History Repeating: Affordable Housing, Cascades, First Homes and lessons from the (fairly) recent past
Earlier this week, I had the pleasure of taking part in a panel discussion about affordable housing, hosted by the LPDF.
It was a fascinating event; convened to explore (in some detail) both why we struggle to plan effectively for affordable housing need and how we address the current difficulties with delivering s.106 Affordable Housing. I think it is fair to say that everyone involved fully understood the assignment.
It also reminded me, quite forcibly, of the benefits of getting old(er)*….. as some of the tools available to get us through the immediate struggles with obtaining offers for s.106 Affordable Housing are not new. They had just temporarily fallen out of fashion.
Cascade Provisions
I started my planning career in the aftermath of the 2008 financial crisis. A period of history which was not kind to the housing sector… be it affordable or otherwise….
Whilst I fully understand the desire to block those years from our collective memories, there are helpful lessons to be learned from them.
In particular, I think it is time to dust off affordable housing cascade provisions in s.106 Agreements.
For those who are unfamiliar, a cascade clause is a mechanism for introducing greater flexibility into the drafting of affordable housing provisions in s.106 Agreements.
The purpose of the clause is to allow you to ‘cascade’ through various types, tenures and mechanisms for meeting a development's affordable housing obligations - without the need to formally vary the entire planning obligation.
The form of wording used can vary considerably. Like most provisions in s.106 Agreements, the drafting tends to be altered to suit the scheme in question and the needs of the parties involved.
As a general rule of thumb, however, you will tend to start with something close to a policy compliant affordable housing offer, and then, if a suitable Registered Provider (RP) has not been found within a specifed period, move through a number of agreed variations to the tenure, mix and or location of the units until you either alight on a form of provision that an RP wants to take or, as an absolute last resort, the developer makes a financial contribution in lieu of on-site provision.
Cascades were all the rage in the late 2000s/early 2010s, but have fallen out of favour in recent years. Primarily as there usually been enough interest from RPs to secure an offer for 106 affordable housing on the majority of large development sites.
Unfortunately, this is no longer the case. For a myriad of reasons, many of which were explored in detail at the LPDF event, demand from RPs for s.106 affordable housing is drying up. There is no longer any guarantee that you will find an RP willing to accept the affordable housing units in the form, tenure and location dictated by the terms of a local plan policy, or s.106 Agreement.
As such, unless you want to risk not being able to deliver any housing at all (or being lumbered with empty standing stock); the prospect of a ‘no offer’ world needs to be addressed.
Cascade clauses are a mechanism that allows you to do this. They may be a bit retro**, but the time is right for a revival
First Homes vs the small sites exemption
My second historical parallel dates from 2016. In particular, the Court of Appeal decision in Secretary of State for Communities and Local Government v West Berkshire District Council & Anor [2016] EWCA Civ 441
That litigation concerned the introduction of the ‘small sites exemption’ from affordable housing requirements, which was brought into effect by way of a written ministerial statement (WMS) on 28 November 2014.
The WMS was challenged by two separate local planning authorities, West Berkshire and Reading. It was struck down in the High Court, before the case found its way to the Court of Appeal.
The Court of Appeal decision is worth reading in full, but for those of you who don't have the time, the key extracts as set out below:
"8. The place of development plans in the planning regime is central to the first ground (inconsistency with the statutory scheme). In the law of town and country planning a development plan is a set of documents containing a local planning authority's policies and proposals for the development and use of land in their area: see in particular ss.17(3) and 38 of the Planning and Compulsory Purchase Act 2004 (the 2004 Act). S.38(6) is especially important in light of counsel's submissions on the first ground:
“If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise.”
We should refer also to s.13 of the 2004 Act which was summarised by the judge at paragraph 26 of his judgment thus: "s.13 requires each LPA to 'keep under review the matters which may be expected to affect the development of their area or the planning of its development', which include the principal physical, economic, social and environmental characteristics of the area, the principal purposes for which land is used, the size, composition and distribution of the population and the effect of changes on the planning of development in the area. These statutory surveys form an important part of the evidence base for the preparation of development plans." S.19(2) provides in part:
"In preparing a local development document the local planning authority must have regard to—
(a) national policies and advice contained in guidance issued by the Secretary of State…"
9. The 2004 Act confers other powers on the Secretary of State which it is helpful to notice at this stage. We may adopt the judge's summary:
"34. In addition, the Secretary of State has a broad power to intervene if he considers a local plan, or a policy in a local plan, to be 'unsatisfactory'. He may direct the LPA to modify the plan and the authority must comply with any such direction unless they withdraw the plan (sections 21 and 22). Any such modification will then generally be considered in the examination process (section 21(5)).
