Small property developers, of schemes with up to ten homes, will face the same economic penalties as bigger firms after a successful challenge to new planning policies.
The High Court has made changes to recent planning law, claiming that the Government was wrong to grant affordable housing exemptions to schemes built by small, local builders.
The Secretary of State for Communities and Local Government hoped to encourage small developers through the exemptions.
Two councils challenged the Government – Reading and West Berkshire – and are celebrating their triumph.
However, house builders say that as a direct result, fewer homes will be built as small schemes will become financially impossible and the housing crisis will worsen.
Councillor Tony Page, of Reading Borough Council, welcomed the ruling by Mr Justice Holgate, saying it is “excellent news, not just for Reading and West Berkshire councils, but for all the people looking for affordable places to live.”1
The Department for Communities and Local Government will attempt to overturn the decision.
It states that it is “disappointed by the judgement”, as the new legislation had “aimed to reduce red tape and extra costs that prevent developments getting built.”1
Law firm Coffin Mew says that the decision will particularly affect urban residential developments and small rural sites.
Head of Commercial Property Law at the company, Nick Leavey, explains: “The economic viability of small schemes is often on a knife edge and this decision is likely to pull the rug from underneath those difficult to develop sites.
“It is also likely to have a negative effect on land values for future deals.”1
Chief Executive of the Federation of Master Builders, Brian Berry, comments: “It is not appropriate to impose the same level of obligations applied to large multi-million pound developments to the smallest of developments being brought forward by the smallest firms.”
He warns that the ruling will worsen the housing crisis, rather than help to address it.
He says that many small builders will now change plans that could have been economically viable, but are now not.
Berry concludes: “Many firms will avoid building on certain sites due to lower margins – a situation that could lead to fewer homes being built overall in the years ahead.”1