What If? The Trinity One Case

What if your development were subject to a section 106 agreement that provided for a commuted sum to be paid towards affordable housing, the precise amount payable to be calculated in accordance with a formula; at the date that the agreement was completed in 2003 the formula would have arrived at a commuted sum of between £500,000 and £700,000 but by the time that it was triggered the basis for calculating the formula had been abolished and so there was no way of arriving at an appropriate figure? Would you go to the High Court and Court of Appeal to seek to resist a claim from the local planning authority that was seeking a sum of £533,058 plus interest?

Well that was what the developer did in the Council of the City of York v Trinity One (Leeds) Limited (Court of Appeal, 21 February 2018). Not only that but they pursued a separate section 106BA and BC application and appeal, before the 30 April 2016 deadline for applications under that procedure, to seek to argue that in any event it should be released from the obligation in order to prevent its development from being economically unviable (a process where it is separately currently pursuing a second judicial review). I don’t know the facts beyond what is stated in the Court of Appeal’s judgment but I would suspect that this saga must pretty much have cost the parties in legal fees the sum being fought over and there remains the possibility of the local planning authority losing out on a substantial contribution towards affordable housing. Mediation anyone?

Hindsight is of course a wonderful thing but the dispute has arisen from not enough “what if?” questions being asked when the agreement was negotiated in 2003.

The relevant clause in the agreement provided that the commuted sum “shall be calculated on the amount of Social Housing Grant necessary to secure affordable rented homes of an equivalent type and size on another site [in a similar residential area in the City of York] which grant for the avoidance of doubt shall be calculated at normal grant levels from regional TCI tables provided on an annual basis by the Housing Corporation or such equivalent grant calculation current at the time and supported by the Housing Corporation”.

Social Housing Grant was defined as “the grant that may be provided in respect of affordable housing in the Council’s administrative area in accordance with Government and Housing Corporation Guidance.”

Some of you may remember the Total Cost Indicator tables that were previously used by the (now defunct) Housing Corporation as a basis for calculating the level of (now defunct) Social Housing Grant.

The lawyers negotiating the agreement at least had asked themselves what if TCI tables were no longer provided on an annual basis by the Housing Corporation but beyond that there was little imagination as to how far the affordable housing funding arrangements might change: if TCI tables ceased to be published, the calculation was to be done on the basis of “such equivalent grant calculation current at the time and supported by the Housing Corporation”. Hmm. No “what if social housing grant and/or the Housing Corporation cease to exist“? No provision for the parties to agree another reasonable benchmark, with the ability to go to an independent expert in the event of dispute?

The Court of Appeal identified that the issue “turns on the balance between giving effect to the intention of the parties and the language of the contract“. It upheld the ruling of the High Court that the clause was not unenforceable due to the lack of certainty as to how the sum was now to be calculated. The court sets out in some detail the approach to be taken, drawing upon principles articulated by the Supreme Court in Arnold v Britton (Supreme Court, 10 June 2015).

The Supreme Court in that case had considered the interpretation of service charge contribution provisions in the leases of a number of chalets in a caravan park in South Wales, and whether annual increases in service charge were to be calculated on a compound basis, resulting in absurdly high increases. Lord Neuberger summarised the correct approach as follows:

When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean”, to quote Lord Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC 1101, para 14. And it does so by focussing on the meaning of the relevant words, in this case clause 3(2) of each of the 25 leases, in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions.”

Lord Neuberger set out six principles and the Court of Appeal in Trinity One drew particularly the first and sixth:

First, the reliance placed in some cases on commercial common sense and surrounding circumstances (eg in Chartbrook, paras 16-26) should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision.”

Sixthly, in some cases, an event subsequently occurs which was plainly not intended or contemplated by the parties, judging from the language of their contract. In such a case, if it is clear what the parties would have intended, the court will give effect to that intention. An example of such a case is Aberdeen City Council v Stewart Milne Group Ltd[2011] UKSC 56, 2012 SCLR 114, where the court concluded that ‘any … approach’ other than that which was adopted ‘would defeat the parties’ clear objectives’, but the conclusion was based on what the parties ‘had in mind when they entered into’ the contract (see paras 17 and 22).”

Applying these principles, the Court of Appeal in Trinity One identified that:

⁃ the intention of the parties was that a commuted sum was to be paid.

⁃ the uncertainty related to quantification rather than the principle of payment.

⁃ “It would defeat the underlying purpose of the Agreement if the clause were unenforceable due to lack of certainty. The consequence would be that TOL would receive the benefit of planning permission without providing affordable housing or a commuted sum. In simple terms, that was not the bargain.”

⁃ “…the quantification of that sum should be that which is equivalent to the amount of money which would have been provided had the SHG remained in being. Although this is a departure from the literal words of the contract, this is the only sensible solution to the problem posed by the abolition of the SHG on which the clause is premised. The clause provides that the developer should pay enough money so that the Council can provide equivalent affordable housing: the best the court can do is work out a roughly equivalent figure for that sum.”

⁃ The figure that had been arrived at of £533,508 was a “reasonable attempt to reach a figure equivalent to the SHG which would have been payable before 2006“.

To a non-lawyer this may all seem obvious, but who wants to go to the Court of Appeal to establish what a provision means, just because not enough “what if” questions weren’t asked at the outset?

York Council isn’t yet entirely out of the woods. I mentioned the pending judicial review in relation to the developer’s section 106BC appeal. The Court of Appeal held that if the section 106BC appeal is ultimately successful, it will have retrospective effect notwithstanding that the council’s rights to be paid had already accrued. That seems strange to me, but given that the section 106BA and BC procedure is no longer available, this issue is of limited continuing wider relevance.

So please remain patient when your solicitor asks you yet another series of “what if” questions. In another part of our legal world, the European Medicines Agency is reported to be seeking to set aside its lease at Canary Wharf on the basis that Brexit will amount to an event of frustration. It was reported elsewhere that the “what if” question may in fact have been asked and then set on one side. Now that can be even more awkward.

This blog post is a belated companion to my 14 October 2017 post, Flawed Drafting: Interpreting Planning Permissions.

Simon Ricketts, 8 September 2018

Personal views, et cetera

So Who Did Win The SPG JR?

Isn’t it heartwarming when the opposing parties in litigation all claim to have won? He said wryly.

Ouseley J’s judgment in McCarthy & Stone Retirement Lifestyles Limited, Churchill Retirement Living Limited, Pegasus Life Limited and Renaissance Retirement Limited v Mayor of London was handed down at 10.30 am on 23 May.

The Mayor rapidly issued a press release that morning, Judge rules in favour of Mayor’s threshold approach to housing.

However, the subsequent press releases by McCarthy & Stone Judge rules in favour of retirement consortium’s judicial review of the Mayor of London’s SPG and by Renaissance Retirement later that day seemed to tell a different story.

So that they can be checked for factual, typographical or grammatical errors or ambiguities, Planning Court judgments are usually issued in draft to the parties at least 24 hours ahead of being handed down, under conditions of strict confidentiality. Disclosure beyond the lawyers and parties themselves is a contempt of court and can bring criminal sanctions. However, what that advance sight does mean is that, by the time that the judgment is formally handed down (often with the parties not needing to be present and with submissions about remedies, costs orders and so on dealt with separately by email), the parties have got to grips with the often complex analysis within it and are ready to influence the way in which the narrative appears in traditional and social media, particularly the breaking online news items in the specialist press.

