19 June 2018

Viability re-appraisal requirement in Mayoral SPG found unlawful for short-term schemes

A group of retirement housing developers are celebrating after their successful judicial review challenge which determined that the viability re-appraisal requirements in the Mayoral Affordable Housing and Viability SPG are unlawful for short-term schemes.

The Mayoral SPG requires every site yielding affordable housing below 35% on-site to undertake an early and a late stage viability review in addition to the initial appraisal at the planning application stage.

The developers’ case was that this re-appraisal requirement unfairly discriminates against them given the acute pressure on the viability of specialist housing schemes. The result being that following the adoption of the Mayoral SPG in August 2017 they were now unable to acquire sites in London due to the unacceptable risk of the unknown affordable housing provision. In the developers’ view, the Mayoral SPG constitutes policy which should rightly be in London Plan.

The Judge found the re-appraisal requirements in the Mayoral SPG to be inconsistent with the current London Plan, and on that basis, unlawful. The London Plan requires re-appraisal for developments which are likely to take “many years” to implement, whereas the Mayoral SPG does not make this distinction.

The Judge clarified that “it is inherent in the concept of the SPG that it purports to supplement and not to contradict development plan policy.” The Mayoral SPG clearly acknowledges this in the Executive Summary where it states that “it is guidance to ensure that existing policy is as effective at possible”.

It remains to be seen what remedies, if any, the court will apply in relation to these unlawful elements. In the interim, Local Planning Authorities will need to revisit their approach to viability review mechanisms on short term schemes – using the Mayoral SPG to continue to insist on such obligations is likely to be unlawful in light of this Judgment.

Case citation: (R (McCarthy and Stone Retirement Lifestyles Limited, Churchill Retirement Living Lmited, Pegasus Life Limited, Renaissance Retirement Limited v The Mayor of London [2018] EWHC 1202 (Admin).

Alice is an associate in our Planning team.

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