In Stonewater (2) Ltd v Wealden District Council [2021] EWHC 2750 (Admin); [2021] PLSCS 179 the High Court has confirmed the relevance of section 106 agreements in determining applications for social housing relief from Community Infrastructure Levy.
The claimant had purchased a site with planning permission for a residential development, with 35% affordable housing provision being secured by the associated section 106 agreement. However, the claimant actually intended to bring the site forward as 100% affordable housing and therefore applied for social housing relief from CIL for all of the dwellings. The application was rejected by the council on the basis that only 35% of the dwellings could be affordable housing as bound by the section 106 agreement and therefore the remaining 65% of the dwellings would not constitute “qualifying dwellings” under regulation 49(2) of the Community Infrastructure Regulations 2010.
The claimant challenged the council’s decision on the basis that a planning obligation is not relevant to whether relief from CIL should be granted or a pre-requisite to it being granted and that the council had erroneously taken into account its own financial gain in making its decision. The council argued that it had insufficient evidence that the housing would in fact be brought forward as 100% affordable, in particular because the claimant had refused to enter into a subsequent section 106 agreement to alter the secured level of affordable housing provision.
In rejecting the claimant’s challenge, the court referred to regulation 51(3)(d)(ii) of the CIL Regulations which requires the submission of evidence that a development qualifies for social housing relief. The court found that whether this evidence is sufficient or not is a matter for the decision maker, in this case the council, and that the existence and wording of section 106 agreements may constitute such evidence and therefore be taken into account when considering any application for relief.
On an analysis of the section 106 agreement, the court found that the wording did fix the affordable housing provision at 35% as it referred to a precise number of units as opposed to any minimum or maximum number. The court refused to imply the words “at least” into the document as it found this was not necessary to make sense of it, following the strict test for implication as set out by the court in Trump International Golf Club Scotland Ltd v Scottish Ministers [2015] UKSC 74; [2015] PLSCS 362.
This case clearly demonstrates that the determination of applications for relief from CIL is yet another area of planning law which constitutes a matter for the decision maker, with interference by the court requiring the high bar of unreasonableness or irrationality to be reached. It also creates another layer of consideration for developers when negotiating section 106 agreements as they must ensure that if CIL relief is to be applied for the section 106 agreement will not hamper this and instead, ideally, support it.
Erica Snellgrove is a solicitor in the planning team at Irwin Mitchell
