Councils lose High Court battle with Mayor of London over affordable rents

A group of nine councils have lost a High Court challenge to the Mayor of London’s plan to allow ‘affordable’ rents in new housing to be set at 80% of the market rate.

The nine councils involved in the case – Islington (which led the action), Camden, Brent, Enfield, Greenwich, Lambeth, Southwark, Hackney and Tower Hamlets – claimed that they should be permitted to set lower rent limits in new affordable housing.

The local authorities said they had typically been able to insist on social rents at around 30-40% of market level in inner London and rents near 80% would be unaffordable to local people.

In London Borough of Islington & Ors v The Mayor of London [2014] EWHC 751 the councils applied to quash Boris Johnson’s decision on 11 October 2013 to publish certain ‘revised early minor alterations’ (REMA) to the London Plan.

They said that provisions of the REMA unlawfully precluded them from imposing borough-wide caps on rent for affordable rented housing, and claimed that the Mayor had exceeded his powers.

But Mrs Justice Lang rejected the councils’ challenge. She said: “In my judgment, the real issue in this claim is a profound disagreement between the claimants and the defendant about economics, planning and housing policy. All parties agree that more affordable rented housing is needed in London, at levels below 80% of market value, but they disagree about how best to realise this aim.

“The claimants wish to have power to introduce local planning policies imposing rent caps on affordable rented housing at levels below 80% of market value; low enough to make the housing affordable to a wider class of potential tenants. The defendant considers that rent control imposed via the planning system will compromise his policy to maximise the provision of affordable rented homes, by rendering delivery of new housing units unviable for developers and registered providers.”

The High Court judge concluded that the Mayor was exercising his statutory powers to make a series of policy and planning judgments in deciding upon the content of the REMA. They did not, in her view, disclose any error of law, she added.

Mrs Justice Lang said the claimant councils had failed to establish that the defendant’s strategy was contrary to the National Planning Policy Framework.

It was also “unarguable” that the Mayor’s strategy was so misguided or flawed that it will effectively prevent the councils from making appropriate provision for affordable rented housing.

“The points made by the claimants on, for example, land values, the difficulty of persuading developers to accept lower rents, and the uneven distribution of affordable rented housing across London, are reasons for disagreeing with his strategy, not grounds for finding the strategy unlawful,” the judge said.

“The defendant has a carefully considered strategy, in line with national policy, for delivery by registered providers. In his reasons, he pointed to proven success, though the extent of this is in dispute. I accept that the strategy may be open to legitimate criticism, but it is plainly within the band of reasonableness.”

The judge also said that – contrary to the claimants’ submissions – the Mayor was entitled to have regard to the views of the Secretary of State and other ministers on whether the REMA was consistent with the NPPF, provided that he ultimately made up his own mind about the proper interpretation of the NPPF.

There was no proper basis upon which to impugn the defendant’s assertion that he formed his own interpretation of the NPPF and did not rely on ministerial advice to construct his policy, she added.

Responding to the ruling, the councils highlighted how Boris Johnson’s plan still left it open to boroughs to fight for lower rents on individual developments, particularly in developments that are not funded by the Mayor.

Cllr James Murray, executive member for housing and development for Islington Council, said: "There is a need right across London to keep rents down in new affordable housing so that people on low incomes can actually afford it.

"We took this case to the High Court because we wanted to be able to set lower rents limits across the board, and so we are disappointed that this judgment may make it harder to do that. But the judgment does recognise that boroughs can keep fighting for lower rent levels in individual developments, particularly where there’s no funding from the Mayor, and so it looks like there will be many more battles to come.”