Government Affordable Housing Policy on Smaller Residential Schemes Quashed

Government Affordable Housing Policy on Smaller Residential Schemes Quashed

The High Court has recently issued an important judgment, quashing a key part of the Government’s policy on affordable housing requirements and planning obligations for small-scale housing sites. The practical implications are of immediate effect on developers’ negotiations.


In November 2014, the Government introduced additions to National Planning Practice Guidance (NPPG) which stated that planning applications for residential developments of fewer than 10 units in size, or 1,000m2, (5 units or less in designated rural areas) were exempt from the requirement to make affordable housing or tariff based contributions. The change to the NPPG also introduced ‘vacant building credit’ which allowed developers to offset vacant floorspace they were bringing back into use against the amount of affordable housing they had to provide.

The Judgement

A recent court case* however has quashed these provisions, allowing Councils once again to request s.106 developer contributions on these smaller schemes. The legal challenge was brought by two local authorities – West Berkshire District Council and Reading Borough Council. These Councils had concerns that their own adopted development plan policies, which allowed for affordable housing to be sought on sites of fewer than ten units, were effectively overridden by the new provisions.

The Court found in the Councils’ favour and the ruling now means that smaller residential schemes of under 10 units can now be required to provide affordable housing and other development contributions. The vacant building credit no longer applies.

Councillor Tony Page of Reading Borough Council explained the rationale of the legal challenge:

‘There is an acute and increasing need for affordable homes in Reading, which is demonstrated by the fact there are around 10,000 people on our housing waiting list, and the changes to the planning system would have made matters worse. The judge’s decision also means an estimated £650,000 per year will be saved for community benefit, including improvements to local roads, schools and playgrounds.’


The introduction of the 10 unit threshold and vacant building credit was part of the Government’s push to make planning less bureaucratic and assist smaller developers by reducing the ‘disproportionate burden’ it considered that s.106 contributions placed on them.

However, in summary, the court has found that the Government inserted the provisions into the NPPG without an evidential basis, adding the new provisions as blanket policies to stimulate development on smaller sites. In doing so through national guidance, rather than primary legislation, the judgement noted the provisions brought conflict with adopted development plans across the country.

This judgement will be especially of interest to smaller and medium-sized residential developers and comes into effect immediately, potentially affecting current planning applications. The judgement turns the clock back to pre-November 2014 on the matter and local plan policy will be the starting point for requirements on residential sites.

The DCLG has suggested it will seek leave to appeal the decision so watch this space for further developments.

Stride Treglown

If you have any queries about any of the matters contained within this client advice note please contact Stride Treglown’s Planning team, who will be able to advise you accordingly.

*West Berkshire District Council and Reading Borough Council v DCLG [2015] EWHC 2222 (admin)

We have taken great care to ensure the accuracy of this advice note. However, the document is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. The contents of this advice note are not intended to comprise definitive statements, but rather offer the opinion of Stride Treglown and provide general guidance on planning issues.