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Clause 5 - Modification or discharge of affordable housing requirements

Part of Growth and Infrastructure Bill – in a Public Bill Committee at 10:30 am on 27th November 2012.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich 10:30 am, 27th November 2012

My hon. Friend makes a good point. I have no doubt that some developers would like there to be a definition guaranteeing them a return of 25%, but hopefully the Government would resist that. However, we do not know. I have to say that, like my hon. Friend, I am in the dark, because we are told that this is all going to be decided on a test of viability, but we do not know what the definition of viability will be. As I said, it is a further illustration of the rushed preparation of the Bill and the inadequate definition of some of the key concepts in it.

In the absence of clarity on viability, let us at least consider one possible scenario. The Minister can help, if he would like, by telling me if he thinks it is not possible. If he does not do so, I will assume that it is a viable, likely scenario that could happen under the circumstances that would apply if the Bill were to be enacted and clause 5, as currently drafted, put into effect.

The scenario goes roughly like this. In a national park—let us take a national park as an example because it was Dr Stone who gave the evidence to us—someone in modestly paid employment needs housing. Members will be able to think of possible scenarios involving people who are vital to the life of a local community, who need housing in the area but are not well paid. That person is not able to afford market housing, and there is not an adequate supply of social housing in the area. The only way in which that person will find a home is if he can secure the agreement of the landowner to release a plot of land at well below market value to provide, in this case, a self-build home. Dr Stone gave the example of individuals arranging to build their own homes.

The individual decides to do that. The landowner offers to release the land at agricultural value, rather than market housing value, and the applicant puts in the application to the planning authority. The planning authority, which in this case would be the national park, would normally not grant planning consent for new housing. However, in this scenario, the planning authority believes the individual is vital to the local economy—let  us say it is an area of forestry and the person performs a useful task in relation to the forest—and so it is minded to agree to the consent. Of course, the one thing it does not want to do under any circumstances is to open the floodgates for a lot of other housing applications, which would change the character of the area and undermine its obligation to support the national park’s natural beauty and protect its special quality. The planning authority accepts the exception, and therefore is minded to agree, but only does so with the section 106 provision that keeps the property available in perpetuity for affordable housing purposes, thereby preventing the individual from releasing the property into the market, realising a substantial capital gain and undermining the policy.

After securing consent, the applicant starts negotiating with developers and builders to get the house built, and discovers that the costs are beyond his means, even with the heavily discounted land values. It would actually require a considerable degree of restraint on the part of an individual in those circumstances, if clause 5 were part of the Bill as enacted, not to see that as an opportunity to get their house built—what a temptation. Clause 5 states that, if a development is stalled because of viability issues, it is open to the individual to go back to the planning authority and to say, “In these circumstances, please either modify or relax entirely the section 106 obligation.”

I do not think that scenario is far from the bounds of possibility, and I note that the Minister did not challenge it. Let us think about what would happen if that individual goes back to the planning authority and says, “Under clause 5, I want you to revise the section 106 obligation because it is making it impossible for me to carry out this development viably.” The authority may say, and I hope they would, “No. We gave you consent on the basis that it is for an affordable home in perpetuity. Those were the terms on which you sought our approval, and we would not otherwise have granted consent for housing in the area, so we are not changing it.” The applicant then has the right to appeal to the Secretary of State, who will refer it to PINS, the Planning Inspectorate.

As I read the Bill, PINS has to consider this on the grounds of viability. That is not on the grounds of whether it is a desirable scheme, or on the grounds of whether it will have an adverse impact on the community if the door is opened to market housing in the area, and not on any other factors that may be relevant to the national park or that particular site, but solely on the grounds of viability. Again, the Minister may challenge me if I am incorrectly interpreting the Bill, but on my reading of it, it appears that the Planning Inspectorate has to consider this solely on the grounds of viability.

If the Planning Inspectorate does that, and the individual plus his builder produce very clear evidence that it is simply not possible to proceed with that house or development currently because of viability, I find it difficult to consider what grounds PINS would have to retain the section 106 obligation in full. It may seek to amend it, or it may agree that the obligation should be dispensed with, but, either way, the decision will utterly compromise the whole rural exceptions policy. That will not just be an issue for that individual case; it will be a dagger in the heart of the whole rural exceptions policy once it becomes clear that the premise on which the policy is based is gone. Once the confidence in the premise that the landowner can be confident in supplying  land at below market value that it will be available in perpetuity and that the land will not ultimately leech its way back into the market, which would give windfall gains to other people, has gone, because the Planning Inspectorate has overturned the rural exception section 106 agreement in one case only, the whole policy is holed below the waterline. There will be a total lack of confidence. Landowners will simply stop supplying land and developers in these areas will no longer believe it is viable to produce schemes. The policy will be killed at a stroke.