Housebuilders fear High Court decision could lead to lower profits and a longer planning process.
A coalition of housebuilding interests has lost a court battle over a council's power to use the planning system to increase social housing provision.

The landmark decision, handed down in the High Court last Friday, will expose firms to more planning risk and could depress the value of new housing developments.

The case arose after Oxford council used supplementary planning guidance to increase the amount of social housing required on new estates from 20% to 30%.

A coalition made up of the House Builders Federation, Bellway Homes and Oxford housebuilder JA Pye responded by bringing legal action. They claimed that the council's action was an abuse of procedure as the role of supplementary guidance was merely to clarify policy rather than to alter it.

The council denied that it had changed its policy. Tom Woof, its principal planning officer, said the 20% figure in the local plan was illustrative rather than definitive.

In his ruling last week, Justice Ouseley found that the council had acted within its powers, although he gave the housebuilders leave to appeal his decision.

Andrew Whitaker, senior regional planner at the HBF, said the court's decision would allow councils to "move the goalposts".

He added that the HBF was discussing the possibility of an appeal with its legal advisers. He said: "We'll study the written judgment. The judge gave us leave to appeal, which doesn't happen very often."

A source at Bellway Homes predicted that the outcome would shift the power balance between councils and developers.

"Through supplementary planning guidance, the council is trying to get extra social housing in by the back door. This is going to affect every developer's future sites," he said.

The case is the latest twist in a continuing struggle between public authorities, concerned that some social groups are being priced out of the South-east's housing market, and developers. In particular, councils are concerned about the availability of workers who provide essential public services such as health, education and transport.

The issue gained attention last year when London mayor Ken Livingstone demanded that affordable housing make up half of all new developments in the capital.

n Housebuilder Berkeley Group has rejoined the HBF. Tony Pidgley, chief executive of the Berkeley Group, said there had never been a greater need for the housing industry to represented by a strong, single voice.

The HBF said it now represents 80% of the housebuilding industry.