Planning law can be difficult in its abstractions and it can take time and strong coffee to arrive at a full understanding of the implications of a judgment (particularly without a familiarity with the evidence presented and submissions made to the court). This blog always includes links to the judgment transcripts because, however detailed the summary, there is no substitute for reading the document itself, but even then it can be hard. All credit to Holgate J in Parkhurst for appending parts of the inspector’s report to provide readers with the necessary context, but that was still a complex judgment (there have been some glib summaries!) and always of course watch for the political spin (Cheshire East Council’s “Cheshire East wins landmark legal judgement for residents in fear of housing sprawl” press release, following its loss in the Supreme Court in Suffolk Coastal , with ultimately an award of costs against it, being a classic of the genre!).

Back to the case in hand. So who really did win?

The claimants are all developers of specialist housing for the elderly. Their main concern with the Mayor’s 2017 affordable housing and viability SPG was that their schemes, usually on small sites, are caught by its requirement for a late stage viability review but were not caught under the adopted London Plan, which refers to the mechanism in the context of schemes which “in whole or in part…are likely to take many years to implement“.

[I summarised the SPG in my 20 August 2017 blog post 20 Changes In The Final Version Of The London Mayor’s Affordable Housing & Viability SPG. (Warning: the Mayor of London’s SPGs are not subject to the same legal regime that applies to local planning authorities in preparing SPDs, summarised in the first part of my 1 December 2017 blog post What’s For The Plan, What’s Supplementary?)]

The claimants’ evidence was that they developed smaller sites – “usually brownfield, higher build costs, significant communal facilities and spaces which were not for sale – making them more costly per square metre than most market housing, and particularly so in London. These schemes were constructed in a single phase, and could not meet affordable specialist housing accommodation requirements on-site, as had been accepted for years; they always provided viability appraisals to justify off-site contributions to affordable housing, and always had to be completed as a whole before any elderly occupiers moved in; they had a markedly slower selling rate. This made the Claimants less able to compete with general house builders in site acquisition.”

Their evidence was that “the acute pressures, on the viability of specialist housing schemes, made it essential that the risk of the development’s returns falling significantly below expectations was reduced to a minimum. They relied on various forms of borrowing to fund site purchases. The standard but notional 20 percent development return used in such appraisals was the bare minimum “on the basis that the risk associated with the affordable housing cost is known…If there is a risk that [that] cost might rise significantly, the risk profile becomes unacceptable….” Mr Warren emphasised that it is the risk which matters when deciding on what price to pay for a site. And it is that extra risk which Mr Burgess said affected them more than those in the general market. The effect of the late stage review was felt by the Claimants at the stage of bidding for the sites in the first place; the uncertainty about the amount of money which might have to be paid over at the late stage review affected the calculation of risk for borrowing, in such a way as to make the funding impossible.”

The judge made no ruling as to whether these concerns were justified and they were not accepted by the Mayor but this was the claimants’ explanation as to why the issues mattered to them.

[I note at this point that the proceedings were brought in the knowledge that the emerging new London Plan would in any event be proposing an equivalent late stage review mechanism. The parameters of that mechanism will no doubt be considered as part of the examination into the draft Plan (rumoured as likely to take place from November 2018 to February 2019)].

So the claimants’ objective plainly was to challenge that requirement for a late stage review of viability in relation to schemes like theirs which could not be said to be “likely to take many years to implement” (although the claimants sought to argue that it was single phase schemes that should not be caught).

In order to demolish that requirement, they contended that the SPG was unlawful and in so doing relied on three grounds:

(1) it constitutes policy which should only be in the London Plan, which is currently being revised; the SPG was also inconsistent with that Plan;

(2) the SPG is a “plan or programme” which required a Strategic Environmental Assessment, SEA, under the Environmental Assessment of Plans and Programmes Regulations, SI 2004 No.1633 but which had not been undertaken; and

(3) it was produced without due regard being had to the constituent parts of the public sector equality duty, PSED, in s149 Equality Act 2010.”

Ouseley J rejected grounds 2 and 3 as unarguable and I’ll say no more about them.

In relation to ground 1, Rupert Warren QC for the claimants first argued that the SPG contained policies which could only be within the London Plan itself, namely “the 35 percent threshold, the fast-track, and the viability tested route, with three viability appraisals, (initial, early stage and late stage), the deliberately slow-track.”, all of which are indeed now proposed as policy in the draft London Plan.

The judge largely sidestepped this issue: “I do not want this judgment to be misread as holding that the SPG, and at this level of detail, must as a matter of law be in the London Plan or alternatively that the SPG cannot lawfully be included in the Plan as policy“. He did not interfere with the Mayor’s decision to treat the matters as appropriate for an SPG.

He commented that whether the emerging policies that reflect those SPG requirements are appropriately strategic for the Plan will be a matter for the inspector to determine following his or her examination of it: “They may contain a level of detail for the control of negotiations in quite small forms of development, and larger non-PSI developments, which excludes them from s334, though I do not doubt that the levels of affordable housing developed on new housing sites, can be seen as a strategic matter. In particular, when the draft London Plan goes for public examination, the question of whether draft policy H6, which takes the SPG into the draft Plan, is “strategic” and “general” may be one on which the inspector after the examination in public expresses a view. I would not want what I say to resolve the content of the draft London Plan, in advance of any inspector’s consideration and report.”

Rupert Warren QC’s second argument under ground 1 was that the SPG was inconsistent with the adopted London Plan. The judge stated:

I am not prepared to hold that conflict with development plan policy of itself makes a non-statutory document unlawful. If it states that it is in conflict with the development plan because that plan is now out of date, for example because of changes in Government policy as might be found in the NPPF, or because the review of the Plan was delayed for proper reasons, I see no basis for it to be unlawful. The weight to be given to it is quite another in the light of s38(6), but the NPPF contains advice which conflicts with development plans up and down the country, and is not on that account unlawful. If an authority seeks to put forward some policy to cover the period when it is out of date, which could happen very quickly with new government policy, I see no reason to hold its actions unlawful. The plan-led system is supported by the proper application of s38(6), which can readily accommodate expressions of policy in conflict with the development plan. It does so often when a new draft plan is issued.”

So, inconsistency of itself does not lead to an SPG being unlawful. However, as identified by the judge:

Here the Mayor clearly did not intend to produce SPG in conflict with the London Plan, let alone to avoid the development plan process. The Executive Summary of the SPG at [4] states that it is “guidance to ensure that existing policy is as effective as possible…it does not and cannot introduce new policy.” Indeed, the consistency of the SPG with the London Plan was a theme of the Defendant’s response to Grounds 2 and 3, SEA and PSED. It is inherent in the concept of SPG that it purports to supplement and not to contradict development plan policy. In so far as he did produce SPG in conflict with the London Plan, he would have misdirected himself as to the meaning and effect of either the Plan or the SPG and so failed, in promulgating it, to have regard to a material consideration. ”

So, inconsistency may well lead to an SPG being unlawful, if the policy-maker did not intend there to be any inconsistency, as was the case with this SPG.

