Council wins row over providing ‘maximum reasonable amount of affordable housing’

The developer had applied to build 96 homes on a former Territorial Army Centre in Parkhurst Road, and initially sought to avoid providing any affordable housing.

Islington’s policy requires developments to provide the “maximum reasonable” amount of affordable housing, with 50% affordable housing provision being the starting point.

The council refused planning permission for the development on 13 May 2016. The developer appealed and eventually increased its offer of affordable housing to 10%.

A planning inspector dismissed the developer’s appeal last week (19 June).

Islington said the decision centred 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,” it claimed.

“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 council also said that the inspector had considered the developer’s market value methodology, which relied on transactional evidence not comparable to the development site, as an inappropriate approach.

The inspector’s decision is just the latest stage in a long-running battle. An initial planning application for the site was submitted in 2013 by developers First Base, and the council refused planning permission for this development twice on the grounds of not providing enough affordable housing as well as other matters.

First Base had sought to justify the low levels of affordable housing provided 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.”

Cllr Ward added: “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.