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‘Vacant building credit’ and small sites exemption 'restored' following successful government appeal


The Court of Appeal has ruled that a 2014 ministerial statement introducing the ‘vacant building credit’ and exempting small sites from affordable housing contributions was not unlawful.

A planning expert has said the effect of the decision appears to be that the policies should be considered a material consideration in planning decisions and changes to the UK government's National Planning Policy Guidance should be expected soon.

In a written ministerial statement in November 2014, housing and planning minister Brandon Lewis announced that housing developments in England of 10 units or fewer or that were smaller than 1,000 square metres in area would be exempted from section 106 affordable housing contributions. Lewis also announced that developers would receive a credit in respect of the amount of floorspace of a vacant building being brought back into use or demolished, which could be offset against affordable housing contributions.

The High Court ruled last year that Lewis’ ministerial statement was unlawful and the policy was immediately removed from the National Planning Policy Guidance (NPPG). High Court judge Mr Justice Holgate said the policy was incompatible with the statutory scheme. He said the UK’s planning system “presumes that planning applications will be determined in accordance with local plan policies” but the immediate effect of the policy was to create blanket exemptions from affordable housing policies in local plans.

The judge said Lewis had failed to take into account necessary material considerations. In Mr Justice Holgate’s opinion, the minister should have considered potential alternatives to the policy; a transitional period for its introduction; and its effect on the amount of land available to councils for the delivery of affordable homes.

Mr Justice Holgate found that the government’s consultation on the policy had been unlawful: failing to explain the reasons behind the proposals sufficiently to allow participants to respond intelligently; and failing properly to consider the responses received. He also said the government had failed to take into account the likely impact of the changes on specific groups of society protected by equalities legislation.

In a judgment handed down last week, three judges sitting in the Court of Appeal disagreed with Mr Justice Holgate on all grounds and reversed his decision.

The appeal judges considered that Lewis’s ministerial statement did not seek to contradict the aims of statutory provisions. They noted that “no systematic primacy is to be accorded to the development plan” under planning legislation, which requires decision-makers to weigh development plan policies against other material considerations including national policy. They said the mandatory language used by Lewis was “unobjectionable” and did not suggest that the policy should be applied without reference to other considerations.

“The policy’s unqualified terms do not demonstrate that it was intended to countermand or frustrate the effective operation of the statute,” said the judges. “The [communities secretary] was not obliged to assure the reader that that was not his intention, nor to state that his policy was subject to the development plan”.

The appeal judges said Lewis “was not … obliged to go further than he did into the specifics described by [Mr Justice Holgate]” as necessary ‘material considerations’. They said planning legislation “establishes a framework for the making of planning decisions”, but “does not lay down merits criteria for planning policy, or establish what the policy-maker should or should not regard as relevant to the exercise of policy-making”.

The judges found Mr Justice Holgate had been wrong to conclude that the government’s consultation had been so unfair as to be unlawful. They did not agree that the consultation document had misled local planning authorities into focusing their responses on the viability of delivering affordable homes on small sites. They said there was no requirement for the communities secretary to make his decision in line with evidence submitted by any particular group of consultees or to provide detailed analysis of specific options proposed by respondents.

The Court of Appeal was satisfied that the government’s equality statement had achieved compliance with equality legislation, despite taking a “broad brush approach”. The judges noted that the equality statement had been produced more than two months after the ministerial statement had been made. However, they decided that it was not the role of the Court to “punish … for the sake of it” and quash the ministerial statement, since the statement that was eventually produced was not legally inadequate, was produced in good faith and would not have resulted in a different decision had it been produced in a timely manner.

Planning expert Matthew Fox of Pinsent Masons, the law firm behind Out-Law.com, said: "The effect of this ruling appears to be that the small sites exemption and vacant building credit are restored as national planning policy. We understand that the Planning Inspectorate is now considering that both elements can be considered as a material consideration in planning terms. No changes have yet been made to the NPPG, but we would expect that this would be imminent, particularly in light of the changes arising from the lapsing of section 106BA of the Town and Country Planning Act and the passing of the Housing and Planning Act."

"This is an important ruling both for small and large sites, with the restoration of vacant building credit likely to prompt numerous discussions with local authorities for any applications that do not yet have consent (including those with committee resolutions). This is a change in policy from before this decision was handed down by the Court of Appeal, and so local authorities will need to take this into account in their decision making. Developers are now in a position to make this point strongly to them."

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