Islington wins legal battle over affordable homes

The London borough of Islington has won a landmark case against a developer who refused to provide enough affordable homes on a former Territorial Army site.

A High Court judge dismissed a legal challenge brought by First Base (Parkhurst Road Limited) last week against decision by the local authority to refuse planning permission for a residential development on the site in Parkhurst Road with little or no affordable housing.

The long-running issue started back 2013 when the developer first bought the site and submitted an initial planning application to the London borough.

The council refused planning permission for this development twice on the grounds of not providing enough affordable housing, as well as other matters.

The case centres around the viability assessment of development and, in particular, how the price of land should be determined in planning, which is a tool increasingly used by developers and their viability consultants in recent years, to avoid complying with rules on affordable housing.

Last summer, the Campaign to Protect Rural England (CPRE) warned there was a growing problem with developers backing out of agreements to build affordable homes, by claiming viability assessments show it is no longer possible to build a previously-agreed number.

Two lengthy public inquiries were held into the application by First Base, both of which were won by the London borough.

Each time the low level of affordable housing provided on the scheme was being justified by the developer on factors such as the purchase price paid for the site, and land transactions of other schemes.

Following the second public inquiry held in early 2017, a planning inspector appointed by the communities secretary, upheld Islington’s refusal of planning permission in June of that year.

The developer then mounted a legal challenge against the planning inspector’s decision at the High Court. The planning inspector’s decision was defended in court jointly by Islington’s legal team and the lawyers representing the Ministry of Housing Communities and Local Government (MHCLG).

Last week, Judge Justice Mr David Holgate dismissed the legal challenge on all three grounds put forward by the developer, and concluded that he was satisfied with the Planning Inspector’s decision to dismiss the developer’s appeal and uphold the council’s decision to refuse the planning application.

And in a highly unusual move, Mr Justice Holgate also recommended that the current, widely used, guidance on viability assessments by the Royal Institute of Chartered  Surveyors (RICS) should be revised ‘in order to address any misunderstandings about market valuation concepts and techniques, the “circularity” issue and any other problems encountered in practice over the last six years, so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making’.

Responding to the judgement, a spokesperson for the London borough said it reinforces the local authority’s long-standing position that developers should abide by the councils’ planning guidelines – rather than ‘overpaying for land and then trying to bypass our affordable housing requirements’.

‘There is a shortage of good quality, genuinely affordable housing in Islington and a significant unmet housing need,’ said the spokesperson.