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You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> London Borough of Islington & Ors v The Mayor of London [2014] EWHC 751 (Admin) (25 March 2014) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2014/751.html Cite as: [2014] EWHC 751 (Admin) |
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QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Strand, London, WC2A 2LL |
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B e f o r e :
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(1) LONDON BOROUGH OF ISLINGTON (2) LONDON BOROUGH OF CAMDEN (3) LONDON BOROUGH OF BRENT (4) LONDON BOROUGH OF ENFIELD (5) LONDON BOROUGH OF GREENWICH (6) LONDON BOROUGH OF HACKNEY (7) LONDON BOROUGH OF LAMBETH (8) LONDON BOROUGH OF SOUTHWARK (9) LONDON BOROUGH OF TOWER HAMLETS |
Claimants |
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- and - |
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THE MAYOR OF LONDON |
Defendant |
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- and - THE SECRETARY OF STATE FOR COMMUNITIES AND LOCAL GOVERNMENT |
Interested Party |
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Paul Brown QC and Graeme Keen (instructed by Transport for London Legal) for the Defendant
The Interested Party did not appear and was not represented
Hearing dates: 13th & 14th March 2014
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Crown Copyright ©
MRS JUSTICE LANG:
The Claimants' Grounds
"3.63 In view of the particular priority the Mayor gives to provision of new affordable homes to meet London's very pressing need, boroughs should give particular weight to the criteria set by national government for the allocation of public resources for affordable housing in setting local plan targets (Policy 3.11) or negotiating provision in private housing or mixed-use developments (Policy 3.12) and should avoid imposing any requirements (such as borough-level caps on rent levels for affordable rented housing) that might restrict the numbers of new affordable homes."
"3.68 Boroughs should enable the range of affordable rents to be applied and should not set rent targets for affordable rented housing in their local development frameworks as this is likely to impede the maximisation of affordable housing provision Londonwide. The Mayor may provide details of where variations to affordable rent can apply in his London Housing Strategy and other relevant documents."
"47. To boost significantly the supply of housing, local planning authorities should:
- use their evidence base to ensure that their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area, as far as is consistent with the policies set out in this Framework, identifying key sites which are critical to the delivery of the housing strategy over the plan period."
"Affordable housing. Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices. Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing.
Social rented housing is owned by local authorities and private registered providers … for which guideline target rents are determined through the national rent regime. It may also be owned by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Home and Communities Agency.
Affordable rented housing is let by local authorities or private registered providers of social housing to households who are eligible for social rented housing. Affordable rented housing is subject to rent controls that require a rent of no more than 80% of the local market rent (including service charges where applicable).
Intermediate housing is homes for sale and rent provided at a cost above social rent, but below market levels subject to the criteria in the Affordable Housing definition above. These can include shared equity (shared ownership and equity loans), other low cost homes for sale and intermediate rent, but not affordable rented housing…"
Conclusions
Affordable Housing Strategy
"4.2.16. For investment purposes, the Mayor has agreed a strategic, London-wide average rent at 65% of market rent across the 2011-15 affordable housing investment programme, taking into account the need to provide family-sized housing at a lower proportion of market rents (further details are provided in the London Housing Strategy). To achieve this 65% pan London average, the business plans of the 63 Registered Providers which will deliver the programme require the flexibility to operate on a scheme by scheme basis which is sensitive to local variations in market rents, and within each scheme, the scope to enable smaller units to effectively cross subsidise family homes."
"4.2.17 For planning purposes, site by site flexibility and scope to address a wide range of needs, including those of families who require homes at around target rents (the priority group), are essential if the Affordable Rent product is to function effectively as intended. This will be compromised if general local rental or income thresholds are introduced to control operation of the Affordable Rent Product as described above eg to seek to focus it just on meeting the needs of particular income groups or to cap maximum rents at levels below 80%. "
"4.3.28 Given the clear national definition of affordable rent, guidance from the Government and the HCA, and NPPF and LP policy supporting the use of available resources to maximise output, boroughs are strongly advised not to set rent/income levels for this product through the planning system, as to do so would compromise their capacity to meet identified needs and raise serious questions of conformity both with national policy and with the LP. Similar advice is being provided against setting such thresholds in local housing strategies and plans. The Mayor will give particular attention to this issue in considering matters of general conformity with the London Plan and London Housing Strategy."
"The GLA will ensure that there continues to be flexibility at a local level for providers and boroughs to negotiate further variations, while maximising affordable housing supply. Providers are also encouraged to make provision for much larger homes of four or more bedrooms where there is specific local need."
" .. Affordable Rent is subject to rent controls that require a rent of no more than 80% of local market rent ... In practice, the rent required will vary for each scheme with levels set by agreement between developers, providers and the Mayor through his housing investment function. In respect of individual schemes not funded by the Mayor, the London boroughs will take the lead in conjunction with relevant stakeholders, including the Mayor as appropriate, but in all cases particular regard should be had to the availability of resources, the need to maximise provision and the principles set out in policies 3.11 and 3.12."
The final sentence above was added on the recommendation of the Inspector. It clarifies the role of boroughs in relation to affordable rented schemes which are outside the scope of the agreements between registered providers and the Mayor.
"In estimating provision from private residential or mixed use developments, boroughs should take into account economic viability and the most effective use of private and public investment, including the use of developer contributions. To expedite the planning process, developers should engage with a registered provider prior to progressing the scheme and secure from them a commitment to provision. In doing so, they should require the provider to identify the resources it is bringing to the scheme and to demonstrate that the proposed affordable housing provision make optimum use of the resources applied in terms of Policy 3.12 and provides the range of affordable rents indicating in the London Housing Strategy. Boroughs should evaluate these appraisals rigorously, drawing on the GLA development control toolkit and other independent assessments. Boroughs are encourage to review and bring forward surplus land in their ownership to maximise their contribution to affordable housing provision, including the provision of land to registered providers on a nil cost or discounted basis."
"7.16 In respect of Islington's point b), the Mayor is advised that the allegation that he is putting "delivery above needs" creates a false dichotomy. Affordable housing needs can only be met if affordable housing is delivered. If affordable rents are capped at a rate which makes schemes unviable, development will clearly not take place and there will no housing available to meet needs. Moreover, NPPF paragraph 47 is not simply about meeting full, objectively assessed needs; it also has, as a recurring theme, the need to deliver a housing strategy. As footnote 11 to NPPF paragraph indicates, deliverability is tied in particular to the need to ensure that the development of sites is viable. Paragraph 47 also has to be read in the context of the NPPF as a whole, including, the guidance in paragraph 173 concerning viability and deliverability.
7.17 The Mayor is advised that there is a further, important point here. Islington's letter creates the impression that the REMA effectively requires all affordable rent units to be brought forward with a rent of 80% of market rent, and thereby prevents any affordable rent units with the lower rents which Islington and the other boroughs regard as "genuinely" affordable. This is simply not the case. It is Government that has defined the product at up to 80% market rent. However, this figure is a maximum: the actual rent will vary depending on local market circumstances. The Mayor's investment policy is predicated on a London-wide average of 65%, from which it is self-evident that some affordable rent is expected to come forward with a rent level that is less than 65%.
7.18 In this regard, it should be noted that the Mayor has accepted the Inspector's recommendation that the wording of paragraph 3.61 should be amended to make it clear that, where schemes are not funded by the Mayor, Boroughs have a role in relation to the deciding of rent levels on a scheme-by-scheme basis. While REMA will prevent boroughs from setting rent caps through planning policy, it does not mean that boroughs cannot work with developers and Registered Providers on a case-by case basis to ensure that the best mix of housing is achieved on individual sites. In such negotiations, the Boroughs will be able to consider the impact of a lower rent on the viability of each scheme individually, and whether allowing a proportion of the affordable rent units in that scheme to come forward with a rent of up to 80% would assist in maximising the amount of affordable housing which is delivered while at the same time ensuring that a proportion of the units are available at rents closer to target rents.
7.19 The affordable rent product was introduced by Government in 2011 in order to continue to deliver affordable housing in a decreased funding environment. The London-wide 65% average is based on investment rather than planning policy. It was born out of a strategic programme that seeks to maximise delivery while ensuring that all rents remain below the local housing allowance rate, and that the programme continues to deliver a significant proportion of family sized housing. This approach is already working with nearly 16,451 homes to rent delivered between April 2011 and July 2013, of which 37% were family sized, alongside 9,546 new homes to rent started. Contrary to the implications of Islington's letter, this means that many family sized units are being delivered at rents which are the same as, or very close to those charged for social rent. Due to densities, it is not unexpected that higher proportions of larger homes are delivered in some outer London Boroughs. However, there are high levels of family sized homes in some inner London Boroughs such as Westminster (58%), Tower Hamlets (46%), Islington (37%) and Southwark (35%).
7.20 In the Mayor's view, this is the way in which concerns about affordability should be addressed. Achieving the London-wide average of 65% will only be possible if a proportion of affordable rent units come forward with rents which are between 65 and 80%. It will be significantly more difficult (if not impossible) to achieve this if individual Boroughs are allowed to adopt inflexible borough-wide policies which cap affordable rent at the levels proposed by Islington and others.
7.21 For these reasons, the Mayor's view continues to be that the approach taken in the REMA represents the most realistic and robust way of ensuring that London continues to deliver the maximum number of affordable homes for those who need them. The Mayor is advised that this approach is lawful and reflects government policy, makes the best use of available resources and will deliver a significant number of family units at lower rent levels."
"Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable. Therefore the sites and scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standard, infrastructure contributions or other requirements, should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable."
The Defendant also relies on paragraph 182 of the NPPF which requires a local plan to be "sound" and "deliverable".
The Inspector's Report
"The remaining elements of this recommendation are not accepted as, in the Mayor's view, they give inadequate weight to national policies, the extent of resources for affordable housing and the basis on which they are made available, and to Mayoral housing policies and the need for planning policies to be consistent with them.
[...]
The Mayor's position at the EiP was that the NPPF did not support the setting of rent caps for the affordable rented housing product. At the first stage of public consultation [...] the Mayor received a letter from the then Minister for Planning, Bob Neill MP, confirming that this approach as carried forward in the proposed alterations was in accordance with national policy. At the second stage, a similar letter was received from the then Minister for Housing, Grant Shapps MP.
[...]
In the Mayor's view, these clear ministerial statements should have been given greater weight by the Inspector. Contrary to the Inspector's conclusion that the REMA are not in accordance with national policy, the Mayor considers these letters clearly demonstrate that accepting the second and third parts of the Inspector's recommendation would not be consistent with national policy and would as such fall foul of one of the NPPF tests of "soundness" (that the plan should enable the delivery of sustainable development in accordance with the policies in the NPPF).
[...]
In the Mayor's view, the Inspector's report (paras 18 – 22) and the recommendations do not sufficiently recognise the importance of this policy on the Affordable Rent product of the arrangements for investment in it across London agreed with CLG.
[...]
The Inspector's report also gives insufficient weight to the availability of resources for different forms of affordable housing, and to the effects on development viability of local planning authorities setting rent caps at levels which would not be supported by the level of subsidy available."
The Views of Ministers
"As Grant Shapps noted in his letter to you of 2nd August 2012, the approach set out in your revisions is aligned to my Department's objective of increasing the delivery of affordable housing. Imposing rent controls through local planning policies would hinder this objective, and risk letting Londoners down by limiting the supply of affordable housing, and reducing choice for tenants."
Single Housing Market
"159. Local planning authorities should have a clear understanding of housing needs in their area. They should:
prepare a Strategic Housing Market Assessment to assess their full housing needs, working with neighbouring authorities where housing market areas cross administrative boundaries. [...]"
"[...] since at least the establishment of the GLA, London has always been regarded as a single market for strategic planning purposes. Both the London Plan and the Mayor's Housing Strategy are based on this accepted approach."
"Housing need is a strategic issue, in that some boroughs cannot meet need within their own boundaries. Each borough does not represent a distinct housing market nor is London made up of a homogenous housing market. Affordable housing targets should be sensitive to the economic and social circumstances of London. The Mayor has set the overall strategic framework for establishing borough-level targets to provide a consistent basis for seeking affordable housing and for estimating future levels of provision."
"As it was not disputed that London is a single Strategic Housing Market Area with complex sub-markets that spread across Borough boundaries and has constrained land supply the use of which has to be optimised, we agree with the Mayor that it is not only appropriate but necessary to include Borough provision targets."
"Though there are differences in the type, quality and cost of housing across London, the complex linkages between them mean that for planning purposes, London should be treated as a single housing market"
"These [affordable housing] requirements across London have little regard to administrative boundaries. It is essential that new provision anticipated in LDFs reflects strategic as well as local needs. This will require close working between the GLA and boroughs to ensure local, sub regional and the Londonwide SHMAs are co-ordinated and that effective account is taken of sub-regional and strategic needs, especially when setting affordable borough housing targets. [...]"
"For planning purposes, London is a single housing market, rather than a collection of thirty three self contained borough ones; indeed, it can be seen as part of a market area that extends out into the wider south east. The new LP recognises this, while acknowledging there is very considerable local variation within it, and that these variations pay little heed to administrative boundaries..."
"the reality is that within one regional market there are a number of sub-markets in inner and outer sectors that have their own characteristics, with considerable variations in types of accommodation, tenure, rents and sale prices"
"Even accepting the point made by the Inspector that there are variations within this market (which would be true of any housing market area) there was no evidence before the EiP or cited in the report which shows these variations are meaningfully correlated with borough boundaries."
"the operation of 33 different rent policies across London would inhibit delivery of a London-wide programme where registered providers operate across borough boundaries."
"In the Mayor's view, the REMA EiP Inspector's report is also incorrect in its approach to the London housing market area. [...] the NPPF (para 159) states that when considering housing needs, planning authorities should work "with neighbouring authorities where housing market areas cross administrative boundaries". It has long been accepted that London represents a single housing market area, and both the London Plan and Mayor's Housing Strategy are based on this accepted approach."
Conclusions