SPG found inconsistent with the London Plan

Posted on 18 July 2018

SPG found inconsistent with the London Plan

Both sides claimed victory with the judgment in the challenge by retirement housing developers (McCarthy & Stone, Churchill Retirement Living, Renaissance Retirement and PegasusLife) and the Mayor over his Affordable Housing and Viability Supplementary Planning Guidance (SPG).  Now that the PR teams have moved on, who was actually right?

Judgment was handed down on 23 May 2018 which upheld in part the housebuilders' claim that the SPG is inconsistent with the London Plan but dismissed claims that there was a need for a Strategic Environmental Assessment and that the SPG was discriminatory against the elderly.  Declaratory relief has since been granted confirming the SPG's inconsistency with the London Plan in relation to late stage viability reviews for single phase schemes.

The housebuilders argued that the SPG is unlawful because it constitutes formal policy which should only be in the London Plan and that the SPG is unlawful because it doesn’t comply with the current London Plan in two respects:

  1. The SPG allows a special exemption from viability assessments where a scheme doesn’t offer the maximum affordable housing but provides at least 35%; and
  2. The SPG imposes a late viability review on single phase schemes if the 35% on site threshold approach is not met.

The housebuilders argued that the SPG affects the viability of specialist housing schemes which are usually single phase and are more expensive than private market housing and as such the possibility of having to always meet 35% affordable housing on site or being subject to a late stage viability review makes funding impossible. The housebuilders highlighted in their evidence that none of the four parties had acquired a site in London since the introduction of the 2017 SPG.

The Mayor argued that the SPG was no more than guidance and that it does not contradict policies in the London Plan as both the London Plan and the SPG sought to maximise affordable housing and contributions.

The Judge did not accept that the SPG was automatically unlawful just because it contained policy not present in the London Plan. However, it was not enough to protect the SPG from the current inconsistency with the current London Plan (which requires justification for a late viability review, which generally is related to the likely length of time a development may take or against the risk of a delayed start) and is to that extent, unlawful.

To summarise, the outcome of the permission hearing is a mixed bag and both sides seem to consider the judgment a victory, albeit in different respects. The Mayor released a statement welcoming the judgment that supported the Mayor’s ‘threshold’ approach to affordable housing as not unlawful in principle. Whereas McCarthy & Stone released a statement confirming their delight at succeeding on the specific challenge which they claim supports their contention that national and local policy is not sufficiently supportive of the housing needs of older people.

The real meat of the decision came after the press releases when the Judge issued a declaration confirming the last sentence of paragraph 10 of the SPG is unlawful: "…early and late viability reviews will be applied to all schemes that do not meet the threshold in order to ensure that affordable housing contributions are increased if viability improves over time." Crucially, the declaration is not exclusive to retirement homes but is a comment on the status of that sentence as a whole.

Any victory for developers will be short-lived as the same provision is contained within the emerging London Plan (Policy H6). It is highly likely the consortium of housebuilders will reiterate their concerns regarding this emerging policy at examination which is due to take place in Autumn 2018 with adoption proposed in late 2019.

McCarthy & Stone Retirement Lifestyles Limited and others v The Mayor of London on behalf of the Greater London Authority, High Court (Ouseley J) 23 May 2018.

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