High Court backs Islington in a landmark planning case on affordable homes

*** We are re-issuing this press release following an intervention on behalf of First Base Ltd. This amended press release clarifies that the developer for the site is Parkhurst Road Limited and First Base Ltd is the development manager. ***

A High Court judge has backed Islington Council in a long-standing battle between the council and developer Parkhurst Road Limited, who refused to provide affordable homes on a former Territorial Army site in line with the council’s planning rules.

The developer bought the site on Parkhurst Road in 2013 and has attempted to secure planning permission for a residential development with little or no affordable housing, ignoring the long-standing planning requirements on the provision of affordable homes set by the council.

An initial planning application was submitted in 2013. First Base Limited has been the development manager for this application, assisted by Gerald Eve as viability consultants. The council refused planning permission for this development twice on the grounds of not providing enough affordable housing, as well as other matters.

The case centres around the viability assessment of development and, in particular, how the price of land should be determined in planning, which is a tool increasingly used by developers and their viability consultants in recent years, to avoid complying with councils’ planning requirements on affordable housing.

Two lengthy public inquiries were held, both of which were won by Islington Council. Each time the low level of affordable housing provided on the scheme was being justified by the developer on factors such as the purchase price paid for the site, and land transactions of other schemes. Following the second public inquiry held in early 2017, an Independent Planning Inspector appointed by the Secretary of State, upheld Islington’s refusal of planning permission in his decision of 19 June 2017.

The developer then mounted a legal challenge against the Planning Inspector’s decision at the High Court. The Planning Inspector’s decision was defended in court jointly by Islington’s legal team and the lawyers representing the Ministry of Housing Communities and Local Government (MHCLG).

Normally, the role of the courts in planning disputes is very limited and restricted to legal technicalities only. However, in this case the Judge Justice Mr David Holgate allowed a fairly detailed examination of planning issues and the development viability evidence in particular.

On Friday, 27 April he dismissed the legal challenge on all three grounds put forward by the developer, and concluded that he was satisfied with the Planning Inspector’s decision to dismiss the developer’s appeal and uphold the council’s decision to refuse the planning application.

Responding to the judgement, an Islington Council spokesperson said:

“We are delighted by the High Court judgement. This decision reinforces Islington Council’s long standing position that developers should abide by the councils’ planning guidelines – rather than overpaying for land and then trying to bypass our affordable housing requirements.

“There is a shortage of good quality, genuinely affordable housing in Islington and a significant unmet housing need. The council is doing everything it can to address this, because we believe that everyone should have somewhere to live that is affordable, decent and secure – and developers must respect these important priorities when they purchase sites in Islington.”

In a highly unusual move, in a postscript to the judgment, Judge Mr Justice Holgate also recommended that the current, widely used, guidance on viability assessments by the Royal Institute of Chartered Surveyors (RICS) should be revised “in order to address any misunderstandings about market valuation concepts and techniques, the “circularity” issue and any other problems encountered in practice over the last 6 years, so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making.”

This is something that the council has been calling for over the last couple of years, due to serious concerns about how the RICS Financial Viability in Planning (2012) guidance note was being applied in practice.

Islington Council’s planning guidance on Development Viability is very clear and specifically cautions developers against overpaying for land and using the purchase price as a justification for providing little or no affordable housing. This landmark judgment reinforces what Islington (and many other councils) have been arguing for years that affordable housing requirements cannot be bypassed by using the “dark art” of viability assessments to ignore planning policy requirements.