The case arose after Tower Hamlets council asked Barratt to contribute £1.6m towards the cost of building affordable housing near the housebuilder's Aspen Way development in London Docklands.
Barratt argued that, on principle, the council's claim was unlawful, as Aspen Way did not increase the borough's need for affordable housing. It also argued that the council's approach shifted public service responsibilities from the council to the housebuilder.
Barratt also challenged the amount of money demanded by the council, as it had excluded the availability of public subsidy when calculating the developer's contribution towards the cost of providing affordable housing.
A Barratt spokesperson said: "We are awaiting receipt of the written judgment, at which time we will consider our position."
Brian Jones, head of planning at Tower Hamlets council, said: "The High Court ruling reinforces and endorses the council's approach in seeking to secure affordable housing for local people."
Andrew Whittaker, regional planner of the House Builders' Federation, said: "This ruling will have implications for housebuilders as it will now be used by other local authorities."
Other housebuilders expressed reservations about the ruling. Clive Wilding, managing director of Gleeson Homes, said: "The decision was probably right but common sense has got to prevail. If the site in question is a regeneration site – and I believe it was – it may be contaminated. Some of the cost of remediation must be taken into account."
We have no choice but to swallow hard and accept the policies of Tower Hamlets
Andrew Wiseman, Furlong Homes
Wilding added: "The ruling was a watershed decision. What's needed is clarity as to what exactly affordable housing policy is.
This does not mean the policy has to be prescriptive."
Andrew Wiseman, chief executive of Furlong Homes, whose operations focus on north and east London, said: "The ruling will simply mean that developers will factor the cost into land."
He added: "Now that this ruling has been made, we have no choice but to swallow hard and accept the policies of Tower Hamlets." However, Wiseman warned that there would be consequences: "At present, the requirement to contribute to the costs of affordable housing only kicks in with developments of 15 units or more.
I think we will now see 14-unit developments springing up everywhere."
He added: "We may also see developers deciding to build 14 two-bedroom flats instead of 21 one-bedroom flats. This of course would be in conflict with John Prescott's desire to see more single-person accommodation built.
