaller sites – including self-builders – don’t face costs that could stop them from building any homes at all.
Developers have been given a boost after the Court of Appeal reversed a judgement that scrapped the small sites affordable housing contributions policy.
The Court of Appeal decision restores the policy which means affordable homes contributions will fall to those bigger developers building the largest sites – while those smaller builders developing sites of 10 homes or fewer will be able to get work started on their sites, without facing charges that could leave them unable to build any homes at all.
Ministers criticised moves by West Berkshire District Council and Reading Borough Council who challenged the policy and brought legal action as “a total waste of taxpayers’ money”.
Speaking of the decision housing and planning minister Brandon Lewis said: “We’re committed to building more homes, including record numbers of affordable homes – key to this is removing unnecessary red tape and bureaucracy that prevents builders getting on sites in the first place.
“Today’s judgement by the Court of Appeal restores common sense to the system, and ensures that those builders developing smaller sites – including self-builders – don’t face costs that could stop them from building any homes at all.
“This will now mean that builders developing sites of fewer than 10 homes will no longer have to make an affordable homes contribution that should instead fall to those building much larger developments.”
And he blasted the local authorities that raised the case adding: “This case was a total waste of taxpayers’ money and the uncertainty the case created amongst housebuilders stalled new development from coming through.
“I hope councils focus their time and money on delivering the front line service that their residents rely on and helping support new housebuilding in their areas that is very much needed.”
The small sites affordable housing contributions policy was introduced in November 2014 to help boost housing delivery and incentivise brownfield development. It introduced a national threshold of ten units or fewer (and a maximum combined gross floor space of no more than 1,000 square metres) beneath which affordable housing contributions should not be sought.
The policy was introduced to tackle the disproportionate burden of developer contributions on small scale developers, custom and self-builders.
Noel Meredith, executive director of United Trust Bank, said: “The Court of Appeal’s judgement overturning a High Court ruling and reinstating the government’s previous guidance to local authorities is very good news for smaller developers, the government, and anyone affected by the UK’s housing shortage.
“In November 2014, the government issued a ministerial statement advising local authorities that affordable housing should not be sought on developments of ten units or 1,000 sq m or less and that where a vacant building is brought back into use or demolished for redevelopment, local authorities should provide a “credit” equivalent to the floor space of the vacant building to be set against affordable housing contributions.
"That guidance was overruled by the High Court last summer and the ruling had a material impact on the viability of many smaller development sites because of the additional burden developers faced of meeting the costs of affordable housing obligations.
“By reinstating the government’s sensible guidance on this matter, the Court of Appeal will bring many smaller developments previously mothballed back into play and encourage smaller developers to once again to see small sites as good and viable opportunities.
"Not only does this decision help smaller developers, it will also help the government to meet its challenging target of building 1 million new homes by 2020 and everyone affected by the housing shortage.”
This story was first featured in our sister publication Specialist Finance Introducer.
