Council wins High Court battle over viability and amount of affordable housing

A Planning Court judge has ruled in favour of the London Borough of Islington in a long-running dispute over a major development which it has said will provide insufficient affordable homes.

Mr Justice Holgate has also called on professional bodies and the government to revisit guidance on how to calculate financial viability.

Developer Parkhurst Road was seeking to redevelop the site of a 0.58 hectares former Territorial Army building in Holloway, for which it paid the Ministry of Defence £13.25m in 2013. Islington refused permission for a scheme for 112 homes – 16 of them affordable – in 2014, which was upheld on appeal on grounds of damaging the area’s character and appearance. The council also argued that Parkhurst Road had overpaid for the site and as a result did not follow its policy of 50% affordable homes in new developments, though the inspector said the company had paid “not…significantly above a market norm”.

Parkhurst Road made a further application in January 2016 for 96 homes, which Islington again rejected because the developer “failed to demonstrate that the proposed development will provide the maximum reasonable amount of affordable housing” and the lack of adequate section 106 obligations. It again went unsuccessfully to appeal and then to court over the way the inspector dealt with the first issue.

In Parkhurst Road Ltd v Secretary of State for Communities And Local Government & Anor [2018] EWHC 991 (Admin) Holgate J said having examined land and sales values in the area “it is clear that the appeal proposal would not provide the maximum reasonable level of affordable housing in accordance with policies”. He went on: “It is also important to ensure that new development is sustainable, delivering the maximum reasonable level of affordable housing in all cases so as to meet the needs of all.  I note the appellant’s position that no affordable housing will come forward if the development is refused planning permission but this argument could be applied to any residential case and is not justification for allowing development that does not properly meet policy requirements and objectives.”

Holgate J said the Royal Institution of Chartered Surveyors’ Professional Guidance: Financial Viability in Planning, issued with the Ministry of Housing, Communities and Local Government and the Royal Town Planning Institute, should address ‘circularity’ by which developers sought to recover excess purchase prices by reducing affordable housing provision. He said: “It might be thought that an opportune moment has arrived for the RICS to consider revisiting the 2012 Guidance Note…to address any misunderstandings about market valuation concepts and techniques, the ‘circularity’ issue and any other problems…so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making.”