We have previously reported on successful appeals by developers to reduce affordable housing contributions under the Section 106BC appeal mechanism. Shortly before Christmas a further developer, Bloor Homes Limited (“Bloor”), succeeded in its appeal to reduce its affordable housing contribution on a scheme in Shepshed on viability grounds.
Bloor entered into a planning obligation in November 2012 which required the provision of 30% affordable housing with 70% in the form of rented units and 30% being intermediate housing. Charnwood Borough Council subsequently refused Bloor’s application to modify the affordable housing contribution.
With the appeal documentation Bloor submitted appraisals for the provision of 30% and 14% affordable housing on the appeal site. Bloor also carried out a Market Research Report which identified values achieved on a residential site under construction on Anson Road in another area of Shepshed.
In reaching his decision the Inspector, Stephen Roscoe, drew heavily on the values achieved from sales at Anson Road. Based on these figures the Inspector concluded that there was an additional £211,000 to add to the 14% appraisal value. He accepted that the affordable housing obligation of 30% made the scheme unviable in current market conditions. However, when looking at the 14% appraisal scheme he concluded that, based on an affordable unit price of £110,000, the value increase justified two additional affordable units. The Inspector decided that the required number of affordable units should be increased to 12, equivalent to 17.1% with 66.6% being rented units and 33.3% being affordable units.
This appeal highlights three issues. First, the significance of meaningful benchmarks. Good local evidence will be persuasive. Second, the Section 106BC appeal process offers some real flexibility. Whilst Bloor did not succeed in securing the 14% affordable housing provision they wanted, they did secure a 13% reduction on the original contribution requirement. Bloor did not carry out any viability appraisal prior to entering into section 106 agreement. The process from submission of the Section 106BC application to the Inspector’s decision took only 6 months. That is less than it may have taken had such work been carried out at the application stage. The relative speed of the process is likely to pose a risk for local planning authorities where section 106 agreements do not have any in-built viability review. Thirdly and finally, the Council suggested a market review mechanism so that, if sales values increased, further affordable housing would be provided. The Inspector noted that since a Section 106BC modification only lasts three years, this was not practicable for a large scheme likely to take longer than that to deliver. This is a more contentious point since it potentially limits the options open to both developers and to local planning authorities. It is more a reflection of a lack of imagination about the potential modifications than an issue of principle. A sensible review clause could be developed and should have been considered.