Elsewhere In Kensington

Last weekend’s blog post was written in different times. 
As predicted given May’s weak majority, Sajid Javid stayed in position as Secretary of State for Communities and Local Government. The announcement of Alok Sharma as housing and planning minister on 13 June was frankly a disappointment. No doubt he is a capable politician, but the task of planning for housing should be a critical priority for the government and to appoint again a junior minister without experience at a senior level of government, without a cabinet role and without previous planning or housing experience was not a good sign. The appalling fire in the Grenfell tower in the early hours of 14 June and the anger that followed was an immediate reality check as to why we need to get a grip on the seriousness of what we face. Come back Lord Heseltine. 
This country has a housing crisis. Not enough homes are being built, there is a need for housing which is affordable for those of low means (including social housing with fixed rents) and we must ensure that what is occupied, new or old, is safe. 
If, as the housing white paper trumpeted on its cover, we have a broken housing market, who is going to fix it, when and how?
Who is also going to make sure that the Building Regulations remain fit for purpose and that, crucially, local authorities have the powers and resources properly to enforce them? What is the bulwark against those inevitably lobbying for another “red tape challenge” or “one in two out” rule? This is wider than about the Grenfell tragedy, whatever its causes turn out to be. The next tragedy may well not be a fire but another lapse or loophole, where we will be told, again, that “lessons will need to be learned”, that there will be a “full public inquiry” and all of the other usual platitudes. 
It is truly depressing that the present government (as well indeed as the Labour party) has Brexit (a riddle, wrapped in a mystery, inside an enigma) as its main policy focus rather than something as urgent and important as providing sufficient and safe housing. And more widely, to what extent has one reason for Brexit been to allow the UK government greater freedom to relax regulations that were designed to protect us or our environment? The government’s continued prevarication on air quality (largely pushing compliance down to local authorities) and the disdain for EU environmental protections expressed by our new Secretary of State for the Environment, Food and Rural Affairs bring this into clear and immediate focus. But do we agree with these priorities? Housing, safety and security are fundamental human rights. Where do the objectives of Brexit (whatever they may be) appear on Maslow’s hierarchy of needs for any of us?
But this is meant to be a planning law blog. I had intended this week to look at a recent inspector’s decision letter in relation to a planning appeal, as well as two recent rulings from the Court of Appeal. By coincidence, the local planning authority for all of them is the Royal Borough of Kensington and Chelsea. 
On 12 June 2017, an inspector, David Nicolson, dismissed an appeal by Notting Hill Gate KCS Limited for planning permission for the demolition of the existing buildings on a large site at the junction of Notting Hill Gate and Kensington Church Street and redevelopment to provide office, residential, and retail uses, and a flexible surgery/office use, across six buildings (ranging from ground plus two storeys to ground plus 17 storeys), together with landscaping to provide a new public square, ancillary parking and associated works. 
On the site at present are a number of buildings, including the ugly and tired 12 storey office block known as Newcombe House; a linear block along Kensington Church Street with shops and restaurants, and Royston Court, a 5 storey building with ground floor retail and 20 self-contained studio units on the upper floors owned and managed by Notting Hill Housing Trust. The studios are occupied by former rough sleepers, in accordance with the grant conditions for its acquisition and refurbishment from the Rough Sleepers Initiative, although this is not secured at present by any section 106 obligation. The site is surrounded by four conservation areas but is outside all of them. There are listed buildings in the area, including Kensington Palace, listed grade 1. 
Notting Hill Housing Trust proposed to compensate the Borough for the loss of nominations to Royston Court through the provision of 10 two-bed homes outside the Borough and committed that proceeds from the sale would be invested in the provision of new family homes in lower value areas.
The inspector identified the main issues in this appeal as “the effects of the proposals on: 

a)  the character and appearance of the area with particular regard to the relative height, scale and massing of the proposed tower and the architectural quality of its design; 


b)  the settings of nearby conservation areas and listed buildings; 


c)  the availability of social rented floorspace within the Borough.”

The inspector was satisfied on the first issue. On the second issue he found that there would in some instances be less than substantial harm, but that (subject to the scheme including sufficient affordable housing) this would be outweighed by the public benefits arising. However, the appeal was dismissed on the final, affordable housing, issue, for two reasons:
– There would therefore be a loss of social rented housing floorspace within the borough contrary to its policy CH3b which resists the net loss of both social rented and intermediate affordable housing floorspace and units throughout the borough
– The inspector considered that the site value of £33m within the appellant’s viability appraisal was too high and he consequently did not accept the appellant’s position that affordable housing “could not be provided on site or, more importantly, that there needs to be a loss of all the existing 20 social housing bed spaces on the site or a net loss in the borough“.

With a compliant affordable housing offer, or adjusted viability appraisal, the door is now open to the appellant to reapply. No doubt it is disappointing for all concerned that after such a slow and expensive process, appeal procedures are not such as to allow the appellant to respond to an inspector’s conclusions, perhaps by increasing its affordable housing commitment, before the formal decision was issued. Would that in some instances speed things up, or simply lead to additional brinksmanship?

Now turning to the two Court of Appeal rulings. In both cases our haphazard planning legislation, with its layers of amendments and its practical failings/ambiguities, has again been found wanting, although in neither case of any assistance to the claimant: 

– In Republic of France v Royal Borough of Kensington & Chelsea (16 June 2017) the Court of Appeal unsurprisingly found that section 26H of the Planning (Listed Buildings and Conservation Areas) Act 1990 (a provision inserted by the Enterprise and Regulatory Reform Act 2013) is of no use as a procedure for certifying that sufficient works have been carried out so as to keep a listed building consent alive – it simply exists to certify that specific works would not require consent on the basis that they would not affect the character of the listed building as a special architectural or historic interest. There is therefore still no procedure for listed building consents, analogous to section 192 of the Town and Country Planning Act in the case of planning permissions. Nor is there a definition of “material operation” in the Listed Buildings Act. The court found that equivalent works may suffice as for planning permissions but the position remains unsatisfactorily uncertain for all concerned – in that case on one side of the grandest of neighbourly disputes Jon Hunt seeking to keep alive consents for a five storey super-basement scheme at 10 Kensington Park Gardens, on the other side the French Ambassador’s residence at 11 Kensington Park Gardens and, trying to adjudicate between competing interests, RBKC (I previously blogged on 6 December 2016 as to the extent to which the borough is particularly beleaguered by these types of cases in First World Problems: Basements).
– In R (Khodari) v Royal Borough of Kensington & Chelsea (11 May 2017), the Court of Appeal held that obligations to requiring dwellings within a development to be “permit free”, ensuring that no one who occupied the additional units would apply for a resident’s parking permit, could not be secured by way of section 106 of the Town and Country Planning Act, given that the obligation did not fall within the restrictive list in section 106(1) of the types of obligation that may be secured (ie (a) restricting the development or use of the land in any specified way; (b) requiring specified operations or activities to be carried out in, on, under or over the land; (c) requiring the land to be used in any specified way; or (d) requiring a sum or sums to be paid to the authority … on a specified date or dates or periodically). In London the issue is academic only as the wider powers within section 16 of the Greater London Council (General Powers) Act 1974 can be recited but outside of London it is certainly an unnecessary headache. (The claimant, Mr Khodari, wasn’t even really concerned about the “permit free” issue – he was simply looking for a technicality to quash the permission as the permission was being relied upon by his landlord in proceedings being taken to end his tenancy).