Mr Warren is reported as pointing to two inconsistencies: “(1) the most important, is the introduction by the SPG of a late stage review to single phase sites where the London Plan only envisaged those for phased developments; (2) the adoption of a 35 per cent affordable housing on-site threshold at which no viability information was required, whereas the London Plan required each site to provide the maximum reasonable amount of affordable housing, which could be greater than 35 percent.”

The judge did not find that the 35% threshold was inconsistent with the adopted Plan (hence the focus of the Mayor’s press release!) but he did find there was inconsistency in relation to the requirement for a late stage review:

By contrast, the language of the London Plan does not permit the imposition of a requirement for all sites over 10 homes, of a specific requirement to produce at least three viability appraisals, and more if the phases so turn out. Nor does it permit it exceptionally. It permits it only where, in general, the timescale or scale of development means that it is likely to take many years to complete a phase or the whole.”

So, he found for the claimants on the issue which had led them to bring the claim in the first place.

The judgment indicates that he will now “hear submissions on the appropriate remedy, if any, for the inconsistency I have found to exist“. But it seems to me that whether the relevant parts of the SPG are formally quashed or not is neither here nor there – the effect of the ruling is that the Mayor cannot lawfully rely on the SPG in requiring a late stage viability review in relation to the sorts of schemes that they promote.

Of course, that may be a Pyrrhic victory. As the judge goes on to comment:

The status of SPG matters little now that the draft London Plan has been published and consulted upon, containing H6. Draft plans often are inconsistent with their predecessors and are given increasing weight as they progress, as outlined in the NPPF. Once the Mayor has considered the consultation responses to the draft Plan, the period for delivering which has expired, and has amended the Plan as he sees fit, it will have no lesser weight than the SPG. Giving some weight to draft policy which is inconsistent with the development plan is not uncommon. The NPPF contains material which is not consistent with developmental plans. The issue about the status and consistency of the SPG is not one of continuing importance.”

That may be so, but presumably the claimants went into the litigation with their eyes open, given the emerging draft London Plan. This will indeed be a temporary win if they do not persuade the inspector that late stage reviews are not appropriate in relation to smaller, usually single phased, schemes. But that will be an issue to be debated without pre-existing support in the form of the SPG.

Who won? The claimants on the point that I suspect they cared most about. The Mayor on the point that I suspect he cared most about: avoiding collateral damage from the proceedings, in the form of any wider adverse ruling on other matters such as the 35% threshold or the validity of the document as a whole.

Simon Ricketts, 26 May 2018

Personal views, et cetera

Pointers From Parkhurst?

Parkhurst Road Limited v Secretary of State (Holgate J, 27 April 2018) is a complex analysis by the High Court of issues relating to viability appraisal. Indeed Holgate J concludes an unusual postscript (paragraph 142 onwards) to his judgment by expressing the hope that “the court is not asked in future to look at detailed valuation material as happened in these proceedings“.

The Parkhurst Road dispute has indeed been protracted, to say the least.

Parkhurst Road Limited had purchased the site in May 2013 for £13.25m from the Ministry of Defence, the site having been allocated by Islington Council as a “site for intensification for residential accommodation to help meet housing need in the Borough“.

An initial development proposal for 150 homes, reduced to 116 homes, was refused by Islington in October 2014 and an appeal was dismissed on design grounds in September 2015 following a six day inquiry. There had been dispute about viability issues at that inquiry but the inspector had been satisfied with the appellant’s benchmark land value position of £13.26m, which would have led to a 14% affordable housing commitment (16 homes). He considered that market comparables relied on by PRL showed that the price paid by PRL for the site “was not of a level significantly above a market norm“. Islington had not accepted the inspector’s approach to viability (pointing to a circularity inherent in relying on market evidence of comparable transactions to the extent it may not have been adjusted to reflect the requirements of relevant planning policies) but had not challenged it, given that the appeal had been dismissed in any event.

A revised scheme was then brought forward in January 2016, for 96 homes, with the design issues resolved, but with no affordable homes, on the basis that the viability of the scheme could no justify it. Again the application was refused, effectively solely on viability grounds, due to an asserted failure to maximise provision of affordable housing as against the council’s borough wide strategic target of 50%. PRL again appealed and by the time the inquiry closed in March 2017 after nine sitting days, the position was that PRL were arguing for a reduced benchmark land value of £11.9m and proposing that 10% of the homes should be affordable housing. Islington was arguing for a benchmark land value of £6.75m, leaving headroom for 34% affordable housing. The council’s case was based on an approach of relying on a low existing use value with a premium added (EUV+). PRL’s case was based on using market signals from other transactions, disregarding transactions “which are significantly above the market norm“.

Holgate J was told “that the two decision letters on the Parkhurst Road site have generated a good deal of interest amongst planning professionals, as if either decision could be taken as laying down guidance of more general application on the approach to be followed where development viability and affordable housing contributions are in issue.”

He throws cold water on that suggestion:

It is important to emphasise that that is not normally the function of a decision letter. The Inspector’s task is to resolve the issues which have been raised on the evidence produced in that appeal. The Inspector is not giving guidance on what course should generally be followed, even in cases raising the same type of issue. First, the application of policy often involves a good deal of judgment and second, the circumstances of an appeal (and the evidence produced) may differ quite considerably from one case to another (see eg. St Albans DC v Secretary of State for Communities and Local Government [2015] EWHC 655 (Admin)). There is a risk of attaching too much importance to the decisions of individual Inspectors, particularly where their conclusions were heavily dependent upon the circumstances of the cases before them and the nature of the evidence and submissions they received, with all their attendant strengths and weaknesses specific to that appeal. Reliance upon such decisions may take up a disproportionate amount of time and may distract parties from preparing suitable and sufficient information to deal with the circumstances and issues which arise in their own case.”

I summarised the inspector’s decision letter dismissing the appeal in my 24 June 2017 blog post Viability & Affordable Housing: Update.

The appellant challenged the decision on three grounds:

Ground 1 – the inspector erred in concluding that the council’s case was based on the EUV plus approach.

Ground 2 – the inspector did not address flaws which had been shown in the council’s valuer’s approach, applied the consultant’s method in a manner which was inconsistent with his understanding of it and failed to recognise substantial changes in the council’s case by the time the end of the inquiry was reached.

Ground 3 – criticisms of the way in which the inspector treated certain comparable transactions when arriving at his decision to accept the council’s benchmark land value figure.

Holgate J is not a judge to be cowed by disputes involving matters of valuation. He is after all President of the Lands Chamber in the Upper Tribunal and Planning Liaison Judge (ie basically the lead Planning Court judge).

He summarises Government policy on viability, quoting from paragraph 173 of the NPPF (with an interesting reference to compulsory purchase compensation principles when referring to the concept of a “willing seller”) and paragraphs 1, 19, 23 and 24 of the viability section of the Government’s planning practice guidance, asserts that the guidance places the onus on the developer to demonstrate non-viability, before summarising relevant local policies.

He addresses the RICS professional guidance, “Financial Viability In Planning“, in paragraphs 50 to 58, without criticism – noting for instance the fact that the guidance note discourages reliance upon EUV+ “as the sole basis for arriving at site value, because the uplift is an arbitrary number and the method does not reflect the workings of the market. Furthermore, the EUV Plus method is not based upon the value of the land if the redevelopment involves a different land use (eg. an office building redeveloped for a residential scheme)”.

