Earlier this month, the Planning Inspectorate rejected a developer's method of calculating the sum to be paid for the provision of off-site affordable housing.

Background

Churchill Retirement Living (Churchill) appealed against the refusal of their planning application by East Devon District Council (the Council) for 39 sheltered apartments for the elderly.

Issue

The Planning Inspectorate (PINS) considered whether or not the proposed development would make adequate provision for affordable housing.

The East Devon Local Plan 2013-31 (Local Plan) requires on-site affordable housing to be provided on all residential developments unless off-site provision of equivalent value is justified by the circumstances. In such cases financial contributions can be made towards off-site provision in the form of a commuted sum. However, the Local Plan did not set out how to calculate the sum. There was some guidance within the Local Plan’s explanatory text which indicated that a specific off-site affordable housing calculator would be used as a starting point for negotiation.

The parties agreed that onsite provision for affordable housing was not appropriate in the circumstances and that a financial contribution towards off-site provision would be justified.

However the parties did not agree on the amount or the means by which such financial contributions should have been calculated. The method of calculation used by Churchill generated a considerably lower commuted sum figure than the Council’s figure.

The Council’s argument

The Council had adopted a Commuted Sum Calculator (the CSC) based on an Affordable Housing Viability Study carried out in 2011. This was to establish a consistent and transparent method of calculating these types of contribution.

Churchill’s argument

Churchill put forward an alternative method of calculating the commuted sum. The resultant contribution figure would have been significantly lower than that proposed by the Council using the CSC.

Churchill argued that the Council’s figure was out of date. Churchill highlighted their lower figure was based on more up to date information collected from the registered affordable housing providers.

The PINS’ decision

Churchill’s appeal was dismissed.

PINS did not object to the use of the calculator being used as a starting point for negotiations between the parties but it did not agree that the CSC should be the only method of calculation. PINS made clear that whichever method is used, the key principle is that of equivalence. The developer should be no worse or better off financially, whether they provide the affordable housing on-site or as a commuted off-site sum.

Churchill’s proposed contribution was insufficient to provide an off-site affordable housing contribution which would be of equivalent value to on-site provision. As a result, Churchill’s contribution would not make adequate provision for affordable housing and would conflict with the requirements of the Local Plan.

PINS set out where a lower commuted sum figure than that generated by the CSC can be justified, the developer must demonstrate that any evidence provided is sufficiently robust that it would result in an off-site contribution that would be of equivalent value.

Points to note

  1. When determining the calculation of an off-site affordable housing contribution, the developer should ensure that they would be in the same financial position whether they provide the affordable housing on-site or as a financial contribution to be made towards off-site provision.
  2. Evidence provided to justify a lower commuted sum figure than that generated by the CSC must be sufficiently robust that an off-site contribution will be of equivalent value to providing affordable housing on-site.