Both cases currently seem an unnecessary distraction and examples of the disputes that increasingly occupy too much time for planners – certainly first world problems in contrast to the more fundamental challenges those affected by the Grenfell disaster now face. Donations to the British Red Cross London Fire Relief Fund may be made here.

Simon Ricketts 18.6.17
Personal views, et cetera

Affordable Housing Tax

In requiring the developers of private housing schemes to contribute to the provision of affordable housing, the planning system has become a tax collection system, and an inefficient, opaque one at that. 
The OECD classifies  taxes as follows:
“… compulsory, unrequited payments to general government. Taxes are unrequited in the sense that benefits provided by government to taxpayers are not normally in proportion to their payments. 

The term “tax” does not include fines unrelated to tax offences and compulsory loans paid to government. […]

General government consists of supra-national authorities, the central administration and the agencies whose operations are under its effective control, state and local governments and their administrations, social security schemes and autonomous governmental entities, excluding public enterprises.
Participants in the planning system seem to accept the political policy choice that has been made: to require developers to subsidise the provision of affordable housing, whether by requiring them to dispose of land or built units to registered affordable housing providers at less than market value (and nowadays at less than cost, given the increasing scarcity of any public sector grants or other forms of subsidy) or to make financial payments towards the provision of affordable housing elsewhere in the area. 
The provision of market housing does not in any way increase the need for affordable housing, indeed over time by increasing supply if anything it should decrease it. It may be said that mixed use communities can only be achieved by requiring the inclusion of affordable housing within market residential schemes, but that in itself does not justify the state putting the cost of the affordable housing at the door of the developer. The only reason that affordable housing section 106 planning obligations meet the requirements of regulation 122 of the Community Infrastructure Levy Regulations 2010 (necessary to make the development acceptable in planning terms; directly related to the development; and fairly and reasonably related in scale and kind to the development) is because of local policies seeking such obligations, supported by national policy. Policy could have easily required development across the board to contribute to affordable housing – or another category of development other than market housing. Why shouldn’t we use plain language and describe the extent of subsidy on each scheme as a tax? Hypothecated it may be but it still surely meets that OECD definition. For the rest of this post I will refer to it as Affordable Housing Tax, AHT. 
How to calculate AHT? Frequently, the high proportion of affordable housing that is required to be provided in connection with a private market housing development, when taken with the other costs of that development (including CIL where chargeable, a more straight-forward and transparent tax – that’s how bad AHT is!), would render the project unviable and so AHT ends up being as much as can be extracted from a development whilst allowing it to go ahead, assuming a fixed capped profit level for the developer and a fixed capped land value for the land owner (often less than its “real” value or actual acquisition cost). 
Take London. The London Plan requires boroughs to seek to maximise affordable housing provision. The current Mayor has indicated that his “long-term aim is for half of all new homes to be affordable”. In his November 2016 draft affordable housing and viability SPG (the subject of my 1.12.16 blog post  ), he introduced a ‘threshold approach’, whereby schemes meeting or exceeding 35% (by habitable room) affordable housing without public subsidy will not be required to submit viability information. There are also minimum requirements as to the proportions of different types of affordable housing that will be required (“tenure split” in the affordable housing industry jargon that we have grown up with). For schemes that cannot meet the threshold, viability appraisal is required to justify how much affordable housing the scheme can deliver.
Imagine such a concept in any other sector:
1. The market produces goods which reduce the need for the state to provide a service, or which are at least neutral. 

2. The market is taxed on those goods, with the tax applied towards provision of that service, instead of that service being paid for by the state. 

3. The level of that tax differs according to location but will often equate to all profits arising from the production of the goods, less a capped profit and capped input cost. 

I’m expressing no view as to whether this process is right or wrong. However, I do feel that the underlying reality has been conveniently forgotten. And the collateral damage from AHT is:
1. loading complexity into the planning process, with local planning authorities having to fulfil both a tax assessment and tax collection role

2. encouraging bad outcomes, with developers incentivised to expend resources on AHT mitigation (complex affordable housing negotiations, arguments over tenures, viability appraisal)

3. reducing housing delivery by rendering some projects unviable. 

How did we get here? There is an interesting 2002 study by the Joseph Rowntree Foundation, “Planning gain and affordable housing: making it count”, which starts with this brief history:

“Local authorities had been experimenting with ways of using the planning system to secure affordable housing in a number of areas in England in the 1970s, but official government endorsement first came in 1979 when the rural exceptions policy was announced. This enables rural planning authorities to grant planning consent for housing on sites that would not otherwise receive permission, provided that only affordable housing is developed on them
The approach was more widely sanctioned to enable affordable housing to be secured on all larger housing developments in 1981 and subsequently included in all Planning Policy Guidance on housing (PPG3) issued since then (DETR, 2000). Provided that local planning authorities have policies in their adopted statutory development plans that assess the need for new affordable housing in their districts, they may require private developers to contribute to meeting this need. They may also set specific targets to be achieved on sites allocated for new housing in adopted plans. When developers agree to make contributions these are made legally binding contracts, where they enter into agreements with the relevant planning authority under section 106 of the 1990 Town and Country Planning Act as part of the process of securing planning permission.”

“In 1998, the policy was amended, to reduce site thresholds above which contributions would normally be sought, and to link it more closely with the government’s policies on social inclusion, mixed communities and urban renaissance through on-site provision of affordable housing (DETR, 1998). In the 2000 version of PPG3, the government made it clear that developers’ unwillingness to make contributions to affordable housing would be an appropriate reason, of itself, to refuse planning permission (DETR, 2000). 

