Summary and implications

The national and property media continue to give a significant amount of coverage to the housing crisis. A sub-plot to this story is the change to the National Planning Practice Guidance (NPPG), which provides for a "vacant building credit" for developers.

The credit has caught the attention of both developers and local authorities, and we are increasingly advising on strategies to utilise the credit, as there are potentially substantial savings on affordable housing obligations despite the uncertainties.

The vacant building credit

The NPPG provides that, if you develop (including if you demolish) an unoccupied building pursuant to a permission, then you are entitled to a credit in the planning authority's calculation of any applicable affordable housing contribution. The credit is the equivalent of the amount of gross floorspace of the building being brought back into use.

The example given within the NPPG is where a building with a gross floorspace of 8,000 square metres is demolished as part of a proposed development with a gross floorspace of 10,000 square metres, any affordable housing contribution applies to the additional 2,000 square metres, subject to viability.

This means a developer does not have to provide affordable housing calculated on the original 8,000 square metres. The credit does not apply if the relevant building has been abandoned.

Recent updates

The initial provisions within the NPPG (published in November 2014) were unclear as to what is meant by "vacant". Recent changes made to the NPPG wording (published on 26 March 2015) provides for local planning authorities to have regard to the intention of national policy when applying the credit. In doing so, the NPPG states it "may be appropriate" for authorities to consider:

  • whether the building has been vacant for the sole purpose of redevelopment; and
  • whether the building is covered by an extant or recently expired planning permission for the same or substantially the same development.

As the policy states that is has been introduced to incentivise brownfield development, including the reuse or redevelopment of "empty and redundant buildings", local planning authorities may consider that the vacant building credit is not appropriate for buildings which have become vacant solely to enable development to proceed. There is not, however, a clear statement to this effect. 

Uncertainty remains

Whilst the update provides more clarification than the previous provisions as to factors local planning authorities should take into account, uncertainty still remains as to how, in practice, the credit will apply. For example, no time limit is specified for the period of time that has to elapse before the building is considered "vacant".

Various local planning authorities have criticised the vacant building credit. In March, the London Borough of Southwark announced intentions to amend its development plan to establish a local exemption policy against the credit. The London Borough of Lambeth, City of London and Westminster City Council have also criticised the effects of the credit.

When contrasted with the exemptions and deductions applicable for the community infrastructure levy in terms of existing floorspace allowances, it is surprising that the Government has left the application of such an important credit so vague. It remains to be seen how, in practice, local planning authorities will apply a credit that could be beneficial for developers, but very costly for affordable housing provision.

It will also be interesting to see if this policy continues under a new Government.

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