Islington wins landmark case against a developer on affordable housing

Islington Council has won a landmark case after the Planning Inspectorate upheld the council’s refusal of planning permission for a site in Parkhurst Road, on the grounds the application does not provide the maximum reasonable amount of affordable housing.

The developer, who applied to build 96 homes on a former Territorial Army Centre, initially sought to avoid providing any affordable housing. 

The council’s policy requires developments to provide the “maximum reasonable” amount of affordable housing, with 50 per cent affordable housing provision being the starting point.  The council refused planning permission on 13 May 2016. The developer appealed and eventually increased its offer of affordable housing to 10 per cent.  The Planning Inspectorate has now dismissed the developer’s appeal.

The Planning Inspectorate’s decision, made on 19 June, centres around how the viability of the development was assessed and, in particular, how the price of land should be determined. Viability appraisals are a tool increasingly used by developers and their viability consultants in recent years, to enhance profits and/or minimise risk at the expense of delivering affordable housing as required by the council’s planning policies on affordable housing.     

This extremely important appeal decision confirms a “…land owner is required to have regard to the requirements of planning policy and obligations in their expectations of land value.” The Planning Inspectorate also considered the developer’s market value methodology, which relied on transactional evidence not comparable to the development site, as an inappropriate approach.

This appeal decision follows an extended application process on the site, with very low levels of affordable housing proposed by the developer. The initial planning application was submitted in 2013 by developers First Base Limited with Gerald Eve retained as viability consultants, and the council refused planning permission for this development twice on the grounds of not providing enough affordable housing as well as other matters. 

The low levels of affordable housing provided on the scheme was being justified by the developer based on factors such as the purchase price paid for the site, and land transactions of other schemes.

Cllr Diarmaid Ward, Islington Council’s Executive Member for Housing & Development, said: “Islington, like all boroughs in London, faces a significant shortage of affordable homes.

“A viability process in planning that allows developers to rely on a flawed approach to market value that delivers little or no affordable housing makes this problem worse, and means developers are not making a fair contribution to the community.

“The decision from the Planning Inspectorate sends a strong signal that developers need to take into account planning policy requirements when bidding for land, and that they cannot overbid and seek to recover this money later through lower levels of affordable housing.

“This decision will ensure the maximum reasonable amount of affordable housing is provided, and strongly discourage developers and landowners from manipulating the development viability process to deliver fewer affordable homes.”

The council’s guidance on Development Viability specifically cautions developers against overpaying for land and using the purchase price as a justification for providing little or no affordable housing.

Islington, and many other councils, have for years always tried to resist attempts by developers using flawed viability assessments, to bypass affordable housing requirements. This decision is highly important in ensuring that councils can require the maximum reasonable amount of affordable housing to be delivered by developers where possible.

For further information please contact:

Peter Morgan
Senior Media Officer
Islington Council
Upper Street, London, N1 2UD
Tel: 020 7527 8004
Alternative contact: Media line 020 7527 2307
www.islington.gov.uk
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