In the 2001 Green Paper on reform of the planning system the government proposed widening the scope of the affordable planning policy to incorporate small sites and commercial developments. It also proposed replacing negotiated contributions by standard authority- wide financial tariffs, which would still mainly be used for on-site provision. (DTLR, 2001a, 2001b).”
In my view, a significant turning point was paragraph 38 of PPG3 (1992): “A community’s need for affordable housing is a material consideration which may properly be taken into account in formulating development plan policies.”
This from an interesting 26 October 2011 paper  by Tim Mould QC:
At the time, the introduction of that policy provoked considerable controversy in planning circles. In Mitchell v Secretary of State, Roy Vandermeer QC sitting as a deputy High Court Judge held that a planning appeal decision based upon considerations of housing price and tenure was unlawful, on the ground that such considerations had nothing to do with the character and use of land. Had that view prevailed, the now conventional approach to delivering affordable housing through the planning process would have been dead in the water, considerations of price and tenure being part and parcel of the means whereby affordable housing is actually secured through the development control process. 

That view did not, however, prevail. The Court of Appeal overturned Mr Vandermeer’s decision. In Mitchell v Secretary of State [1994] 2 PLR 23, Saville LJ said (page 26G-H) : 

“On the law as it presently stands, therefore, the need for housing in a particular area is a planning purpose which relates to the character and use of land. Given that this is so, the proposition advanced on behalf of Mr Mitchell is that the need for a particular type of housing in an area is not a planning purpose which relates to the character of the use of land if that need is itself dictated or generated by considerations of cost or type of tenure. 

I cannot accept this argument. To my mind there is no sensible distinction to be drawn between a need for housing generally and a need for particular types of housing, whether or not the latter can be defined in terms of cost, tenure or otherwise. In each case the question is whether, as a matter of planning for the area under consideration, there is a need for housing which the grant or refusal of the application would affect. 

The fact that the need may be dictated by considerations of cost or type of tenure seems to me to be immaterial….
….the fallacy in the argument is that it simply confuses the need for housing (which on the authorities is a legitimate consideration) with the reasons for that need and concentrates exclusively on the latter while effectively ignoring the former. ”

Thereafter the national planning policy for the delivery of affordable housing through the planning process became encapsulated in a departmental circular devoted to that topic – DETR Circular 6/98 “Planning and Affordable Housing“. Building on the established materiality of the need for affordable housing, paragraph 1 of the circular required local planning authorities to investigate the degree of need for affordable housing in their area and, based on that evidence, to include in their local plans a policy for seeking an element of such housing on suitable sites. Such policies would then be material consideration in determining an application for planning permission.”

Tim then points to PPS3 (2005), which is even more specific as to what was required from developers: “planning authorities were required to set overall targets for affordable housing during the plan period based on (inter alia) the findings of a Strategic Housing Market Assessment; to include separate targets for social rented and intermediate housing; to specify the size and type of affordable housing likely to be needed in particular locations; to set out the range of circumstances in which affordable housing would be required; and to set out the approach to seeking developer contributions towards affordable housing provision in their area. There was further guidance on the provision of affordable housing in rural areas.”
As we then move forward to the publication in 2012 of the NPPF, the references to seeking developer contributions to affordable housing are lost. Not because the approach has changed but because by now this is just the system, isn’t it?
The NPPF simply says this about affordable housing, para 50:

“To deliver a wide choice of high quality homes, widen opportunities for home ownership and create sustainable, inclusive and mixed communities, local planning authorities should: 

    * plan for a mix of housing based on current and future demographic trends, market trends and the needs of different groups in the community (such as, but not limited to, families with children, older people, people with disabilities, service families and people wishing to build their own homes); 


    * identify the size, type, tenure and range of housing that is required in particular locations, reflecting local demand; and 


    * where they have identified that affordable housing is needed, set policies for meeting this need on site, unless off-site provision or a nancial contribution of broadly equivalent value can be robustly justified (for example to improve or make more effective use of the existing housing stock) and the agreed approach contributes to the objective of creating mixed and balanced communities. Such policies should be sufficiently exible to take account of changing market conditions over time“
 

Similarly, there is the assumption in the Government’s 2014 planning practice guidance, along with specific references later introduced into the document as to the circumstances in which affordable housing requirements should not be sought (reflecting the 28 November 2014 written ministerial statement that set out the small sites threshold and the vacant building credit). 

Throughout this period the availability of public subsidies to support the delivery of affordable housing has reduced.  
What an example of mission creep all of this is. How enticing for successive governments to restrict general taxation by progressively increasing the burden of paying for affordable housing onto private sector residential development. 
The political sleight of hand goes further: recognising the financial impact that this responsibility places on residential development, beneath the headline proportions of affordable housing that are sought, the definition of affordable housing has been adjusted to the disadvantage of those in most need of it:
– first with the introduction of affordable rent rather than social rent (see the House of Commons Library briefing paper dated 7 May 2015), affordable rent being a reduction of at least 20% on market rent as opposed to social rent’s generally lower, fixed rent, levels
– more recently with consultation on widening the definition of affordable housing to include “starter homes” and also, for build to rent development, discount market rent (see my 4.3.17 blog post). 

One advantage of calling a tax a tax would be that we could then have an honest conversation as to whether it is right that CIL always has priority over AHT. That 15% of CIL that is for neighbourhoods to apply (25% where a neighbourhood plan is in place) – can’t AHT take priority over that? Indeed, given that neighbourhood slice doesn’t even have to be spent on the provision of infrastructure (but on either “the provision, improvement, replacement, operation or maintenance of infrastructure” or “anything else that is concerned with addressing the demands that development places on an area”), why not advise that in areas of particular need of affordable housing the neighbourhood slice should automatically go toward affordable housing?
Of course the very term “affordable housing” is politician-speak. After all, all housing is affordable to some and unaffordable to others. Don’t we really mean “subsidised housing”, “low income housing” or “public housing”? I’m surprised indeed we haven’t yet seen it rebranded as “community housing”. 
But what other approach could be taken to securing it, other than the present one?
An interesting exercise would be to calculate, nationally or authority area by authority area, the annual level of AHT that is secured from developers by way of section 106 obligations (some useful national figures to begin with are within Annex A of the Government’s May 2016 starter homes consultation paper) and then to work out what that might equate to if it became an across the board (all development, not just housing) CIL-type charge. As I say, why should the cost of affordable housing solely fall on residential development? Indeed, arguably it is employment development that adds more directly to the need for homes. 
Indeed, as part of any review of CIL, doesn’t the concept of a Community Housing and Infrastructure Levy, or CHIL, have a ring to it?
Furthermore, whilst there is a much bigger role for local authorities to play in delivering affordable housing, direct and in conjunction with registered providers and the private sector (and potentially with a greater focus on neighbourhood, community, participation in delivery and management), why not turn the system on its head and boost production by making it positively in the developer’s interest to deliver affordable housing, through offering tax credits? This has been the US model, via the Low-Income Housing Tax Credit (LIHTC), ironically now under threat due to Trump’s proposed tax changes (see for example Bloomberg piece Trump Corporate Tax Shakeup Puts Housing Developers in Tailspin 26 April 2017). 

