Generation Rent or Generation Buy: Which one should it be?
Effective housing policy should properly provide for adequate housing for rent as well as to buy.
Several contributing factors to housing supply shortages include a dwindling skilled workforce, materials price inflation, limited development funding for SME builders and, chiefly, difficulties within the planning system.
In an attempt to alleviate these difficulties, in November 2014 the Department of Communities and Local Government issued a ministerial guidance from housing minister Brandon Lewis exempting small developments from requirements to provide affordable housing under Section 106.
Mr Lewis recognised that the viability of smaller schemes was being undermined by this affordable housing payment obligation, which, in effect, risked the delivery of any homes at all.
This revised guidance pleased housebuilders, but offended certain local authorities who saw it as an attack on their source of social housing funding.
They promptly challenged the policy guideline in the case of West Berkshire District Council Reading Borough Council vs. Department for Communities and Local Government  EWHC 2222 (Admin).
“Effective housing policy should properly provide for adequate housing for rent as well as to buy”
The local authorities applied for a judicial review of Mr Lewis’ decision.
The National Planning Policy Framework required local planning policies to make provision for affordable housing.
Following concerns about the decline in the small-scale housebuilding industry, communities secretary Greg Clark carried out a consultation and subsequently amended national planning practice guidance, by way of a ministerial statement so that developments of 10 units or 1,000 sq m or less will be excluded from affordable housing levies and tariff-based contributions, with a threshold of five units or less applying in designated rural areas.
The claimants were concerned that this new policy will effectively negate or “trump” local plans and policies and contended that:
- The new national policy was inconsistent with the statutory scheme and its purposes.
- The consultation process had been unfair.
- The minister had failed to take into account certain material considerations; and
- The minister had failed to comply with the public sector equality duty as per Equality Act 2010 s.149.
Mr Justice Holgate in the High Court agreed with them and granted their application.
This decision has, unsurprisingly, caused uncertainty given other decisions upholding the exemption of small schemes from the statutory contributory framework in accordance with the ministerial policy guidance.
As such, Mr Clark has appealed and the bottleneck in the planning system remains.
However, prime minister David Cameron’s announcement during the Conservative Party conference that he will abolish the requirement that developers provide a certain amount of affordable housing to rent in new developments, would remove the bottleneck for good when it is implemented.
At the same time, the PM reiterated his commitment to Starter Homes. Under this initiative, developers would be required to sell the homes at a 20 per cent discount with a price cap of £450,000 in London and £250,000 elsewhere.
The initiative aims to deliver 200,000 homes in this parliament. While this will assist supply for those able to buy, those only able to rent must not be forgotten.
Samuel Okoronkwo is a practising barrister. He specialises in planning, construction and engineering law and can be found at www.samuelokoronkwo.com or contact his clerk at firstname.lastname@example.org.