Islington Council wins landmark affordable housing case

Islington Council leader Richard Watts, centre, meets staff at the Dover Court site where new council houses are being built. Picture: Steve Bainbridge Steve Bainbridge Photography Ltd

Islington Council has won a landmark case that could stop developers across the country skimping on their affordable housing offering.

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The Planning Inspectorate, an independent regulator, upheld the town hall’s refusal of planning permission for a Parkhurst Road site on grounds the project did not provide the “maximum reasonable amount” of affordable homes.

First Base Ltd applied to build 96 homes on the former Territorial Army Centre in 2013 but the bid contained no affordable housing at all.

Islington’s target is 50 per cent, but policy dictates developers must build as many as possible. The council rejected First Base’s bid twice and now its appeal – which raised the offer to 10 per cent – has also been dismissed.

The decision centred around how the viability of the development was assessed and how the price of the land should be determined.

Viability assessments are increasingly used by developers and consultants – in this case Gerald Eve – to enhance profits and minimise risk, at the expense of delivering affordable housing.

The inspectorate said a “land owner is required to have regard to the requirements of planning policy and obligations in their expectations of land value” and said the market value calculations, which relied on transactional evidence not comparable to the development site, were “inappropriate”.

Low levels of affordable housing on the scheme were being justified by the developer based on factors such as the price paid for the site and fees paid for land elsewhere.

Islington’s housing boss Cllr Diarmaid Ward said the decision would help stop developers “manipulating” the viability process.

He said: “Islington, like all boroughs in London, faces a significant shortage of affordable homes.

“A viability process in planning that allows developers to rely on a flawed approach to market value that delivers little or no affordable housing makes this problem worse, and means developers are not making a fair contribution to the community.

“The decision sends a strong signal that developers need to take into account planning policy requirements when bidding for land, and that they cannot overbid and seek to recover this money later through lower levels of affordable housing.”