Some significant changes to the way in which social and affordable housing can be delivered by developers are included in the Urban Regeneration and Housing Act 2015, which commenced on 1 September of 2015 pursuant to SI 364/2015 (the 2015 Act). As detailed below, there are two main changes to Part V. The first is that the maximum percentage of land which a planning authority can require to be transferred to it by a developer has been reduced from 20% to 10%. The second is that the options available to a developer, as to how they comply with its social and affordable housing obligations, have been reduced.
1. Maximum Percentage Social and Affordable Housing
Planning authorities must ensure that sufficient suitable land is zoned for residential use to meet the requirements of its housing strategy. A planning authority is also obliged to include objectives to secure the implementation of its Social and Affordable Housing Plan. This is seen as a particularly acute issue at the moment where there is a significant scarcity of new housing.
Planning authorities have a discretion under the Planning and Development Act 2000 as to how much residential zoned land must be reserved for social and affordable housing. That discretion, which had been subject to a maximum ceiling of 20%, has now been reduced to a maximum of 10%. During the Dáil Debate on the (then) Bill in July 2015, it was explained that this reduction was justified by reference to the different economic context now (as compared with 2000 when the Part V provisions were first introduced), and the need to stimulate increased housing construction activity by reducing development costs and, as a result, house prices.
2. Compliance with Part V
There are now 3 options for compliance with Part V (apart from the default option of transferring undeveloped land) as follows:-
- A developer can build the percentage of social and affordable housing required and then transfer it to either the planning authority or its nominated authority. The number and specification of the houses must be agreed in advance with the planning authority; or
- A developer can transfer houses on other land, as per a prior agreement, to the planning authority or its nominated authority; or
- A developer can grant a Lease to the planning authority of an agreed number and specification of houses, either within the application site or elsewhere within the planning authority's functional area.
These 3 options are in addition to the default option, which is the transfer of undeveloped land within the application site.
The 2015 Act prescribes that it is no longer possible to make a payment in lieu of the provision of social and affordable housing; or to transfer undeveloped land that is somewhere other than within the application site; or to provide serviced sites.
3. The Agreement
The substance of the Part V Agreement has generally been a matter left over for agreement between the developer and the planning authority after planning permission has been granted. The 2015 Act now prescribes that the Part V Agreement must be concluded before the lodgement of a Commencement Notice under the Building Control Regulations. A failure to do so will render subsequent development unauthorised.
4. What provisions apply to Planning Permissions already in existence?
As the effective date of the 2015 Act is 1 September 2015, it seems likely that grants of planning permission on or after 1 September 2015 will be subject to the new Part V Provisions. If planning permission was granted before 1 September 2015, the 2015 Act prescribes that provided all the parties agree, the new regime can apply but, absent agreement, the old provisions apply.
5. Monetary Value
The 2015 Act clarifies how any alternative method of compliance (i.e. other than the transfer of undeveloped land) is to be measured. In essence, the alternative method must ensure that the planning authority gets an equivalent "planning gain". "Net monetary value" is the terminology used in the 2015 Act and is defined as the open market value of the land less its "existing use value". The price payable for the houses built is required to reflect:-
"The costs, including normal construction and development costs and profit on those costs, calculated at open market rates that would have been incurred by the planning authority had it retained an independent builder to undertake the works, including the appropriate share of any common development works, as agreed between the authority and the developer".
When assessing the "existing use value" of the lands, the 2015 Act changes the relevant reference date so it is no longer valued on the date of the transfer of ownership of the land to the planning authority, but is rather valued on the date on which the planning permission referred to is granted.
6. Dispute Resolution
If the developer and the planning authority cannot reach agreement on the Part V Provision, the matter can be referred to either An Bord Pleanála or the Property Arbitrator, depending on the issue in dispute.
The property arbitrator has jurisdiction over valuation matters e.g. the number and price of houses to be transferred, with An Bord Pleanála having jurisdiction over all other disputes. An Bord Pleanála, for example, would determine which method of compliance is the most appropriate.