Or do we have it right with our present system? Question. 
Simon Ricketts 28.5.17
Personal views, et cetera

Money For Nothing? CPO Compensation Reform, Land Value Capture

To what extent might the state choose to tax land owners, through reducing their compensation entitlement, in order to facilitate the provision of housing or infrastructure, rather than subsidise that provision through more general tax raising? How can the state capture land value gains created by its own infrastructure provision, or due to its own strategic planning for development?
These questions are central to a number of current areas of public policy thinking, including:
– Using compulsory purchase 
– Land auctions and land value capture charges
– Benchmark land values in viability appraisal
– CIL reform
There are some confluences arising in this area between current Conservative party thinking, other political parties, Transport for London and Shelter to name but a few. I’m not sure that land owner interests have yet joined all the dots. Developers may wish to partner more closely and regularly with local authorities with compulsory purchase powers, but in other situations should also be aware of the risks ahead for their businesses if additional costs are not sufficiently predictable as to come off the land price or if they cause land owners simply to hold rather than sell. 
Using compulsory purchase

Compulsory purchase is already a practical mechanism for securing land where there is a compelling case in the public interest for interfering with private property rights. Of course it isn’t easy, and will never be. The power is draconian. The necessary procedural safeguards to protect against its abuse make for a slow, procedurally technical process and for uncertain outcomes.

Another disincentive for local authorities can be the significant compensation costs payable, given the fundamental principle that the land owner is entitled to what the value of his interest would have been were it not for the compulsory acquisition (the ‘equivalence’ principle). Even where compensation liability is being underwritten by a developer partner, the extent of compensation is:
– likely to affect whether the project is viable after all; and
– not ascertainable until all parties are too far in to back out due to the leisurely pace at which a compensation figure is determined (both pre- and post-reference to the Lands Tribunal, aka Lands Chamber of the Upper Tribunal). 
The Conservative manifesto, published on 17 May 2017, refers to compulsory purchase in this one paragraph:
“We will enter into new Council Housing Deals with ambitious, pro-development, local authorities to help them build more social housing. We will work with them to improve their capability and capacity to develop more good homes, as well as providing them with significant low-cost capital funding. In doing so, we will build new fix-term social houses, which will be sold privately after ten to fifteen years with an automatic Right to Buy for tenants, the proceeds of which will be recycled into further homes. We will reform Compulsory Purchase Orders to make them easier and less expensive for councils to use and to make it easier to determine the true market value of sites”

I am guessing that what is planned goes further than making the current system work better. Changes are being considered which would enable in some circumstances greater use of compulsory purchase and, in some circumstances, acquisition at lower values than the equivalence principle would suggest. 
The February 2017 Housing White Paper says this:
“2.43 Compulsory purchase law gives local authorities extensive powers to assemble land for development. Through the Housing and Planning Act 2016 and the Neighbourhood Planning Bill currently in Parliament we are reforming compulsory purchase to make the process clearer, fairer, and faster, while retaining proper protections for landowners. Local planning authorities should now think about how they can use these powers to promote development, which is particularly important in areas of high housing need. 

2.44 We propose to encourage more active use of compulsory purchase powers to promote development on stalled sites for housing. The Government will prepare new guidance to local planning authorities following separate consultation, encouraging the use of their compulsory purchase powers to support the build out of stalled sites. We will investigate whether auctions, following possession of the land, are sufficient to establish an unambiguous value for the purposes of compensation payable to the claimant, where the local authority has used their compulsory purchase powers to acquire the land.

2.45 [ ]

2.46 We will keep compulsory purchase under review and welcome any representations for how it can be reformed further to support development.”
Note the references to encouraging the use of compulsory purchase where development has stalled, and investigating the use of auctions to establish land value (more on that later in this blog post).
Revealingly, in the week before the publication of the manifesto there was a press release with this passage in its “notes to editors”:
“To further incentivise councils to build, the Conservatives also intend to reform compulsory purchase rules to allow councils to buy brownfield land and pocket sites more cheaply. At the moment, councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not. As a result, there has been a more than 100% increase in the price of land relative to GDP over the last 20 years and the price of land for housing has diverged considerably from agricultural land in the last fifty years. Between 1959 and 2017, agricultural land has doubled in value in real terms from £4,300 per acre to £8,900 per acre, while land for planning permission has increased by 1,200%, from £107,000 to just over £1,450,000. Local authorities therefore very rarely use their CPO powers for social housing, leaving derelict buildings in town centres, unused pocket sites and industrial sites remain undeveloped.
I’m guessing at the following policy strands for a future Conservative government from these various statements:
1. Further encouragement for use of CPO powers in the right circumstances, including particular encouragement where a “Council Housing Deal” is in place (guaranteeing social housing with a fixed-term right to buy for tenants) and possibly where private sector development is shown to have stalled (link this and the “delivery” elements of the Housing White Paper and this could be quite a stick to wield).
2. Further process reform likely.
3. Reform likely of the process for determining the compensation price to be paid, so that (1) figures are known earlier on, (2) the land auctions model is followed (see later in this blog post) to determine values in appropriate circumstances and (if those ‘notes to editors’ are to believed) (3) in some circumstances authorities will be able to acquire land for less than it is worth (possibly ruling out hope value unless planning permission or a certificate of appropriate alternative development under section 17 of the Land Compensation Act 1961, has actually been obtained). 
The last point (still speculation) has caused consternation and excitement in equal measure. The principle of equivalence is at stake, but equally this opens up the prospect of securing land for development at an undervalue so as to achieve affordable housing at no cost to the state. Money for nothing (unless you are the land owner). Shelter for example have been lobbying for a similar approach. Their May 2017 paper Financing the infrastructure and new homes of the future: the case for enabling acquiring authorities to purchase land for strategic development under a special CPO compensation code May 2017 lobbies for Government to:

enable acquiring authorities to purchase land for strategic development under a special CPO compensation code. This would involve three changes:

1)  An amendment to the National Planning Policy Framework to allow planning authorities to designate land for strategic development; 

2)  An amendment to Section 14 of the 1961 Land Compensation Act to disregard prospective planning permissions on land designated for strategic development; 


3)  An amendment to Section 17 of the 1961 Land Compensation Act to restrict the use of certificates of alternative development on land designated for strategic development.”