The Secretary of State and Islington resisted the grounds but submitted that, in any event, PRL’s criticisms “do not vitiate the essential conclusion of the inspector that, contrary to local policy, the appeal proposal failed to provide “the maximum reasonable amount of affordable housing“”.

After a lengthy analysis of the decision letter as well as the arguments that had been put forward by the parties, the judge rejected grounds 1 and 3. He accepted in part PRL’s arguments in relation to ground 2, there had indeed been flaws in the council’s valuer’s approach which were not addressed properly by the inspector. However that error, in the judge’s view, did not vitiate the basis upon which the inspector rejected PRL’s case that a 10% affordable housing provision represented the maximum reasonable level and was not therefore a basis for quashing the decision.

The claim was accordingly dismissed.

Which takes us to that postscript in paragraphs 141 to 147. It is an intriguing read for what is says about, for instance the following:

⁃ The importance of overcoming uncertainty as to how viability assessment should properly be carried out, which is “making it difficult for practitioners and participants in the planning process to predict the likely outcome and to plan accordingly. It also leads to a proliferation of litigation“.

⁃ The tension that has arisen in the application of paragraph 23 of the viability passages in the PPG, which should mean reflecting and not bucking relevant planning policies when arriving at a benchmark land value, but on the other hand ensuring that the application of those policies should be informed by and not bucking an analysis of market evidence.

⁃ Data on comparables should be adjusted properly but on the other hand there are drawbacks in a simple requirement to conform to EUV+, by way of formulaic application, especially via local authority documents which have not been subjected to independent statutory examination prior to adoption.

Finally, in the context of the Government’s consultation proposals in relation to standardised inputs to viability assessments (see my 10 March 2018 blog post Developer Contributions, CIL, Viability: Are We Nearly There Yet the judge offers a suggestion:

It might be thought that an opportune moment has arrived for the RICS to consider revisiting the 2012 Guidance Note, perhaps in conjunction with MHCLG and the RTPI, 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 6 years, so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making.”

That would indeed be welcome.

Simon Ricketts, 28 April 2018

Personal views, et cetera

[Colleagues at Town acted for PRL but these are, as always, my personal views].

Developer Contributions, CIL, Viability: Are We Nearly There Yet?

Bookends to this last week:
On Monday 5 March 2018 the draft revised NPPF , accompanying consultation proposals document and the Government’s response to the housing white paper consultation were all published, as well as the two documents I’ll focus on in this blog post:
Supporting housing delivery through developer contributions: Reforming developer contributions to affordable housing and infrastructure (which also addresses proposed reform to CIL); and 

Draft Planning Practice Guidance for Viability 
On Friday 9 March 2018 Draft Planning Practice Guidance: Draft updates to planning guidance which will form part of the Government’s online Planning Practice Guidance was published. 

The draft revised NPPF itself says very little on developer contributions, CIL and viability. 
On contributions, paragraph 34 of the draft (headed, in contrast to the “developer contributions” document, “development contributions” – consistency of terminology would be good!) states:
Plans should set out the contributions expected in association with particular sites and types of development. This should include setting out the levels and types of affordable housing provision required, along with other infrastructure (such as that needed for education, health, transport, green and digital infrastructure). Such policies should not make development unviable, and should be supported by evidence to demonstrate this. Plans should also set out any circumstances in which further viability assessment may be required in determining individual applications.”

On viability:

58. Where proposals for development accord with all the relevant policies in an up-to- date development plan, no viability assessment should be required to accompany the application. Where a viability assessment is needed, it should reflect the recommended approach in national planning guidance, including standardised inputs, and should be made publicly available.”
The Developer Contributions consultation document (responses sought by 10 May) addresses both contributions by way of section 106 planning obligations and by way of CIL. The document is accompanied by a research report commissioned from the University of Liverpool, The Incidence, Value and Delivery of Planning Obligations and Community Infrastructure Levy in England in 2016-17 which has some interesting statistics, underlining for me the scale of monies already being secured from development, over £6bn in 2016/2017:

It is clear from the consultation document that we are still on a journey to an unknown destination:
“The reforms set out in this document could provide a springboard for going further, and the Government will continue to explore options to create a clearer and more robust developer contribution system that really delivers for prospective homeowners and communities accommodating new development. 

One option could be for developer contributions [towards affordable housing as well as infrastructure] to be set nationally and made non negotiable. We recognise that we will need to engage and consult more widely on any new developer contribution system and provide appropriate transitions. This would allow developers to take account of reforms and reflect the contributions as they secure sites for development. 

The proposals in this consultation are an important first step in this conversation and towards ensuring that developers are clear about their commitments, local authorities are empowered to hold them to account and communities feel confident that their needs will be met.”
First step in a conversation??
Contributions via section 106 planning obligations
The document sets out perceived disadvantages of relying on section 106 planning obligations, including:
– delays (but there is no mention of how these could easily be reduced by prescriptive use of template drafts and more robust guidance and the Government’s previous proposal for an adjudication process to resolve logjams in negotiations has been dropped)
– the frequency of renegotiations, most frequently changing the type or amount of affordable housing (but with no analysis of why this is so – often in my experience for wholly necessary reasons, often linked to scheme changes or reflection of changed government affordable housing priorities or funding arrangements)

– a concern that they may “only have captured a small proportion of the increase in value” that has occurred over the time period covered by the University of Liverpool research report (but, aside from where the scale of contributions has been depressed from a policy compliant position due to lack of viability, why is this relevant? Planning obligations should be about necessary mitigation of the impacts from development, not about capture of uplifts in land value ). 

– lack of transparency. 

– lack of support for cross boundary planning. 

Despite these criticisms, the document does not propose significant changes to the section 106 process (or provide any timescale for the further review it alludes to) save for proposing to remove the pooling restriction (Regulation 123 of the CIL Regulations 2010) in areas:

* “that have adopted CIL; 


* where authorities fall under a threshold based on the tenth percentile of 
average new build house prices, meaning CIL cannot feasibly charged; 


* or where development is planned on several strategic sites

The Government is consulting on what approach should be taken to strategic sites for this purpose, the two options being stated as:
“a) remove the pooling restriction in a limited number of authorities, and across the whole authority area, when a set percentage of homes, set out in a plan, are being delivered through a limited number of large strategic sites. For example, where a plan is reliant on ten sites or fewer to deliver 50% or more of their homes; 

b) amend the restriction across England but only for large strategic sites (identified in plans) so that all planning obligations from a strategic site count as one planning obligation. It may be necessary to define large strategic sites in legislation.”
I would prefer to see the pooling restriction dropped across the board. If authorities choose not to adopt a CIL charging schedule but to rely on section 106 planning obligations to make contributions towards infrastructure then why not let them, subject to the usual Regulation 122 test? I thought we wanted a simpler system?
There are sensible proposals for summaries of section 106 agreements to be provided in standard form (although we do not yet have the template), so that information as to planning obligations can be more easily made available to the public, collated and monitored. 
Contributions via CIL
The Government’s thinking on CIL continues along the lines set out alongside the Autumn 2017 budget and summarised in my 24 November 2017 blog post CIL: Haven’t Found What I’m Looking For ie wandering dangerously away from the CIL review panel’s ideas of a simpler, more uniform but lower charge regime. The proposed ability for authorities to set different CIL rates based on the existing use of land is inevitably going to make an overly complex system even worse, introducing another uncertainty, namely how the existing use of the land is to be categorised. The Government recognises that risk:

Some complex sites for development may have multiple existing uses. This could create significant additional complexity in assessing how different CIL rates should be apportioned within a site, if a charging authority has chosen to set rates based on the existing use of land. 

