Billions could be lost in affordable housing funding after the Court of Appeal reinstated the Vacant Building Credit.
The 2014 government policy allowed owners of buildings to sidestep affordable housing payments. Buildings that are empty when they gain planning permission for conversion to residential incur a contribution to affordable housing only on any extra space created.
The policy was meant to get redundant land and property back into use, but councils left out of pocket protested to housing minister Brandon Lewis.
Supporting the credit in 2015, he said: “It is crazy to tax empty buildings being brought into productive use. Such tariffs hinder regeneration and lead to empty, boarded properties.”
But after Westminster City Council claimed it could lose more than £1bn every year in affordable housing contributions and experts warned that the London boroughs of Camden, Islington, Southwark and Kensington & Chelsea would also be hit, the High Court quashed the policy in July 2015.
However, the Court of Appeal has overturned the decision, re-introducing the policy and the ruling that a development of 10 units or fewer does not need to include affordable housing.
The policy could still be challenged in the Supreme Court.
Indigo Planning said that the redevelopment of vacant buildings in the regions could be made more financially viable by the vacant building credit but warned of its effect on London.
Simon Grundy, Indigo’s regional director, said: “The government’s recent appeal against the Reading and West Berkshire judgment represents a further development for the vacant building credit.
“With such a pressing need for affordable housing and a recognition from the industry that it needs to be a priority, this move may feel counterproductive.”
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