Shelter’s delight at the references in the Conservatives’ recent policy announcements is plain to see from their subsequent 16 May 2017 blog post Compulsory purchase and council homes – a new direction for housing policy?
Do the Conservatives really intend such a radical market intervention, or do they misunderstand how the compensation system currently works? The reference in the press release’s “notes to editors” that “councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not” is of course wrong. The prospect of planning permission for development in the “no scheme world” is taken into account in arriving at a valuation but the existence of a planning permission is never assumed. 

However logically necessary the concept is, the “no scheme world” (or “Pointe Gourde”) rule been much criticised for being difficult to apply in practice. Its complexities were most recently explored by the Supreme Court in Homes & Communities Agency v JS Bloor (Wilmslow) Ltd  (22 February 2017), where Lord Carnwath said this:
The rule has given rise to substantial controversy and difficulty in practice. In Waters v Welsh Development Agency [2004] 1 WLR 1304; [2004] UKHL 19, para 2 (“Waters”), Lord Nicholls of Birkenhead spoke of the law as “fraught with complexity and obscurity”. In a report in 2003 the Law Commission conducted a detailed review of the history of the rule and the relevant jurisprudence, and made recommendations for the replacement of the existing rules by a comprehensive statutory code…”

Lord Carnwath had himself of course chaired that review. Too late for the litigants in Bloor, now finally, by virtue of section 32 of the Neighbourhood Planning Act 2017  (which introduces new sections 6A to E into the Land Compensation Act 1961) we have a codified version of the “no scheme world” rule. (The compulsory purchase provisions within the 2017 Act are well summarised by David Elvin QC in a paper  to the 2017 PEBA conference). 

New section 6E has refined the rule so that it is now more difficult for claimants to rely on increases in value of their land created by the transport project for which the land has been acquired, where regeneration or redevelopment was part of the justification for the transport project. 
The big question is whether a more radical manipulation of the “no scheme world” rule might be possible, even if it parted from the principle of equivalence. After all, if land for development could be secured at little more than agricultural value…?
It would be mightily difficult, indeed controversial to the extent of potentially being counter-productive, if land is to be acquired without prolonged legal wrangling. If in the real world your land has hope value for another form of development, why should that be ignored? However, in fact it’s not legally impossible.
Article 1 of the protocol to the European Convention on Human Rights states as follows:
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. 

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

(Incidentally, the Conservative manifesto confirms: “We will not repeal or replace the Human Rights Act while the process of Brexit is underway but we will consider our human rights legal framework when the process of leaving the EU concludes. We will remain signatories to the European Convention on Human Rights for the duration of the next parliament.“)
The European Court of Human Rights interprets Article 1 of the protocol so as to require compensation to be paid in relation to the confiscation of property. In Lithgow v UK  (European Court of Human Rights, 8 July 1986), a case arising from Labour’s nationalisation of various industries under the Aircraft and Shipbuilding Industries Act 1977, the court said:
“The Court further accepts the Commission’s conclusion as to the standard of compensation: the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference which could not be considered justifiable under Article 1 (P1-1). Article 1 (P1-1) does not, however, guarantee a right to full compensation in all circumstances, since legitimate objectives of “public interest”, such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value”.


Whilst a distinction was drawn in the case between state nationalisation of industries and the compulsory purchase of property, the same basic principles apply. It is clear from this and other cases that individual states are given a margin of appreciation to determine what is in the public interest. For example:
Sporrong and Lönnroth v. Sweden  (22 September 1982) (a case about longterm blight caused by ‘zonal expropriation permits’)
 “…the Court must determine whether a fair balance was struck between the demands of the general interests of the community and the requirements of the protection of the individual’s fundamental rights…
James v UK  (21 February 1986) (a challenge brought by the trustees of the estate of the Duke of Westminster to leasehold enfranchisement under Leasehold Reform Act 1967):
“Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is “in the public interest”. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment both of the existence of a problem of public concern warranting measures of deprivation of property and of the remedial action to be taken… Here as in other fields to which the safeguards of the Convention extend, the national authorities accordingly enjoy a certain margin of appreciation.” The Court went on to find that the aim of the Leasehold Reform Act 1967, namely greater social justice in the sphere of housing, was a legitimate aim in the public interest



Similarly, in theory a mechanism might be arrived at which in some way disentitled land owners in some circumstances from achieving a full market value for their land. But the circumstances would need to be carefully circumscribed and the reaction of most land owners would be to fight rather than one of flight. 
It is not as if compulsory purchase compensation is presently particularly generous, even with the additional loss payments (capped, even for owner-occupiers, at the lesser of 10% of the compensation payable and £100,000) that were introduced by the Planning and Compulsory Purchase Act 2004 specifically to sweeten the pill for land owners and make compulsory purchase less contentious! Do we really want more uncertain situations such has arisen at the Aylesbury Estate, with the Secretary of State rejecting  a CPO made by the London Borough of Southwark, on the basis of the prejudice that would be caused to leaseholders by the inadequate level of compensation payable to them, and now reportedly  having consented to judgment following a challenge by the council, such that all concerned now face a re-opened inquiry?
Furthermore, if these amended compensation principles are only to apply to, for example, Council Housing Deals, how will dispossessed owners be able to recover their property, or further compensation, if the land ends up not being used for the restricted purposes for which the land was taken?
Lastly, that manifesto reference to making it “easier to determine the true market value of sites”. Does this suggest a simplification of compensation principles? Or an overhaul of the timescales for determining compensation liability? Transport for London have recently suggested (in the paper referred to in the next section of this blog post) that the Government might make “the process of acquiring land through compulsory acquisition more transparent by:

* Introducing an independent valuation panel to determine the market value of the land based on the ‘no scheme’ principle set out in the Neighbourhood Planning Bill 2016 

* Establishing (early in the land acquisition process) an objective and transparent evidence base on alternative development potential in the absence of the scheme, for such a panel to determine ‘no scheme’ market values, for instance through the use of a modified section 17 certificate”.
Land auctions, land value capture charges

The passage quoted earlier from the Housing White Paper refers to “auctions”. Academic Tim Leunig has been promoting  the idea of “community land auctions” for a long time and indeed the idea was toyed with in the early years of the coalition government, whilst to a number of us it seemed naive in its assumption as to how planning actually works:
“The council first asks all landowners to name the price at which they are willing to sell their land. By naming a price, the landowner gives the council the right to buy the land for 18 months at that price. The council then writes a development plan. As now, they will take into account the suitability of the land offered for development, but will also consider the price of the land, and the likely financial return to the council.”
Transport for London has more recently been promoting a more sophisticated “development rights auction model” as a method of capturing land value increases created by transport infrastructure improvements. Their 20 February 2017 land value capture report , summarises it as follows:
“For zones with high development potential (particularly for housing) with multiple landowners, the Government, TfL and the GLA should consider the development rights auction model (DRAM), a new land value capture mechanism. 

