UK: Credit Check: Muddles In The Mire

Last Updated: 19 February 2015
Article by Roy Pinnock

The introduction of new policy on section 106 tariffs and affordable housing has generated significant interest and concern. The policy simply states that:

"A financial credit, equivalent to the existing gross floorspace of any vacant buildings brought back into any lawful use or demolished for re-development, should be deducted from the calculation of any affordable housing contributions sought from relevant development schemes."

The statement is clearly policy, albeit the weight to attach to it is a matter of debate.  Where local plans have been adopted in accordance with the NPPF, taking account of viability and vacant floor space, should the new policy override that?  The additional supporting paragraphs in the NPPG are not policy, but there is a risk that they will be treated as if they are, given the poor and skeletal nature of the policy itself.

This shock and awe approach to policy making has led to mixed reactions.  It is estimated that it will cost Westminster City Council alone £1bn in lost funding.  Westminster, Southwark and the City of London are looking for ways to reshape their policies to cope.  Reading and other boroughs have brought a legal challenge. The Westminster Property Association has said it rejects the windfalls the changes would bring.  There have to be question marks about how long it will last.  However, for as long as the policy survives in its current form, the opportunities are offset by some uncertainties.

Opportunity cost

Although there is an argument that the policy only applies to financial contributions it is likely that the  offset applies to both financial contributions and on-site provision. The policy therefore opens up the scope for greater profits.  It also creates a perverse incentive for further running down the stock of commercial floorspace and replacing it with residential uses in some areas.

The policy is not binding on local planning authorities – who may see good planning reasons for not giving it overriding weight.  The likelihood of it being given overriding weight on appeal means that many authorities will feel unable to continue their previous approach though.

The furore highlights how so much reliance has come to be placed on financial contributions and raises a question of whether local Plans that relied on affordable housing provision from vacant buildings remain sound.  Unless there is alternative provision (or finance) or an increase in greenfield site allocations, it is hard to see how they can be – the local plan will not meet the objectively assessed need for affordable housing.  For plans to be sound, they will need to be amended to identify how they will fund affordable provision in urban areas without developer contributions (or how significantly increased site allocations outside urban areas will enable the slack to be taken up, albeit that it will be in less sustainable locations).

Credit check

The policy itself is limited to the 28 November 2014 Ministerial Statement.  The guidance on how to apply the credit is sparse. Several practical difficulties are already apparent:

  • How much credit? The basis of calculation is open to debate. Correspondence with CLG suggests that obligations should be reduced to the same proportion as the net increase bears to the total residential floorspace.  Developers should not assume that the space will be offset on this 'straight line' basis – authorities such as Norwich are considering a more nuanced approach where average unit sizes are factored in, with potentially significant effects. Some authorities will apply a GEA basis, not GIA.
  • Vacancy: The href=http://planningguidance.planningportal.gov.uk/blog/guidance/planning-obligations/planning-obligations-guidance/ target=_blank>NPPG refers to 'relevant' vacant buildings providing a credit.  That will mean different things to different people.  Does it mean all of a building or part?  Does it mean at the date of application, of permission or later?  Developers will need to be careful to avoid a definition or period of vacancy that could cut across existing floorspace offsets for CIL. Will authorities seek to back-date rates claims where vacancy is relied on but was not obvious before?
  • Abandonment: The credit will not apply where buildings have been abandoned. This is a high threshold, but also a strange test to choose, being an area of law ill-suited to planning permissions and requiring a mixed objective and subjective test. Unless buildings have become so dilapidated that they are effectively beyond any resumption of a previously authorised use, it will rarely apply.

Local Plan changes

There is a nudge, perhaps unintended, to review Local Plans.  CLG have suggested that the measure is intended to be impact based. If authorities review the impacts and adopt policies that reflect it, the development plan should trump the credit policy.  Authorities in urban areas – particularly London – are now fast tracking this kind of review.  In some areas, a Neighbourhood Plan might be a quicker and easier vehicle in which to do this, given that such plans only need to be prepared 'having regard to' national policy.  According to recent Secretary of State appeal decisions, they can be adopted inconsistently with the NPPF, become immediately out of date (or sit in draft) and still be given determinative weight on appeal.

There is also a nudge to CIL. The new policy can, and should, be reflected in CIL viability modelling for all types of sites.  It may increase the charging rates significantly for strategic sites with material levels of vacant building.  As local authorities look for alternative sources of funding the changes may also lead to more scrutiny of whether the Government's changes to the CIL regime under the Localism Act 2011 did, really, kill off the ability to spend CIL on affordable housing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
6 Sep 2018, Business Breakfast, Glasgow, UK

Decarbonising our heat is a key component of The Scottish Energy Strategy and an essential piece of the complex matrix we must tackle if we are to meet our climate change obligations.

11 Sep 2018, Business Breakfast, Milton Keynes, UK

Join us for our next development breakfast round table event reflecting on the on-going planning discussion regarding the Oxford-Cambridge corridor and helping you consider how best to cash in on the exciting opportunities by considering the benefits of promotion and option agreements.

20 Sep 2018, Seminar, London, UK

Environmental regulation and liability have risen up the boardroom agenda over the past decade. Recent changes to environmental sentencing have brought this area of risk even more into focus.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions