Housing associations and all those interested in the provision of affordable housing will no doubt be assessing the ramifications of the High Court ruling regarding Stonewater’s £3 million Community Infrastructure Levy (CIL) bill.

You can read more detail here but, in brief, last year the Stonewater housing association acquired a site in Hailsham, East Sussex, which had outline planning permission for 169 homes, 35 per cent of which was to be affordable.

It is common practice for housing associations to purchase sites with a view to turning the entire site into affordable homes, and that is what Stonewater proposed.

It applied for social housing relief from the CIL charge but this was rejected by Wealden District Council on the basis that the existing section 106 agreement limited affordable housing on the site to 59 units.

Stonewater challenged, arguing that 59 was a minimum not a ceiling, but the council countered, citing a lack of evidence that all the new homes would be affordable since the planning permission and section 106 had set a limit.

The High Court agreed.

The development could not therefore proceed with 100 per cent affordable homes unless and until the council agreed to a fresh section 106 agreement or a deed to vary the existing section 106 agreement.

The upshot is that the council could not grant social housing relief unless and until it was satisfied that 100 per cent provision was appropriate. Faced with a £3+ million CIL bill, Stonewater has stated that the development is no longer viable.

So what does this mean?

• The outcome of the case suggests that in future it may not be possible to build more affordable homes than the number agreed in the section 106 unless the wording of the agreement allows for that, and may allow a council to push back on a deed to vary an existing section 106 agreement to increase levels of affordable housing if this means a negative effect upon its CIL income if that is the balance it wants to strike.
  
  
• Affordable housing providers will need to consider whether any additional funding they may be able to obtain is greater than the cost of CIL.
  
  
• On the flipside, while affordable housing is a good thing, it doesn’t follow that it’s necessarily desirable without limits, especially if it impacts on the provision of local infrastructure through CIL. In the case of Stonewater it was expected that local highway improvements would be funded by the CIL receipts.

Put simply, early engagement with local planning authorities is essential in order to ascertain how the number of affordable homes in an existing section 106 agreement can be raised to 100 per cent.

Further information

Contact John Ainsworth or Laura Eacott

Savills Planning