This blog post explores how the meaning of affordable housing has evolved following the publication of the revised National Planning Policy Framework (“NPPF”) on 24 July 2018 and the Draft New London Plan showing Minor Suggested Changes on 13 August 2018. This is part of our ‘back to basics’ affordable housing series and is intended to supersede entry 1 in the series. Continue reading
Tag: section 106 agreement
The Government is recommending that viability is assessed in detail by the local authority at the stage of setting its development plan and allocating land for certain uses, and that specific assumptions should be made at that stage regarding land value and what is a reasonable return for a developer – using the ‘existing use value plus’ (EUV+) land valuation method and assuming a return of 20% of gross development value (GDV) for the developer in appropriate circumstances. It could then be more difficult for a developer to re-open negotiations on viability at a later stage.
The Government’s new Draft Planning Practice Guidance for Viability sets out more detail on the new proposals, as we explain in this post. This draft guidance is one of a raft of new publications which the Government have released, including new draft National Planning Policy Framework (NPPF) and a consultation on developer contributions including Community Infrastructure Levy (CIL) which are all aiming to increase the supply of housing, provide certainty for developers, capture land value more effectively and improve and speed up the planning process.
Author: Matthew White, Partner and Head of Planning, London
Developers with planning permission for residential development can currently apply to renegotiate affordable housing obligations which have become economically unviable. However, this review mechanism will cease to be effective on 30 April 2016. Therefore applicants have until this date to apply to renegotiate, and later requests will not be considered.
The review mechanism was introduced as a temporary measure in 2013 (under new sections 106 BA-BC of the Town and Country Planning Act 1990) to assist stalled schemes, and it was due to end on 30 April 2016. According to the Government's Spending Review and Autumn Statement 2015, the mechanism was going to be extended to 2018. However the Department for Communities and Local Government (DCLG) has confirmed to us that the provisions will in fact cease to be effective on 30 April 2016, as originally stated in the legislation. DCLG accept that this is a change in direction from the autumn statements but state that they are not planning to make a formal announcement on the matter at this stage.
Author: Martyn Jarvis, Associate, Planning, Real Estate, London
The UK is facing a housing crisis, most pronounced in London, and this is set to be a key factor in the forthcoming Mayoral elections. Meanwhile, commercial viability is the talk of the town. How “viable” a scheme is will influence how much affordable housing can be provided. Requiring disclosure of viability information across London, standardising land value calculations, standardising viability methodology and fixing affordable housing targets are amongst recent recommendations made to the Government and to the Mayor.
Transparent viability information is already required in Islington, and with Greenwich and Southwark following suit where schemes are not policy compliant, the London Assembly are now urging the Mayor to adopt this approach across London. Over the past few weeks the London Assembly Planning Committee and London First have both presented papers aimed at steering a policy shift once the new Mayor takes office.
Herbert Smith Freehills' real estate development team are monitoring a number of areas of law likely to change during 2016. Here is a summary of some key areas of change we expect in the field of planning (from a development perspective), highlighting some opportunities these changes may present.
In November 2014, the Government published a Ministerial Statement which outlined a policy known as 'vacant building credit' whereby buildings which were empty could be given a credit, equivalent to the vacant floorspace of the building, to be set against affordable housing contributions. The policy was always controversial and had not had a high rate of implementation. The same Ministerial Statement also introduced an exemption from section 106 contributions to affordable housing for small developments (10 units or 1,000 sqm or less).
Both policies have now been quashed, following the court decision in West Berkshire District Council and Reading Borough Council v Department for Communities and Local Government (31 July 2015). The Government had hoped that the policies would encourage the bringing of empty buildings back into use, but the court held that they conflicted with other planning policies and the national planning framework, they were introduced without proper consultation and would have led to a substantial reduction in affordable housing provision.
The status of planning applications made and permissions granted between 28 November 2014 and 31 July 2015 which involve vacant building credit or the affordable housing exemption is now uncertain. The case is also likely to have wider implications for Government procedures for introducing future national policies. Since the court's decision, the national planning practice guidance (NPPG) online has been updated with a reference to the case and the relevant paragraphs relating to the Ministerial Statement have been removed (paras 12 – 23 under the 'Planning Obligations' section).
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A High Court Judge has ruled that the monitoring fees routinely added by local planning authorities to section 106 costs will not generally meet the test of ‘necessity’ required under the CIL regulations. For developers in the middle of section 106 negotiations, this could be used as a basis for resisting these fees.