The key features of the development rights auction model are: 

* The integrated planning and consenting of land use and density in a defined zone around a major new transport facility, in parallel with the planning of the transport scheme 
* The introduction of a periodic development rights auction, in which development rights over land put forward (voluntarily) by landowners are auctioned in assembled packages to a competitive field of developers. Gains above a reserve price are shared between the participating landowners and the planning/auctioning authority. No development taxes (such as CILs or s106 payments) are payable under this scheme. All non-operational but developable public sector-owned land within the zone is entered into the auction as part of a standard public sector land pooling arrangement 

* The introduction of a high zonal CIL for those landowners who wish to self- develop rather than participate in the auction 

* The use of reformed compulsory purchase order (CPO) powers (following successful passage of the Neighbourhood Planning Bill 2016) to deal with holdout problems that threaten to stall development, together with further consideration of other options as discussed in the report”.
The Government’s 8 March 2017 budget announcements included a memorandum of understanding  entered into with the GLA, that says this:
“At Budget 2016, the government invited Transport for London (TfL) to bring forward proposals for financing infrastructure projects from land value uplift. 

The government has agreed to establish a joint taskforce bringing together the GLA, TfL, London Councils, HM Treasury, Department for Transport (DfT) and Department for Communities and Local Government (DCLG) to explore the options for piloting a Development Rights Auction Model (DRAM) on a major infrastructure project in London.

Should a pilot of DRAM be agreed, it will be jointly evaluated by London and the government to review its effectiveness and determine whether a similar model could be applied to other infrastructure projects.”


I can’t presently relate the DRAM initiative to the reference in the Housing White Paper (quoted above) to establishing land value via auctions in CPO situations, following possession. What on earth is that a reference to?
TfL’s February 2017 paper has various other more radical policy suggestions to capture infrastructure-related land value increases, including changes to SDLT, to retention of business rates and a new “land value capture charge” This would “capture a proportion of the premium paid to landowners by new purchasers or tenants of residential property for access to new transport facilities“. (Shall we call a tax a tax though, folks?). 
There is also a current RTPI research project The Use of Alternative Land Value Capture Mechanisms to Deliver Housing in England and Wales.
Benchmark land values in viability appraisal

One of the most contentious issues in relation to developers’ project viability appraisals (carried out for the purposes of seeking to agree reductions in the scale of section 106 affordable housing and other obligations) is the benchmark land value that should be applied as a cost input. Clearly it should not be the actual market value (which would lead to circularity) but equally it should not be just the existing use value (EUV), which would not reflect reality and would result in schemes being assumed to be viable when in reality they would not be because the land would not be made available at the assumed benchmark value. 
The 2012 RICS guidance, Financial Viability In Planning  , advises that it is appropriate to take into account alternative use value (AUV):
“Site Value should equate to the market value subject to the following assumption: that the value has regard to development plan polices and all other material planning considerations and disregards that which is contrary to the development plan.”
As summarised in my 1.12.16 blog post  , the London Mayor is seeking to move away from accepting AUV, preferring an “EUV+” approach, ie existing use value “plus premium”, with the methodology for calculating the premium left undefined, and therefore a recipe for continuing debate. 
In practice, surely any attempt to pitch EUV+ at less than AUV is equivalent to restricting the application of the “no scheme world” rule – a policy intervention to apply that shortfall for public purposes. Except that with viability negotiations, it could of course lead to development simply not proceeding. Is there then a stalled scheme and grounds for compulsory purchase? The extent to which this sort of economic intervention is acceptable needs to be carefully limited and defined. 
CIL reform

There have been rumours that the reason why the Government parked in February any response to the CIL review team’s report was that the new ministerial team had started to think about whether in fact any replacement for CIL should encapsulate land value concepts (memories of the planning gain supplement anyone?). There is certainly no mention of CIL in the Conservative manifesto. Certainly the policy priorities as between CIL and affordable housing need to be reconsidered. 

If we weren’t in such dire straits, we could of course go back to a position where the state invested in social housing and funded public services without weighing the costs so heavily on land owners and developers. In the meantime, over the next five years we’ll definitely see answers emerge to those questions I posed back at the beginning of this overlong post. 
Simon Ricketts 20.5.17

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Affordable Housing & Viability: London Leads

Full credit to Sadiq Khan for pressing ahead with his heavily trailed draft Affordable Housing and Viability SPG  despite the Government’s inexplicable delay in publishing the Housing White Paper (whatever its contents prove to be). The deadline for consultation responses to the draft SPG is 28 February 2017. As the draft warns, when the Government’s detailed proposals in relation to starter homes are published, presumably as part of the white paper, there will be knock-on implications for the SPG – after how can the percentages in the draft SPG possibly survive the imposition of a mandatory starter homes top slice?
The SPG will be guidance rather than policy (although I suspect that the distinction may over time prove largely semantic when non compliant schemes come before the Mayor for sign off) and LPAs are “strongly encouraged” to follow it for schemes of ten or more dwellings. The SPG will supersede section 3.3 (Build to Rent) and Part 5 (Viability) of the March 2016 housing SPG. The rest of that SPG remains current. It will inform the drafting of the new London Plan, a consultation draft of which is expected in Autumn 2017. 
What follows will become very familiar I’m sure to all of us negotiating London section 106 agreements. The level of prescription may prove helpful in narrowing the scope for re-inventing the wheel, subject to the attitude that LPAs take to what after all is only draft non-statutory guidance. 
The ‘threshold’ approach
The draft SPG introduces a ‘threshold approach’, whereby schemes meeting or exceeding 35% (by habitable room) affordable housing without public subsidy will not be required to submit viability information. 
Schemes are divided into “route A” and “route B”. 

Route A schemes are:
. applications which do not meet the 35% threshold and required tenure split;

• applications which propose affordable housing off-site or as cash in lieu contribution; 

• applications which involve demolition of existing affordable housing (in particular estate regeneration schemes); 

• applications where the applicant claims the vacant building credit applies. 

Route B schemes are schemes which meet the 35% threshold and required tenure split (and which do not otherwise fall within the route A scheme definition above). Viability appraisal is not required, although there will be an “early review mechanism … triggered if an agreed level of progress is not made within two years of permission being granted” (the agreed level of progress being defined at the outset in the section 106 agreement).
The required tenure split
The required tenure split is:
– “at least 30% low cost rent (social rent or affordable rent) with rent set at levels that the LPA considers ‘genuinely affordable’ (this will generally be significantly less than 80% market rent). As part of [the] consultation, LPAs are being invited
to give guidance on what rent levels they consider to be genuinely affordable if above the benchmarks for London Affordable Rent”.
– “at least 30% as intermediate products, with London Living Rent … and/ or shared ownership being the default tenures assumed in this category. For viability purposes, London Living Rent homes in mixed-tenure schemes can be treated similarly to shared ownership, as it can be assumed that they will be sold on a shared ownership basis after a period of 10 years”.

