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Judge urges viability assessment review as borough wins affordable housing battle

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A London borough has been backed by a High Court judge in a battle with a developer which refused to meet the council’s demand for affordable housing.

Mr Justice Holgate has also recommended the current, widely used, guidance on viability assessments by the Royal Institute of Chartered Surveyors (RICS) should be revised in order to prevent further cases from coming before the courts.

In his postscript, Mr Justice Holgate said: “It might be thought that an opportune moment has arrived for the RICS to consider revisiting the 2012 guidance note, perhaps in conjunction with [the Ministry for Housing, Communities & Local Government] and the [Royal Town Planning Institute], in order to address any misunderstandings about market valuation concepts and techniques, the ‘circularity’ issue and any other problems encountered in practice over the last six years, so as to help avoid protracted disputes of the kind we have seen in the present case and achieve more efficient decision-making.”

The case centred around the viability assessment of development and, in particular, how the price of land should be determined in planning. This is a method increasingly used by developers to avoid complying with councils’ planning requirements on affordable housing.

Islington LBC’s policy requires developers to provide the “maximum reasonable” amount of affordable housing on a site, with 50% affordable housing being the starting point.

The claimant Parkhurst Road Limited, which applied to build 96 homes on a former Territorial Army Centre in Parkhurst Road, initially sought to provide less than Islington’s affordable housing target in 2013.

The council refused planning permission and the developer appealed before it increased its offer of affordable housing to 10%.

The low levels of affordable housing provided on the scheme was being justified by the developer based on factors such as the purchase price paid for the site and land transactions of other schemes

The council refused planning permission for this development twice on the grounds of not providing enough affordable housing, as well as other matters.

Two lengthy public inquiries were held, both of which were won by Islington LBC. In June last year a planning inspector also upheld Islington’s decision.

The developer then mounted a legal challenge against the planning inspector’s decision at the High Court, which was jointly defended by Islington’s legal team and the lawyers representing MHCLG.

On Friday Justice Holgate dismissed the legal challenge on all three grounds put forward by the developer.

Responding to the judgement, an Islington LBC spokesman said: “This decision reinforces Islington council’s long-standing position that developers should abide by the councils’ planning guidelines rather than overpaying for land and then trying to bypass our affordable housing requirements.

“There is a shortage of good quality, genuinely affordable housing in Islington and a significant unmet housing need. The council is doing everything it can to address this, because we believe that everyone should have somewhere to live that is affordable, decent and secure – and developers must respect these important priorities when they purchase sites in Islington.”

A spokesperson for Parkhurst Road Limited said: We are disappointed with the High Court’s decision. We acquired the site from the Ministry of Defence through a competitive bidding process in 2013, and our approach to viability was previously approved by the Planning Inspectorate at appeal in 2015.

“Our track record in Islington speaks for itself - all our schemes deliver significant amount of affordable homes and jobs that help build thriving mixed communities. It is therefore extremely disappointing that the site remains empty after five years and is not delivering much-needed homes for Londoners. We are currently reviewing our options for the site.”

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