In an effort to diversify the house building market and to boost housing numbers by easing the burden of planning obligations on smaller developers, central government amended national planning policy in late 2014 to exempt small housing schemes (schemes of 10 houses or less and less than 1000 sq m in floor area) from affordable housing and other tariff-based infrastructure contributions. Many councils immediately ceased to seek contributions or affordable housing given this change in national policy.

Following a successful challenge in the High Court by two Berkshire councils, the exemption was deleted from national policy.  However, the exemption was re-introduced following a judgement of the Court of Appeal in May 2016. The Court of Appeal’s judgement disagreed with all four grounds upon which the High Court originally quashed the policy change.

With the matter apparently settled, several councils decided to ignore the exemption and successfully argued their cases to planning inspectors that their need for affordable housing was so exceptional that greater weight should be given to local planning policies requiring affordable housing contributions rather than the national policy exemption aimed at increasing housing supply.

This creates a new kind of uncertainly for developers of small schemes as they cannot be sure if exemption will apply from authority to authority.  Our view is that if the Government is serious about this aspect of national policy, it must make it clear that any affordable housing threshold should only start at 10 units and that irrespective of affordable housing need, permissions should be granted as a default (subject to compliance with other plan policies) in accordance with the exemption.