High Court quashes affordable housing exemptions for small housing sites and vacant building credit


In November 2014 the Government issued a Ministerial Statement introducing a new policy for the provision of affordable housing. The new policy allowed small development sites to be exempt from providing affordable housing (developments of 10 dwellings or fewer, 5 dwellings in rural areas; or a maximum gross floor space of 1000 sq metres). The new policy also provided for a vacant building credit to be applied to conversion and redevelopment schemes whereby existing or demolished floorspace would not need to provide affordable housing. The new policy was subsequently incorporated into national planning policy guidance (PPG para 021 to 023).

Reading Borough Council and West Berkshire District Councils jointly challenged the new policy through the High Court, arguing that the policy had profound consequences for local authorities in fulfilling their responsibilities to make provision for affordable housing. The Councils claimed that the policy would significantly reduce the amount of affordable housing across the country by approximately 20 per cent and equivalent to an annual value of £693m based on 2011/12 figures). The Claimant Councils also claimed the policy would have a particular impact in their areas.

The Judgment

The High Court judgment was issued on Friday 31st July 2015 ruling that both the small development exemption policy and the vacant building credit policy were both unlawful and incompatible with the statutory framework of the Town and Country Planning Act 1990 and the Planning and Compulsory Purchase Act 2004.

In order to avoid the judiciary questioning “proceedings in Parliament” (by application of article 9 of the Bill of Rights 1689) the Judge delivered a declaration via Paragraph 211 of the judgment, that the policies:-

“must not be treated as a material consideration in development management and development plan procedures and decisions or in the exercise of powers and duties under the Planning Acts more generally”.

Following the judgment, the Department for Communities and Local Government issued an update to the national PPG. A new paragraph (030) was added to the PPG on 1st August stating :

“Please note that paragraphs 012-023 of the guidance on planning obligations will be removed following the judgment in R (on the application of West Berkshire District Council and Reading Borough Council) v Secretary of State for Communities and Local Government [2015] EWHC 2222 (Admin).”


It is understood that the Government intends to appeal the decision however in the meantime this judgment could have significant implications for the delivery of smaller housing schemes, particularly for those sites acquired on the basis of zero or reduced affordable housing requirements and which are now required to make provision. In such situations viability assessments will play a crucial role.

It is clear that if the Government wishes to pursue its policy of incentivising and improving the viability of smaller scale development schemes it will need to urgently revisit the mechanism by which it introduces such policies.