Affordable housing contribution could be removed despite occupation of all residences

Section 106BA of Town & Country (Planning) Act 1990 (“the Act”) says an English planning obligation that contains an affordable housing requirement can be modified, replaced, removed or discharged by the planning authority so that the development becomes economically viable.

In Medway Council v Secretary of State for Communities and Local Government & Ors [2016] the permitted development comprised 332 residential units (which had already been built) and 5,738 sq m of commercial floorspace divided into 16 units (which had yet to be built), public open space, new and modified accesses and car parking at Chatham Quays.

Under the related Section 106 Agreement the Developer was to make affordable housing contributions, which the council had agreed be deferred until after the 300th residential unit was occupied. This had happened some time earlier.

The development, taken as a whole, was unviable even without having to make the contribution, as the affordable housing contribution being removed (around £1.3M indexed to October 2014) would be insufficient to off-set the loss (around £12.3M).

With the houses already built and occupied was it too late to get the requirement to contribute removed from the Section 106 Agreement?

The High Court said the development must be seen as a whole, and was still on-going, and not complete, as to its second commercial phase.

In the circumstances the fact that the residential element was already complete and in excess of the trigger number of habitations did not prevent the Developer applying under Section 106BA of the Act.

Whilst the modification applied for would not make the scheme viable, it would improve the viability of the scheme and make it’s completion more likely.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.