Section 106 housing delivery put to test

Planning appeal decisions do not carry the same precedent as court decisions but there are occasions when they set a benchmark in the interpretation of planning policy. One such case is the the secretary of state’s decision in July on the provision of affordable housing on a 12.68-hectare greenfield site in the urban area of Hinckley in Leicestershire.

The Hinckley and Bosworth Local Plan, adopted in 2001, includes a general target of 20% affordable housing on new sites and the target for the appeal site corresponded to this. The council had adopted Supplementary Planning Guidance (SPG) on affordable housing in September 2002. The SPG includes three additional provisions:

• Where developers feel unable to offer 20% affordable housing, the onus is on them to demonstrate why a scheme would not be viable

• Based on the council’s housing needs survey and on account of the relationship between local incomes and house prices, social rented housing – supplemented by a small amount of shared-ownership housing – is the most effective means of meeting local affordable needs
• It is accepted that, in some circumstances, RSLs will be unable to subsidise the quantity and mix of affordable housing mentioned above. Here, the developer should provide the balance of subsidy required to achieve the necessary affordable housing, unless they can demonstrate that this is not possible.

The appellant in the Hinckley case, Jelson Ltd, queried the level and type of housing need identified in the council’s 1999 housing needs survey and whether it was still pertinent. Jelson also argued that, even if the 20% affordable housing target should be applied to this site, it was unreasonable for the council to insist on a 9:1 ratio of social rented: intermediate housing because of the lack of certainty regarding the availability of social housing grant (SHG). Instead, Jelson offered a fixed contribution of 75 plots (20% of the total) via a unilateral section 106 undertaking to be made available to an RSL free of charge.

The council responded that housing need had, in fact, increased since the 1999 survey to the extent that a target higher than 20% was now justified. The 9:1 ratio between social housing and intermediate housing was still justified. Even with a 30% discount the outgoings on newly built housing were likely to exceed locally prevailing rent levels; the contribution that intermediate housing can make to meeting local housing need, therefore, would remain limited.

Jelson was only prepared to offer the 9:1 split if 100% SHG was available. But there was no evidence this would be forthcoming. If this level and type of affordable housing provision was reasonably required, this is what the developers should guarantee to deliver. The council went on to argue that this was a greenfield site with no unusual or exceptional costs and Jelson had provided no evidence that the affordable housing contribution sought would threaten the scheme’s viability.

The inspector identified three key issues:

• Whether a contribution of, or equivalent of the value of, a fixed number of free housing plots is a sufficient and reasonable approach to the affordable housing contribution for the site
• Whether the choice of the tenure of the affordable housing within the scheme is essentially a matter for the developer to determine or whether the council can and should control it
• Whether, if enough SHG (or other funds from a housing association) is not available to fund social rented housing, the developer should be expected to fund the provision of such housing entirely.

Conclusions

Substantial weight should be attached to the council’s SPG.

For the site to make no contribution to affordable housing, or a reduced one, would conflict with the local plan, the SPG and government guidance.

Jelson’s proposals, as set out in the unilateral Section 106 undertaking, were defective in that they would not guarantee the delivery of the required number of units.

If no priority is given to ensuring that the main component of affordable housing need (ie, social rented housing) is provided on identified sites, the results would be both unfair and haphazard.

Circular 6/98 does not specify how affordable housing is to be delivered in the absence of an RSL or SHG. However, it does state that affordable housing should be delivered to meet local need. In this case, the section 106 did not deliver the requisite number and type of affordable housing and there were no particular circumstances warranting treatment as a special case.

The inspector specifically recognised that this appeal raised “important matters of principle” which had not been previously “addressed or tested in appeals involving a secretary of state decision or a High Court challenge”, notwithstanding the fact that there are reviews to PPG3 and advice on planning obligations generally still pending. This is a secretary of state decision and no legal challenge has been raised.