A new government policy which excluded small developments from affordable housing levies has been quashed by the high court.
The National Planning Policy Guidance, introduced in November 2014, excluded schemes of fewer than 10 houses from affordable housing levies.
It also created the controversial vacant building credit, allowing developers planning to convert empty offices into flats to only pay an affordable housing levy on new space created.
The policy was challenged by West Berkshire district council and Reading borough council following an outcry from local authorities, which feared it would significantly reduce the volume of housing they could deliver.
The challenge was upheld by the court, which found that it was “incompatible” with the Town and Country Planning Act 1990 and therefore “unlawful”.
The ruling was welcomed by affordable housing campaigners, including Labour’s London mayoral hopeful Tessa Jowell. She said the policy had done “untold damage to London”.
However, property agents welcomed the government’s announcement that it would challenge the ruling on the ground it would affect the viability of small developments.
Gerald Eve planning partner Peter Dines said: “This is a clear blow for the government as it tries to increase the number of homes being built to address the housing crisis.
“It will also have to reassess the introduction of significant policy changes through the NPPG, particularly as it considers its long list of planning reforms, for this term.”
JLL director David Ramsay added: “This change in legislation will make smaller developments less viable. Britain is in desperate need of more homes, so it is disappointing that smaller builders who make an important contribution to the country’s housing provision are being discouraged.”
jess.harrold@estatesgazette.com