In these circumstances, the Government proposes to simplify the charging of CIL on complex sites, by: 

* encouraging the use of specific rates for large strategic sites (i.e. with a single rate set for the entire site) 


* charging on the basis of the majority use where 80% of the site is in a single existing use, or where the site is particularly small; and 


* other complex sites could be charged at a generic rate, set without reference to the existing use of the land, or have charges apportioned between the different existing uses.”

One wonders how this would play out in practice. 

It seems that the requirement for regulation 123 lists (of the infrastructure projects or types of infrastructure which the authority intends to fund via CIL – and which therefore cannot be secured via section 106) is to be removed, which is of concern since regulation 123 lists (the use of which should be tightened rather than loosened) serve at least some degree of protection for developers from being double-charged. 
 The Government is proposing to address one of the most draconian aspects of the CIL process – the current absolute requirement for a commencement notice to be served ahead of commencement of development, if exemptions and the right to make phased payments (where allowed by the authority) are not to be lost, is to be replaced by a two months’ grace period. However, this does not avoid all current problems as any exemptions would still need to be secured prior to commencement.

A specific problem as to the application of abatement provisions to pre-CIL phased planning permissions is to be fixed. These flaws in the legislation continue to emerge, a function of the complexity and artificiality of the whole edifice, which the panel’s proposals would significantly have reduced. In the meantime, we are some way away from actual improvements to the system we are all grappling with day by day, with no firm timescale for the next set of amending Regulations. 
Viability
The thrust of the draft planning practice guidance for viability is understood and reflects what had been heralded in the September 2017 Planning for the right homes in the right places consultation document – focus viability consideration at allocation stage, standardise, make more transparent – but there are some surprising/interesting passages:
– Is the Government contemplating review mechanisms that don’t just ratchet upwards? Good if so:
It is important that local authorities are sufficiently flexible to prevent planned development being stalled in the context of significant changes in costs and values that occur after a plan is adopted. Including policies in plans that set out when and how review mechanisms may be included in section 106 agreements will help to provide more certainty through economic cycles. 

For all development where review mechanisms are appropriate they can be used to amend developer contributions to help to account for significant changes in costs and values over the lifetime of a development. Review mechanisms can be used to re- apportion or change the timing of contributions towards different items of infrastructure and affordable housing. This can help to deliver sites that would otherwise stall as a result of significant changes in costs and values of the lifetime of a development.”
– Review mechanisms are appropriate for “large or multi phased development” in contrast to the ten homes threshold in draft London Plan policy H6 (which threshold is surely too low). 
– The document advises that in arriving at a benchmark land value, the EUV+ approach (ie existing use value plus premium) should be used. The London Mayor will have been pleased to see that but will then have choked on his cornflakes when the Government’s definition of EUV+ is set out. According to the Government, EUV is not only “the value of the land in its existing use” (reflecting the GLA approach) but also “the right to implement any development for which there are extant planning consents, including realistic deemed consents, but without regard to other possible uses that require planning consent, technical consent or unrealistic permitted development” (which is more like the GLA’s approach to Alternative Use Value!). 
Then when it comes to assessing the premium, market comparables are introduced:
When undertaking any viability assessment, an appropriate minimum premium to the landowner can be established by looking at data from comparable sites of the same site type that have recently been granted planning consent in accordance with relevant policies. The EUV of those comparable sites should then be established. 

The price paid for those comparable sites should then be established, having regard to outliers in market transactions, the quality of land, expectations of local landowners and different site scales. This evidence of the price paid on top of existing use value should then be used to inform a judgement on an appropriate minimum premium to the landowner.”

I am struggling to interpret the document as tightening the methodologies that are currently followed, or indeed introducing any material standardisation of approach. 

The EUV+ position is covered in more detail by George Venning in an excellent blog post.
– There is a gesture towards standardisation in the indication that for “the purpose of plan making an assumption of 20% of Gross Development Value (GDV) may be considered a suitable return to developers in order to establish viability of the plan policies. A lower figure of 6% of GDV may be more appropriate in consideration of delivery of affordable housing in circumstances where this guarantees an end sale at a known value and reduces the risk.” However, there is no certainty: “Alternative figures may be appropriate for different development types e.g. build to rent. Plan makers may choose to apply alternative figures where there is evidence to support this according to the type, scale and risk profile of planned development.
More fundamentally, I am sceptical that viability-testing allocations at plan-making stage is going to deliver. At that stage the work is inevitably broad-brush, based on typologies rather than site specific factors, often without the detailed input at that stage of a development team such that values and costs can be properly interrogated and without an understanding of any public sector funding that may be available. If the approach did actually deliver, significantly reducing policy requirements, so much the better, but that isn’t going to happen without viability arguments swamping the current, already swamped, local plan examination process.
Indeed, as was always going to be the case with the understandable drive towards greater transparency, the process is becoming increasingly theoretical (think retail impact assessment) and further away from developers opening their books to demonstrate what the commercial tipping point for them is in reality, given business models, funding arrangements, actual projected costs (save for land), and actual projected values. “Information used in viability assessment is not usually specific to that developer and thereby need not contain commercially sensitive data“. 
The document contains more wishful thinking:
A range of other sector led guidance on viability is widely available which practitioners may wish to refer to.”
Excellent. Such as?
Topically, this week, on 6 and 7 March, Holgate J heard Parkhurst Road Limited’s challenge to the Parkhurst Road decision letter that I referred to in my 24 June 2017 blog post Viability & Affordable Housing: Update. The challenge turns on the inspector’s conclusions on viability. Judgment is reserved. 

We also should watch out for Holgate J’s hearing on 1 and 2 May of McCarthy and Stone & others v Mayor of London, the judicial review you will recall that various retirement living companies have brought of the Mayor of London’s affordable housing and viability SPG. 
The great thing about about writing a planning law blog is that the well never runs dry, that’s for sure. (Nothing else is). 
Simon Ricketts, 10 March 2018
Personal views, et cetera

CIL: Haven’t Found What I’m Looking For

So now we know. We will all be continuing to scratch our heads over CIL. 
My 25 March 2017 blog post CIL: Kill Or Cure? summarised the main October 2016 (but only published February 2017) recommendations of the CIL review team: “the replacement of the current system with a more standardised approach of Local Infrastructure Tariffs (LITs) and, in combined authority areas, Strategic Infrastructure Tariffs (SITs). LITs would supposedly be set at a low level calculated by reference to a proportion of the market value per square metre of an average three bedroom property in the local authority area…For developments of ten dwellings or more, there would be a return to the flexibility of section 106 for provision of site-specific infrastructure (netting off LIT liability) and of course abolition of the pooling restriction.”

