Developers of small schemes of up to ten homes will have to face the same economic penalties as larger builders, after a successful challenge to new planning policies.
The High Court has re-written recent planning law in deciding that the Government was wrong to grant affordable housing exemptions to the type of schemes on land typically put together by local estate agents and built out by local small builders.
The Secretary of State for Communities and Local Government had made the exemptions to its policy in order to encourage small developers.
The two councils – Reading and West Berkshire – which brought the legal challenge to the Government have celebrated their victory.
But house builders and others said that as a direct result, fewer homes would be built as small schemes would be economically unviable, and the housing crisis would worsen.
At Reading Borough Council, Cllr Tony Page hailed the judgement by Mr Justice Holgate, calling it “excellent news not just for Reading and West Berkshire councils but for all the people looking for affordable places to live”.
DCLG is to try and overturn the decision.
It said it was “disappointed by the judgement”, as the new legislation had “aimed to reduce red tape and extra costs that prevent developments getting built”.
Law firm Coffin Mew said the judge’s decision would particularly affect urban residential development and small rural sites.
Nick Leavey, head of commercial property law, said: “The economic viability of small schemes is often on a knife edge, and this decision is likely to pull the rug from underneath those difficult to develop sites.
“It is also likely to have a negative effect on land values for future deals.”
At the Federation of Master Builders, chief executive Brian Berry said: “It is not appropriate to impose the same level of obligations applied to large multi-million pound developments to the smallest of developments being brought forward by the smallest firms.”
He warned that the ruling will exacerbate the present housing crisis rather than help to address it.
He said many small builders will now reassess plans that could have proved economically viable, but now will not be.
Berry added: “Many firms will avoid building on certain sites due to lower margins – a situation that could lead to fewer homes being built overall in the years ahead.”
Comments (2)
I had expected to see that this was big builders in the background controlling government policy so was surprised to see it came from local authorities. Unless of course, being totally cynical, any of those councillors are connected in any way with big developers. That said, here in Newcastle S106 money is used to prop up the council at the expense of those of us who have bought on new build sites. Eg. Not enough school places next to new build sites, council allowing strategic open spaces to be closed off to public use by the builders, nothing adopted for 12 years now on The Great Park, kids play areas downsized from original plans. All the time extra money into the coffers of the council when S106 renegotiated to allow more houses and thus more money to council. All the time the council working hand in hand with the builders. Then our head of planning went off to work for one of the builders.
Small developer client refuses to look at land in our area precisely because of this and other over expensive S106 charges. This was his view over 5 years ago He used to specialise in 5 – 25 unit sites.