– the remaining 40% is to be determined by the relevant LPA but must be “genuinely affordable”.

“London Living Rent is a new type of intermediate affordable housing that will help, through low rents on time-limited tenancies, households with around average earnings save for a deposit to buy their own home”. It has “ward-level caps … based on one-third of median gross household income for the local borough. The cap varies from the Borough median by up to 20 per cent in line with house prices within the ward”. The Mayor intends to limit eligibility for London Living Rent and other intermediate rent products to households on incomes of £60,000 a year or less, down from £90,000. 

“[F]or intermediate dwellings to be considered affordable, annual housing costs, including mortgage (assuming reasonable interest rates and deposit requirements), rent and service charges should be no greater than 40% of net household income. 
For shared ownership properties, to ensure mortgage costs assumptions are reasonable, boroughs, developers and registered provides are advised to assume buyers will access RPs, with a term of 25 years and a 90% loan to value ratio. The prevailing average interest rate being offered to lenders based on the terms above should be used to calculate the monthly payments. Generally shared ownership is not appropriate where unrestricted market values of a unit exceed £600,000”. 
Viability appraisal
Viability appraisal will be required to following a prescriptive approach, set out in part 3 of the draft. In relation to some familiar areas for dispute:
– “The price the RP has agreed to pay for each unit should be used in the viability appraisal and should be enshrined in the Section 106 agreement (for phased schemes the price in the Section 106 should be inflation linked)”.

– It should be assumed that all developers will incur generic average finance costs based on standard market rates.

– The IRR approach will not generally be appropriate for schemes of fewer than 1,000 units. 

– The benchmark value will be based on an existing Use Value plus premium (EUV+) approach, rather than the circularity of a market value approach. The Mayor will generally only accept an Alternative Use Value (AUV) approach where there is an existing implementable permission for that use.

The Mayor expects “all information to be made public, including council and third party assessments. Applicants will have the opportunity to argue that limited elements should be kept undisclosed, but the onus is on the applicant to make this case”. 

Review mechanisms
Section 106 agreements for route A schemes will need to require a two stage review mechanism:
– An “early review” where an agreed level of progress with the scheme is not made within two years of the permission being granted. Any surplus to be split 60/40 between the LPA and the developer and any surplus identified to translate into additional onsite affordable housing. “Thus plans should identify which units would switch to affordable accommodation in the event of an increase in viability at this early stage. If the agreed level of progress has been made, this review will not be triggered. All signatories to the Section 106 need to commit to making their best endeavours to fulfil their relevant requirements (setting out key milestones and requirements) to deliver the scheme and account may be had of the market situation at time of review”. 

– A “near end of development review which will be applied once 75% of units are sold. Where a surplus profit is identified this should be split 60/40 between the LPA and developer. The outcome of this review will typically be a financial contribution towards off-site affordable housing provision”. 

– The surplus is applied up to a total of 50% affordable housing.

The review should consider changes in gross development value and build costs using formulae set out in Appendix A to the draft SPG and which should be set out in the section 106 agreement. 
Build To Rent
Specific favourable provisions apply to Build To Rent, defined as complying with the following criteria:
“• a development, or block/ phase within a development, of at least 50 units; 

• the homes to be held as Build to Rent under a covenant for at least 15 years; 

• all units to be self-contained and let separately; 

• unified ownership and unified management of the development; 

• professional and on-site management; 

• longer tenancies offered (ideally three years or more) with defined in-tenancy rent reviews; and 

• property manager to be part of an accredited Ombudsman Scheme and a member of a recognised professional body”.

The Build To Rent restriction should usually be by way of section 106 agreement and should include a clawback mechanism if the units cease to be used for Build To Rent purposes. Two potential, alternative , clawback mechanisms are being consulted upon:
– to seek to recoup the initial loss of affordable housing if the homes are sold out of the Build to Rent sector, based on an appraisal submitted at application stage showing the reduced number of affordable homes possible due to the Build To Rent model. 

– a clawback to secure a total of 35% affordable housing. 

Affordable housing within Build To Rent schemes can be by way of discounted market rent (DMR), managed by the private sector landlord. The Mayor is seeking that the DMR be at London Living Rent. 
Some relaxation of space standards may be acceptable for Build To Rent products, particularly where they are subject to a longterm covenant that they will remain as Build To Rent. 
Differences are recognised in the approach to viability for Build To Rent schemes. Particularly:
“a different approach to profit (often lower than a build for sale scheme); 
• different approaches to sales and marketing; 

• rate of sale/disposal – this will generally be faster for a Build to Rent scheme (generally a build to rent appraisal will assume a development period and then a sale to an investor or operator); and 

• potentially lower risk compared to for sale schemes”. 

Finally, the Mayor is keen to secure the following five management standards:

“- Longer tenancies (three years or more) should be available to all tenants. These should have break clauses for renters, which allow the tenant to end the tenancy with a month’s notice any time after the first six months. 

– Within these tenancies there should be formula-linked rent increases. The LPA should not stipulate the level of rent increases on market rate tenancies, but these should be made clear to the tenant when the property is let and LPAs should ensure they are not set to discourage tenants from taking longer tenancies. Rents should normally be reset on each new tenancy.

– There must be on-site management. This does not necessarily have to mean
full time dedicated on-site staff in every case, as this could be unviable and unnecessary on small schemes. However all schemes need to have prompt issue resolution systems and some daily onsite presence.

– Providers must have a complaints procedure in place and be a member of
a recognised ombudsman scheme. They must also have membership of a designated professional body, such as the British Property Federation or Royal Institute of Chartered Surveyors.

– Finally, properties must be advertised on the GLA’s London-wide portal, in due course, which can be in addition to any advertising the provider may already be undertaking”.

Registered providers/grant funding

Applicants are encouraged to have registered providers on board at pre-application stage. 
The Mayor’s grant funding will only be available for route B applications if it increases the proportion of affordable housing above the nil-grant position to a level of 40% or more.
“The Mayor’s Homes for Londoners: Affordable Homes Programme 2016-2021, sets out how grant is going to be used to increase the amount of affordable housing delivered on developer-led sites above 35%, and to support approved providers deliver programmes with at least 50% affordable housing”. 