The team’s brief had been:
“Assess the extent to which CIL does or can provide an effective mechanism for funding infrastructure, and to recommend changes that would improve its operation in support of the Government’s wider housing and growth objectives.” 
In February, the Government promised to respond to the team’s recommendations alongside the Autumn 2017 budget.  Here we are, two years on from when the CIL review team’s work was commissioned in November 2015. The Autumn budget policy paper published on 22 November 2017 does indeed respond to the team’s recommendations, in the following terms:


Going through the proposals:

Removal of section 106 pooling restrictions, recommended by the CIL review team, is to be welcomed. Of course that should not be a green light for authorities in relation to a development proposal to revert to blanket tariff type section 106 requirements which would fail the regulation 123 test and wider principles recently set out by the Supreme Court in the Aberdeen case (see my 28 October 2017 blog post). 
Speeding up the process of setting and revising CIL, also recommended by the CIL review team, needs greater care in my view. It made sense as part of the review team’s concept of lower rates, arrived at in a more mechanistic manner than is currently the case. But there is no hint of lower rates in the Government’s proposal. Accordingly, close scrutiny is required. It is difficult enough as it is to have a meaningful influence on the process. The indication that higher zonal CILs could quickly be introduced to seek to capture land value uplifts around stations for instance is interesting but such interventions will need to be introduced with care if they are not in fact to discourage land owners from making their property available. 
Allowing authorities to set rates that better reflect the uplift in land values between a proposed and existing use was not a proposal that was considered by the CIL review team. It adds a further degree of complexity to the process. Charging schedules will have more categories. Precise floorspace calculations will be required not just of the proposed development but of the building that is to be replaced. Unintended consequences will inevitably arise and influence development strategies.  
A change of the indexation basis to house price inflation from build costs was not recommended by the CIL review team and will marginally complicate the process of calculating indexation, given that different areas will be experiencing differing inflation rates. And why is house price inflation relevant to non-residential floorspace?
Allowing combined authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff was recommended by the CIL review team but that was against the backdrop of CIL being replaced with a lower “local infrastructure tariff”. Any additional net cost to owners and developers will directly affect viability, ie reduce the amount of affordable housing that schemes could otherwise afford. If the ability to rely on viability arguments is to be reduced, as the Government separately proposes, this is definitely going to impede delivery. Furthermore, why does affordable housing always lose out to infrastructure, particularly when charging authorities are proving very slow in spending the CIL monies that they have so far collected?
The proposals make no mention of the CIL Review team’s proposal, widely supported, of allowing infrastructure to be delivered via section 106 agreements in connection with larger developments, recovering the flexibility and opportunities for efficiency that the CIL system has removed. 
What next?
There will be detailed consultation on these and other changes, ahead of or possibly alongside the draft revised NPPF (rumoured now to have slipped to April 2018) before regulations are made which would probably now not come into force until early 2019. Earlier regulations are expected to deal with the specific ambiguity within regulation 128A affecting section 73 applications (highlighted in the VOA ruling mentioned in my CIL: Kill Or Cure blog post and since challenged by way of judicial review by the charging authority, Wandsworth) – but the transitional provisions within those regulations, and the extent to which the clarification should have retrospective effect, will need careful thought. 
For my part I find it incredibly disappointing that this whole process has been so slow and that the considered recommendations of the review team appear to have been cherry picked, destroying any internal coherence in what is proposed. Aside from correcting some obvious flaws, there appears to be nothing that will reduce CIL’s complexity, the problems arising from the multiplicity of exemptions, the straitjacket that it imposes in relation to more complex schemes and the high rates that are being set with little real scrutiny – indeed quite the reverse. The Government may have answers to these criticisms but simply relying on one paragraph in the budget policy paper really isn’t good enough.  
Simon Ricketts, 24 November 2017
Personal views, et cetera

Viability Assessment Is Not A Loophole, It’s A Noose

Congratulations to Shelter’s PR team. Its report, Slipping through the loophole: How viability assessments are reducing affordable housing supply in England, with a deliberately emotive reference in its accompanying 1 November 2017 press release to a ‘legal loophole exploited by developers‘ was lapped up largely uncritically by the media:
Loophole that allows developers to avoid building affordable homes leads to huge shortfall Telegraph, 31 October 2017
Majority of affordable homes lost due to legal loophole exploited by developers, show figures Independent, 1 November 2017

Revealed: The ‘Loophole’ Developers Use To Avoid Building More Affordable Homes Huffington Post, 31 October 2017
SHAMEFUL GREED Developers are using a legal loophole to build less affordable homes than required in order to protect their profit margins The Sun, 1 November 2017

Some basic truths are being conveniently forgotten. I set out some of them in my 28 May 2017 blog post, Affordable Housing Tax and won’t repeat them here, save to say that we need to pause and reflect whether public policy on affordable housing provision is in a good place at all at present. 
The aim of the Shelter report is to seek to persuade the Government to follow through with its proposed limiting of the role of viability assessment at application, as opposed to plan-making, stage. This proposal is being consulted upon in Planning for the right homes in the right places consultation paper, responses to which are due by 9 November 2017.
But the report is unbalanced. The description of the assessment process is over-simplistic. It asserts blandly that developers “can cite viability concerns to lower the amount of affordable housing they are required to provide, in order to guarantee them a 20% profit margin and inflate their bids for land”, playing down the scrutiny given by the authority’s valuers (or district valuer if the authority so chooses) and by the Planning Inspectorate on appeal (see for example my 24 June 2017 blog post that referred to the Parkhurst Road and Newcombe House decisions). The report repeatedly refers to 20% profit on a scheme as if it is a standard benchmark dreamed up by developers, when in reality a scheme by scheme approach is required. Often that figure has indeed been accepted, but on the basis that it is determined to be appropriate as a tipping point. Given the risks inherent in any major scheme (the paper wrongly states that “the developer’s profit is effectively guaranteed by the viability loophole” – not guaranteed, not a loophole) how much profit would a provider of capital require in order to invest in that project rather than in any other commercial development or investment? 20% sounds about right to me?
The report ends up laying most of the blame at paragraph 173 of the NPPF:
“…To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable.”
It seeks to show the effect that this supposed change in approach has had on the delivery of affordable homes by way of section 106 agreement:

It is interesting to look at this table alongside other tables in the research work from which it is drawn, Rethinking planning obligations: balancing housing numbers and affordability (Dr Sue Brownill and Dr Youngha Cho, School of the Built Environment Oxford Brookes University, March 2017):


In my view NPPF has been far less influential than other changes such as the loss of Government funding. 

