Town and country planning – Community infrastructure levy (CIL) – Social housing relief – Claimant social housing provider applying to quash decision of defendant local authority refusing application for social housing relief from CIL – Whether defendant erring in law – Application dismissed
The claimant, a not-for-profit provider of social housing, applied to quash the decision by the defendant local authority refusing its application for social housing relief under the Community Infrastructure Levy Regulations 2010 (the CIL Regulations), in relation to a residential development scheme of 169 houses at Oaklands, Ersham Road, Hailsham, East Sussex. The effect of the decision was to make the claimant liable for a levy in excess of £3m, which, it said, rendered the development scheme unviable.
Planning permission for 169 new homes on the site was originally granted by the defendant on the grounds that 35% (59 homes) would be affordable housing pursuant to the terms of an agreement under section 106 of the Town and Country Planning Act 1990. The site was later acquired by the claimant, which wanted to proceed with delivering 169 affordable homes.
By the time of the hearing, the parties agreed that the construction of the section 106 agreement was the key issue in the claim. In particular, whether it controlled the amount of affordable housing that could come forward pursuant to the planning permission and cap the amount at 35% of the dwellings in the development.
As the case involved interpretation of the CIL Regulations, the interested party secretary of state was joined as an interested party at the court’s request and directed to produce written submissions to assist the court. Those submissions were limited to the interpretation of the regulations and did not extend to the facts and circumstances.
Held: The application was dismissed.
(1) The proper interpretation of tax legislation required a close analysis of what, on a purposive construction, the statute actually required. That approach had also been applied to the interpretation of the community infrastructure levy (CIL): Barclays Mercantile Business Finance Ltd v Mawson [2004] UKHL 51; [2005] 1 AC 684, R (on the application of Orbital Shopping Park Swindon Ltd) v Swindon Borough Council [2016] EWHC 448 Admin; [2016] PLSCS 71 and R (on the application of Gardiner) v Hertsmere Borough Council [2021] EWHC 1875; [2021] PLSCS 123 followed.
Under regulation 49(1), a chargeable development which comprised or “is to comprise” qualifying dwellings was eligible for relief from liability for CIL. A qualifying dwelling was likely to be a dwelling which was yet to be constructed. That was apparent from regulation 51(3)(b), which required, with one exception, all claims for social housing relief to be made before the commencement of the development.
For the purposes of regulation 49, a qualifying dwelling was one which would satisfy at least one of the six conditions set out in regulation 49(3) – (7B). Those conditions addressed the criteria for the provision of social rent, affordable rent and intermediate rent dwellings by a local housing authority, a private registered provider of social housing, a registered social landlord or other bodies.
(2) By regulation 51(1), a person wishing to benefit from social housing relief had to submit a claim accompanied by evidence that the chargeable development qualified for social housing relief by reference to the conditions mentioned in regulation 49: regulation 51(3)(d)(ii). Whether the evidence was sufficient to demonstrate that one or more of the conditions would be satisfied in the future was a matter for the decision-maker, having regard to the specific facts and circumstances of the case, subject to public law principles including Wednesbury reasonableness.
Subject to the satisfaction of the procedural requirements in regulation 51, the grant of social housing relief was mandatory. If the conditions were met, relief had to be granted. There was nothing in the regulations, either expressly or by implication, which enabled the decision-maker to consider the effect of granting the relief, including, for example, the impact on CIL receipts or the question of whether there would be a perceived over-concentration of affordable housing in a particular locality.
(3) The inclusion of a section 106 agreement, or similar legal obligation, as part of the evidence in support of an application for relief under conditions 2 or 3, might be a material factor in the decision-maker’s assessment of the evidence. Whether the presence of a section 106 agreement, or its absence, justified the grant or refusal of a claim for relief would depend on the facts and circumstances of the particular case.
In the case of a public document such as the section 106 agreement, there was only limited scope for the use of extrinsic material or the factual background, such as the shared knowledge of the contracting parties, in the process of interpretation: R (Lambeth London Borough Council) v Secretary of State for Housing, Communities and Local Government [2019] 1 WLR 4317, Trump International Golf Club Scotland Ltd v Scottish Ministers [2015] UKSC 74; [2015] PLSCS 362; [2016] 1WLR 85, Norfolk Homes Ltd v North Norfolk District Council [2021] PTSR 863 and Wood v Capita Insurance Services Ltd [2017] AC 1172 considered.
(4) The language of the document in the present case indicated that the agreement controlled the amount of affordable housing that could come forward, by fixing a specific requirement of 35% affordable housing. A scheme which provided less or more units of affordable housing would not comply with the section 106 requirement and hence would be contrary to its terms and to that extent unlawful, albeit the defendant would have a discretion to vary the section 106 agreement or enter into a new agreement.
By imposing a precise amount of affordable housing, rather than a “floor”, the section 106 agreement was doing no more than giving effect to the planning application before it, which was for a scheme of 35% affordable housing, and to the expectations of both the developer at the time and the defendant in granting permission.
The claimant’s application for relief, on the basis of 100% provision of affordable housing, was made in circumstances where there was in existence a section 106 agreement with provision for affordable housing at a lower level. The claimant had not taken up the defendant’s suggestion of a fresh section 106 agreement. Unless and until the defendant agreed, in the exercise of its planning judgment, to a fresh section 106 agreement or a deed to vary the existing agreement, the proposed 100% provision was unlawful.
Charles Banner QC (instructed by Clarke Willmott LLP) appeared for the claimant; Tim Buley QC (instructed by Wealden District Council) appeared for the defendant; Ben Du Feu (instructed by the Government Legal Department) made written submissions for the interested party.
Eileen O’Grady, barrister
Click here to read a transcript of Stonewater (2) Ltd v Wealden District Council