Concluding thoughts

In 2015 private sector schemes only delivered on average 13% affordable housing. Will this approach nudge the percentage upwards? This largely depends on whether developers believe that to button down 35%, with no review as long as development is not delayed, and with no need for viability appraisal, is sufficiently achievable or attractive. If it isn’t then it will be business as usual, with viability appraisals submitted to seek to secure a significantly lower percentage. 

How will LPAs react, particularly those inclined to hold out for the 50% target? And how will the imposition of a mandatory proportion of starter homes impact on this nuanced, London-specific approach?

Is the Mayor’s target of 50% now unachievable by flagging 35% as in practice acceptable or can the use of public land and grant funding make any appreciable difference?

Pass. But at least the likely structure of section 106 agreements for route A, route B and Build To Rent schemes (or rather the Mayor’s starting position) is increasingly clear. Which means, if the approaches are commercially palatable, faster permissions and less delay to development (particularly with the spectre of reviews triggered by delayed implementation). And:

Mayor of London: 1

Secretary of State: nil.
Simon Ricketts 1.12.16
Personal views, et cetera

The Latest on Viability Disclosure

Each September LD Events’ annual Viability and Planning conference comes around. My regular slot at the event covers ”transparency in the viability process – access to information” and it’s always interesting how the climate has changed over the previous 12 months. This blog post provides links to some of the key decisions and policy developments, supplementing my 27 September 2016 presentation. 

Information Tribunal

In the same way that previous years have been dominated by the Information Tribunal’s decisions in London Borough of Southwark v Information Commissioner, Lend Lease and Glasspool  (9 May 2014, Heygate Estate) and Royal Borough of Greenwich v Information Commissioner and Brownie  (30 January 2015, Greenwich Peninsula), this year there has been another big Information Tribunal decision: Clyne v Information Commissioner and London Borough of Lambeth  (14 June 2016, Streatham Megabowl).


Clyne is important because the Tribunal go in detail through all of the following elements of the viability appraisal, justifying item by item, their decision to order disclosure:

 • Private residential values broken down by individual unit size/location within the development?

• Affordable housing average values per square foot?

• Gross development value?

• Marketing budget?

• Construction costs?

• Professional fees?

• Projected costs : contingency percentage?

• Projected costs : letting/sale agent and legal fees?

• Benchmark land value?

• Surplus/deficit figure?

• Other : performance measures?

 This was a case where the figure allowed for developer’s profit had already been disclosed.

 Information Commissioner

 There has also this year been a plethora of decisions by the Information Commissioner. Each very much turns on its facts. However, the following basic principles are commonly set out:

 – The four necessary criteria set out in Bristol City Council v Information Commissioner and Portland and Brunswick Squares Association  (24 May 2010) to get to first base ie establishing that the information is commercially confidential for the purposes of Regulation 12(5)(e) of the Environmental Information Regulations 2004:

(i) Is the information commercial or industrial in nature?

(ii) Is confidentiality provided by law? This will include confidentiality imposed on any person by the common law of confidence, contractual obligation, or statute.

(iii) Does the confidentiality protect a legitimate economic interest? Where the arguments refer to the economic interests of a third party, it will not be sufficient for a public authority to speculate on the potential harm attached to disclosure. Instead, the public authority must have evidence that demonstrates the arguments genuinely reflect the concerns of the third party.

(iv) The confidentiality would be adversely affected by disclosure. Although this is a necessary condition, the Information Tribunal in the Bristol City Council case considered that the disclosure of truly confidential information into the public domain would invariably harm the confidential nature of that information. As such, if the preceding three stages of the test are fulfilled, it will follow that the exception is engaged. Where this is found to be the case, a public authority must next go on to assess whether the balance of the public interest required disclosure

– It is not sufficient that harm “might” be caused by disclosure. It is necessary to show that on the balance of probabilities it would be caused.

– Those resisting disclosure on the basis of the harm that would be caused need to show a specific link between precise categories of withheld information and the stated harm.

– Detailed consideration as to whether the public interest in maintaining the exemption is outweighed by the public interest in disclosure.

 These are some of the decisions from the last 12 months:

Sweets Way Estate  (Barnet, 9 August 2016) – disclosure.

Doone  (East Hampshire, 16 June 2016) – disclosure.

Aylesbury Estate  (Southwark, 25 April 2016) – disclosure. 

Bishopsgate Goodsyard  (Tower Hamlets, 22 March 2016) – disclosure.

Heygate Estate  (Southwark, 15 February 2016) – redactions of DVS reports upheld equivalent to what was withheld in Glasspool, ie proposed commercial values, financial gearing rates, base inflation percentages for the delivery period set against assumed regeneration inflation figures, cost analysis summaries and construction costs. 

Tuke School, Peckham  (Southwark, 13 January 2016) – overage provisions in sale contract withheld.

 Chase Farm Hospital site  (Enfield: 9 December 2015) – withheld: forecasted residential land sale receipts and assumed value of land associated with a new school. Sensitive negotiation position of NHS Trust.

Brentford FC new stadium  (Hounslow: 22 October 2015) – all disclosed except specific appraisal information relevant to subsequent negotiations.

 Silver Hill  (Winchester, 17 September 2015) – withheld: development value of individual elements of the scheme, breakdown of individual costs and resultant net development value and profit, estimated rental value of commercial property, percentage of estimated rental values which the proposed ground rents would represent, budget for acquiring third party land, estimated construction costs for individual blocks, letting and marketing costs, interest rate on financing.

 London boroughs turning up the heat

Ahead of any updated London-wide guidance from Sadiq Khan (and his promised team of viability specialists), different boroughs are taking different approaches. For example the Hounslow local validation list  October 2015 and Greenwich local validation list  January 2016 both now require unredacted viability appraisals, which will be publically available. Other boroughs have been adopting development viability SPDs, for example Islington’s January 2016 SPD  and Southwark’s March 2016 SPD  , both of which require justification for exempting any elements of an appraisal from disclosure. Other boroughs take a more traditional approach to treatment of commercially sensitive material – who knows, perhaps even heeding the advice at paragraph 4.3 of the RICS guidance on financial viability in planning  :

 “Pre-application discussions usually proceed on the basis of treating commercial information provided by a developer (applicant) or their consultant as confidential. In order to encourage openness and transparency in the viability process both at pre- and post- application, it is also often the case that the viability reports submitted to a local planning authority are required to be classified as confidential in part or as a whole. This is to encourage the applicant to disclose the maximum amount of information, which can then be reviewed and reported upon. LPAs should therefore be asked to treat and hold this information on a similarly reciprocal basis and respect that disclosure of confidential information could be prejudicial to the developer (applicant) if it were to enter the public domain. Information will usually be disclosed to the LPA adviser but not to the general public as it may be commercially sensitive.

 Simon Ricketts 26.9.16

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