By political sleight of hand, moral and legal responsibility for funding the provision of affordable, ie subsidised, housing has over the last decade moved largely onto the owners of land being brought forward for residential development and the promoters of those schemes. What level of affordable housing do these schemes have to bear? In reality, given such high policy targets, as much as can be extracted in negotiations, often with a review mechanism in the section 106 agreement allowing for further extraction at later stages in the development, preserving only as a potential return whatever benchmark land value and developer’s profit percentage has been agreed upfront in the viability assessment. 
As I explained in my Affordable Housing Tax blog post, section 106 requirements in relation to affordable housing largely started in the 1990s and became progressively entrenched in policy through the 2000s. But, prior to reductions in government funding, first in 2005 and then in 2011, the basis for developer commitments towards affordable housing was very different. Developers would commit in their section 106 agreement to affordable housing provision on the basis of securing a minimum base price for the units, usually being obliged to market the opportunity to nominated registered providers (known as registered social landlords until 2008). The quantum of the registered provider’s bid would depend upon the level of social housing grant secured from the Housing Corporation (replaced by the Homes and Communities Agency) and/or local authority. The nature of tenure of the affordable housing, and quantum, would depend upon the base price secured and in turn, in large part, upon the availability of social housing grant. “Cascade” provisions would specify the policy priorities in terms of tenure/quantum where the minimum base price could not be achieved. The minimum base price would commonly be linked to the Housing Corporation’s Total Cost Indicator (TCI), ie its estimate, area by area, of the normal cost of providing different types of housing. Social housing grant was commonly as high as 40 to 60% of TCI. But from around 2011 , with little fanfare and no public debate, social housing grant ceased to be available for section 106 affordable housing. 
As a result of that fundamental change in approach, affordable housing requirements are now pretty much a straight tax on land value (where the developer can pass the cost to the land owner through paying less for the land) and otherwise a tax on development. Often in reality the cost cannot be passed on – land owners have existing uses for their land, other potential development options or simply a minimum aspiration below which they will not go. Equally, land may have been acquired by an irrationally exuberant purchaser, unwilling now to crystallise a loss.   
Viability assessment is a necessary evil, but don’t assume that developers relish it:
– Via review mechanisms it can end up capping the maximum return that is achievable, an unattractive option when weighed against the uncapped risks that arise through any development project.  
– The toxic nature of the public debate, placing at the developer’s door a problem not of its making.

– The increasing risk that commercially sensitive information will need to be shared publicly.  

– The slow, expensive and unpredictable nature of the process, involving various consultants, all paid for by the developer – plainly, going with the policy grain will always be an easier option.

There is of course a debate to be had as to the relative extent to which land owners, developers and the state should fund affordable housing. I hope that we are indeed about to have that debate. There are some faint but encouraging signs, for instance the announcement by the prime minister in her party conference speech of £2bn towards social housing, the promised green paper and Sajid Javid’s recent urging that the Chancellor should borrow to build homes. We await the Autumn budget on 22 November with interest. In the meantime, unless local planning authorities are going to reduce massively their affordable housing requirements (unlikely, it’s needed), there is no alternative to viability appraisal. By all means, let’s make it work better but, without it, we will have even fewer homes built. 
Inevitably, we’ve been there before. See for example an ODPM report, July 2005: The Value for Money of Delivering Affordable Housing through Section 106:
“7.1  The research confirms that s.106 plays an important role in the delivery of affordable housing. However, there are other factors besides s.106 which have a significant influence on the provision of affordable housing. Some of these factors affect the availability of land, others affect the capacity to negotiate affordable housing contributions, still others affect the financial capacity of RSLs and other stakeholders. Such factors include: 
…

– Other planning obligations – the requirement for other essential planning obligations can reduce the contribution available to affordable housing. 

– Rent restructuring – this can affect the ability of the RSL to raise loans. 

– The grant regime – the abolition of LASHG has implications for affordable housing delivery if it is not replaced by other means. The short term nature of the bidding regime for funds can delay or postpone a scheme.

See also written evidence submitted to the Communities and Local Government Committee by by Professor Tony Crook, Ms Sarah Monk, Dr Steven Rowley and Professor Christine Whitehead in 2006:
”  Our research suggests that most (nearly three quarters) of Section 106 affordable housing units have an injection of public subsidy in the form of Social Housing Grant. At first sight this is odd and does not sit easily with one of our interpretations of Section 106, ie that developer contributions replace the need for subsidy. This might suggest policy “failure” but ignores the context within which Section 106 works best. Our evidence shows that planning gain delivers affordable housing in high price areas where land is expensive. What developers’ contributions appear to have done to date is to reduce the price of this expensive land to one that RSLs can afford within Housing Corporation funding guidelines. So, despite significant developers’ contributions, mounting on average to 5% of the gross development value across Section 106 sites (both the market and non-market elements), SHG is still needed to make the homes affordable and the schemes viable. In a recent calculation we have estimated that developers’ contributions on schemes agreed in 2003-04 were valued at £1,200 million. In looking at how Section 106 provides funding, we also need to recognise that Section 106 negotiations between developers and planners are not just about affordable housing contributions, but are usually about a much wider range of contributions, both in terms of physical off-site infrastructure and wider community needs, including school buildings. Affordable housing is not necessarily the highest priority and hence there may be little by way of developers’ contributions left over once other requirements have been negotiated and agreed. Thus both the expense of the land and the competing claims on planning gain explain the need for SHG, although without a clear negotiating and “accounting” framework there may well be risks that SHG inadvertently cross-subsidises these other planning “gains”.”


Eleven years on and it seems to me that we are in a much worse position. Whilst some grants are of course still available, social housing grant is long gone and in many areas a large non-negotiable slice has taken out by CIL (supposedly to be spent by authorities on infrastructure that unlocks development but that is not how it has turned out at all).

If the 2017 answer is to rely on land owners and developers to pay for affordable housing, let that be the outcome of a proper political debate and written into policy rather than the current unsatisfactory situation, which appears to me to be intellectually dishonest. If you’re going to tax market participants, do it openly, explain why you’re doing it and be sure that the mechanism is efficient in delivering the agreed objectives – more housing and more affordable housing, of all tenures. 
Simon Ricketts, 4 November 2017
Personal views, et cetera

Mending The Planning System (Has Anyone Tried Switching It Off And On Again?)

When I recently blogged about the Raynsford review of the planning system, I really wasn’t expecting shadow CLG Secretary of State Roberta Blackman-Woods to announce yet another one at the Labour party conference, at a CPRE fringe event. This is CPRE’s write-up. It will be called “People and Planning”. According to Building magazine we can expect proposals to streamline the compulsory purchase system and “tougher measures to stop developers sitting on sites“, as well as a rethink on CIL and on the Government’s recently announced OAN methodology consultation. 
Labour leader Jeremy Corbyn had the following passages in his conference speech, leading on from references to the Grenfell Tower tragedy:
We have a duty as a country to learn the lessons from this calamity and ensure that a changed world flowers . I hope that the public inquiry will assist. But a decent home is a right for everyone whatever their income or background. And houses should be homes for the many not speculative investments for a few. Look at the Conservative housing record and you understand why Grenfell residents are sceptical about their Conservative council and this Conservative government.

Since 2010: homelessness has doubled, 120,000 children don’t have a home to call their own, home ownership has fallen, thousands are living in homes unfit for human habitation. This is why alongside our Shadow Housing minister John Healey we’re launching a review of social housing policy – its building, planning, regulation and management.

We will listen to tenants across the country and propose a radical programme of action to next year’s conference. But some things are already clear tenants are not being listened to.
We will insist that every home is fit for human habitation, a proposal this Tory government voted down. And we will control rents – when the younger generation’s housing costs are three times more than those of their grandparents, that is not sustainable.

Rent controls exist in many cities across the world and I want our cities to have those powers too and tenants to have those protections. We also need to tax undeveloped land held by developers and have the power to compulsorily purchase. As Ed Miliband said, “Use it or lose it”. Families need homes.

After Grenfell we must think again about what are called regeneration schemes.

Regeneration is a much abused word.

Too often what it really means is forced gentrification and social cleansing, as private developers move in and tenants and leaseholders are moved out. 

We are very clear: we will stop the cuts to social security.

But we need to go further, as conference decided yesterday.

So when councils come forward with proposals for regeneration, we will put down two markers based on one simple principle:
Regeneration under a Labour government will be for the benefit of the local people, not private developers, not property speculators. 

