In judgment handed down on 11 May 2016, the Court of Appeal overturned the High Court decision to quash the Government's controversial affordable housing exemptions for small scale development and vacant building credit.

The changes were first introduced by written ministerial statement in November 2014 but were found to be unlawful in July 2015 by Mr Justice Holgate on an application for judicial review by West Berkshire District Council and Reading Borough Council.

In allowing the appeal by the Secretary of State, the Court of Appeal's decision will have immediate implications for local authorities and developers promoting schemes of less than 10 units or which involve the demolition or reuse of vacant buildings as the polices must, once again, be taken into account in the determination of Planning Applications.

The policies

The policies were first announced in a statement by Brandon Lewis MP to the House of Commons on 28 November 2014. In brief, the statement directed that:

  • '...for sites of 10 units or less, and which have a maximum combined gross floor space of 1000 square meters, Affordable Housing and tariff style contributions should not be sought....'
  • 'For designated rural areas..., which includes National Parks and Areas of Outstanding Natural Beauty, authorities may choose to implement a lower threshold of 5 units or less, beneath which affordable housing and tariff style contributions should not be sought....Within these designated areas, payment of affordable housing and tariff style contributions on development of between 6 to 10 units should also be sought as a cash payment only....'
  • 'A financial credit, equivalent to the existing gross floor space of any vacant building brought back into any lawful use or demolished for redevelopment, should be deducted from the calculation of any Affordable Housing contributions'

Changes were subsequently made to the online National Planning Practice Guidance to explain how the policies were to be applied.

The challenge

The policies were controversial because of the perceived effect on local authorities' ability to deliver affordable housing.

An application for Judicial Review was brought in the High Court by West Berkshire District Council and Reading Borough Council on five grounds:

  • in deciding to adopt the policy, the Secretary of State failed to take into account material considerations including the implications of the policies for local authorities
  • The national policy is inconsistent with the statutory scheme for the determination of planning applications and its purposes
  • The consultation process carried out by the Secretary of State was unfair
  • the Secretary of State failed to comply with section 149 of the Equality Act 2010; and
  • The decision to introduce the new national exemptions from Affordable Housing requirements were irrational.

In the High Court, Holgate J found in favour of the Claimants on 4 of their 5 grounds finding it unnecessary to consider the fifth ground. However this decision was reversed in the Court of Appeal.

Of perhaps most of general significance for planning decisions was what the Court had to say on ground 2 (inconsistency with the statutory scheme).

Holgate J had found the policy to be 'improper because, in effect, it purports to override relevant policies in the statutory development plan insofar as they are inconsistent with national policy. To that extent the national policy ignores or circumvents the presumption in favour of the development plan policies in section 38 (6)'.

The Court of Appeal however disagreed, finding that (as a matter of general principle):

'While the development plan is under section 38 (6) the starting point for the decision maker (and in that sense there is a "presumption" that it is to be followed), it is not the law that greater weight is to be attached to it than to other considerations'

'Policy may overtake a development plan'; and

The Secretary of State was entitled to articulate planning policy in 'absolute or unqualified terms" and that to do so "is not in principle repugnant to the proper operation of section 38 (6)'.


As a result of the Court of Appeal's decision, the small scale exemptions and the vacant building credit are once again matters of national planning policy and are material considerations to be taken into account in the determination of planning applications.

The policy will have to be taken into account and, unless material considerations indicate otherwise, should be followed in decision taking.

The duty to have regard to the policy will apply to any new application as well as any application which is not yet determined. There may also be scope to review planning permissions that have recently been granted.

The Government has certainly made clear that it considers the policy to have been restored. In a press release issued shortly after the judgement was handed down, Brandon Lewis said, in no uncertain terms, that 'this will now mean that builders developing sites of fewer than 10 homes will no longer have to make an affordable homes contribution that should instead fall to those building much larger developments'.