35. By section 26(1) an LPA may prepare a revision of its local plan at any time. Section 26(2) empowers the Secretary of State to direct the authority to prepare a revision of its plan in accordance with a timetable set by him.
36. Section 27 gives the Secretary of State a very wide default power if he considers that an LPA is failing to do anything necessary in connection with the preparation or adoption of a local plan. Subject to holding an independent examination under section 20, the Secretary of State may prepare or revise a local plan and then finally adopt a local plan."
10. S.70(2) of the Town and Country Planning Act 1990 (the 1990 Act) is important. It provides that, in dealing with an application for planning permission, the local planning authority
… shall have regard to
(a) the provisions of the development plan, so far as material to the application,
(b) any local finance considerations, so far as material to the application, and
(c) any other material considerations."
…..
12. Lastly we should note that the Secretary of State's power to formulate and adopt national planning policy is not given by statute. It is an exercise of the Crown's common law powers conferred by the Royal Prerogative. As we shall show this circumstance has played its part in the argument."
"19. Leaving aside the assertion at (ii) concerning the decision to issue policy rather than seek primary legislation (as to which there is some debate in the skeleton arguments: it is unnecessary to go into it), Mr Drabble's statement amounts to no more than a conventional description of the law's treatment of the Secretary of State's policy in the decision-making process. It does not (though this is not suggested) save the policy. It merely explains how the law requires it to be applied.
20. In our judgment, then, the policy stated in the WMS is not to be faulted on the ground that it does not use language which indicates that it is not to be applied in a blanket fashion, or that its place in the statutory scheme of things is as a material consideration for the purposes of s.38(6) of the 2004 Act and s.70(2) of the 1990 Act, and no more. It does not countermand or frustrate the effective operation of those provisions. The judge has, with respect, conflated what the policy says with how it may lawfully be deployed."
So, you may ask why I am revisiting this Court of Appeal decision now? Well, there is a very simple answer to that: First Homes.
Much like the small sites exemption, First Homes are a creature of national planning policy. They were initially introduced by a WMS in May 2021, which was then quickly followed up by changes to national planning policy guidance. Perhaps surprisingly, apart from a couple of fleeting references in paragraph 6 and footnote 36, First Homes have not yet made into the NPPF*+.
Like the small sites exemption, the language of the First Homes policy is… emphatic… and fails to indicate “that it is not to be applied in a blanket fashion, or that its place in the statutory scheme of things is as a material consideration …..and no more”.
And, yet, just like the small sites exemption, that is exactly what the First Homes policy currently is. A material consideration and no more.
The upshot of which is that, for the moment at least:
- Where a Council's local plan does not require the provision of First Homes, then this should be the default position (in accordance with s.38(6) of the 2004 Act and s.70(2) of the 1990 Act). Unless, the Council considers that the benefits and justification of providing them is sufficient to outweigh that presumption; and
- Where a Council's local plan does require the provision of First Homes, then this should be the default position (in accordance with s.38(6) of the 2004 Act and s.70(2) of the 1990 Act). Unless the Council considers that the benefits and justification of NOT providing them is sufficient to outweigh that presumption.
You will note that I say ‘for the moment’. The Levelling-Up & Regeneration Act 2023 (LURA) could change this. If First Homes are made a national development management policy (NDMP), then when the relevant provisions of LURA take effect*!, the requirement would obtain equal status with the local plan. In the event of a conflict between the affordable housing provisions of a post s.93 LURA local plan and a First Homes NDMP, the requirements of the NDMP would take precedence.
Until that happens, however, First Homes are just another factor in the planning balance. As long as the justification for doing so is sufficiently robust and well evidenced, whether or not to actually require them is a matter for the decision-maker.
*The (er) has been added for the sake of my own ego. I have a milestone birthday this year and might be in denial about it.
** like many things from my youth. Apparently wearing dresses over jeans and butterfly clips are also making a come back…
*+ I have literally just checked this.
*! The relevent provision is s.93 LURA 2023. It hasn't been brought into effect at the time of writing. My most recent commencement table can be found here.
In our judgment, then, the policy stated in the WMS is not to be faulted on the ground that it does not use language which indicates that it is not to be applied in a blanket fashion, or that its place in the statutory scheme of things is as a material consideration for the purposes of s.38(6) of the 2004 Act and s.70(2) of the 1990 Act, and no more. It does not countermand or frustrate the effective operation of those provisions. The judge has, with respect, conflated what the policy says with how it may lawfully be deployed.”
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