First, people who live on an estate that’s redeveloped must get a home on the same site and the same terms as before.

No social cleansing, no jacking up rents, no exorbitant ground rents. 

And second councils will have to win a ballot of existing tenants and leaseholders before any redevelopment scheme can take place.

Real regeneration, yes, but for the many not the few.

That’s not all that has to change.”

Liberal Democrats’ leader Vince Cable took a similar theme in his own party conference speech:
“If there is any single lesson from the Grenfell disaster, it is that people in poverty aren’t listened to. Nowhere is inequality more marked than in the housing market. Property wealth for the fortunate coexists with growing insecurity and homelessness for many others. Home ownership, which spread wealth for generations, is no longer a realistic prospect for younger people with moderate means.

To put this right, we must end the stranglehold of oligarchs and speculators in our housing market. I want to see fierce tax penalties on the acquisition of property for investment purposes, by overseas residents. And I want to see rural communities protected from the blight of absentee second home ownership, which devastates local economies and pushes young people away from the places where they grew up. 

Homes are to live in; they’re not pieces on a Monopoly board. But whatever we do with existing homes will not be enough. A doubling of annual housing supply to buy and rent is needed. 

For years politicians have waffled about house building while tinkering at the edges of the market. I want to recapture the pioneering spirit that in the mid-20th century brought about developments like Milton Keynes and the new towns…I want to see a new generation of garden cities and garden villages spring up in places where demand presently outstrips supply.

But we know that private developers alone will not make this happen.Just as social reformers in the 1950s and 60s saw government roll up its sleeves and get involved with building, government today has a responsibility to be bold…and to build more of the homes we need for the 21stcentury. It is utterly absurd that councils are allowed to borrow to speculate in commercial property…but are stopped from borrowing to build affordable council houses.”

The shadow of Grenfell of course looms over the politics of planning and social housing. Secretary of State for Communities and Local Government, Sajid Javid, had earlier in the month announced a “green paper on social housing“:
A wide-ranging, top-to-bottom review of the issues facing the sector, the green paper will be the most substantial report of its kind for a generation.

It will kick off a nationwide conversation on social housing.

What works and what doesn’t work.

What has gone right and what has gone wrong,

Why things have gone wrong and – most importantly – how to fix them.”
Shelter also put out a press release, big on hyperbole, short on analysis, referring to the ‘legal loophole’ of ‘secret viability assessments’, focusing on the reduced levels of affordable housing achieved in Kensington and Chelsea compared to the borough’s 50% policy target and making the explicit link to Grenfell:
New research from Shelter reveals that a legal loophole has been used by housing developers to avoid building 706 social homes in Kensington and Chelsea – more than enough to house families made homeless from the Grenfell tower fire.”

How is the government’s position on the role of viability in planning (set out in paragraph 173 of the National Planning Policy Framework, a non-statutory, hardly obscure, planning policy document, now over five years’ old) a “legal loophole“?
Poor Raynsford review, is planning is too political for whatever emerges from it to gain traction? Its recommendations are due to be presented to next year’s party conferences. I hope that clear distinctions are drawn between changes to be made to the basic legislative hardware of the system (is it resilient, efficient, clear for users?) and to be made to the software (the NPPF, PPG structure – is it kept up to date to reflect the Government’s policy priorities and guiding users’ behaviour appropriately?), the purpose of the changes being to influence the content, scale, quality and pace of the data processing: individual plans and decisions actually coursing through the system, leading most importantly to delivery of political priorities, whatever they may be for the next Government. The review is somewhat hamstrung by not being able to set out those priorities as its starting point. 
So, what of the Government’s position? Regardless of what will be said at the forthcoming Conservative party conference, surely the current Government is not currently in a strong position to make further major changes. However, there is much unfinished legislative business, arising from:
– partly implemented enabling legislation (Housing and Planning Act 2016, Neighbourhood Planning Act 2017)

– uncompleted consultation processes (the Housing White Paper and associated documents, February 2017; Planning For The Right Homes In The Right Places, September 2017)

– other previously floated initiatives (for instance in the Conservative Party’s 2017 general election manifesto)

– other previous initiatives, partly overlapping with the above (a House of Commons library briefing paper dated 12 July 2017 lists 22 pre-June 2017 announcements that have not yet been implemented, or cancelled). 

 I have tried to take stock of where we are in terms of legislative as opposed to policy changes. This is a list of where I believe we are with the main planning law provisions of the 2016 and 2017 Acts (with relevant commencement dates indicated, although check the detail: in many cases a provision in primary legislation may have been switched on but still requires further secondary legislation for it to have any practical effect):

 Housing and Planning Act 2016 

 * Starter homes – providing a statutory framework for the delivery of starter homes – not in force, not really needed since the Housing White Paper u-turn

* Self-build and custom housebuilding – requiring local authorities to meet demand for custom‐built and self‐built homes by granting permissions for suitable sites – from 31 October 2016

* Neighbourhood planning changes – from 12 May 2016

* Permission In Principle/Brownfield Land Registers

    * Housing and Planning Act 2016 (Permission in Principle etc) (Miscellaneous Amendments)(England) Regulations 2017 – 6 March 2017

    * Town and Country Planning (Permission in Principle) Order 2017 – 15 April 2017

    * Town and Country Planning (Register of Previously Developed Land) Regulations 2017 – 16 April 2017

* Extension of Government’s ability to designate poorly performing LPAs such that non-major applications can be made direct to the Planning Inspectorate – from 12 July 2016

* Planning freedoms schemes – from 13 July 2016

* Resolution of disputes about planning obligations – not in force

* NSIPs including a housing element where functional link or close geographical link – from 6 April 2017

* Powers for piloting alternative provision of processing services – from 12 May 2016 (but no pilots yet)

* Urban Development Corporations/designation of new town areas – from 13 July 2016

* Compulsory purchase changes – mostly from 3 February 2017

Neighbourhood Planning Act 2017 
 * Neighbourhood planning changes – (partly) from 19 July 2017, subject of a previous blog post)

* Power to direct preparation of joint local development documents – not yet in force

* Restrictions on pre-commencement planning conditions – from 19 July 2017 (although Regulations not yet made)

* Restriction on PD rights re drinking establishments

    * Town and Country Planning (General Permitted Development) (England) (Amendment) (No 2) Order 2017 from 23 May 2017 (subject of a previous blog post)

* More compulsory purchase changes – partly in force, various commencement dates

 And these are the limited areas where we can expect further legislation:

* CIL reform (probably limited reform in this Parliament)

* Further PD rights? Maybe not. There has been silence in relation to upwards extensions in London and further rural PD rights, although limited light industrial to residential PD rights come into force for three years from 1 October 2017, following amendments to the General Permitted Development Order last year. 

* 20% increase in planning application fees (definitely)

* Completion notices reform (maybe, floated in Housing White Paper, subject of a previous blog post)

* Statutory three month deadlines for Secretary of State decisions (maybe, floated in Housing White Paper)

* Planning appeal fees (maybe, floated in Housing White Paper). 

* Regulations as to the “technical details” procedure for permissions in principle (definitely)

 I had to get my head round all of this in preparing to speak at Conference.*

*The RTPI’s Planning Issues For The Housing Agenda conference on 4 October.

Simon Ricketts, 30.9.17

Personal views, et cetera