Westminster removes affordable housing requirements for hotels

Westminster City Council published its City Plan on 21 April 2021, deleting the controversial requirement for hotel development to make provision for affordable housing. The proposed policy threatened to further hamper the creation of much needed visitor accommodation within central London.

Policy 10 of the draft City Plan had required hotel developments that proposed a net increase in floorspace within the Central Activity Zone (“CAZ”) to either provide affordable housing on-site or make a financial contribution to off-site provision. In response to concerns from the commercial sector as to the viability of such proposals, and complications posed by the Use Classes Order introduced in September 2020, Westminster subsequently revised the proposal to seek a contribution from all commercial development within the CAZ delivering more than 1,000 sqm of net additional floorspace.

However, Policy 10 was rejected entirely by the Planning Inspectorate on the following planning grounds:

• No NPPF, PPG or London Plan requirements for affordable housing contribution: the inspector noted that there is no mention of any need for purely commercial developments to contribute to affordable housing within these planning frameworks.
• No adverse impact on the CAZ: a key rationale for Westminster’s promotion of affordable housing within the CAZ is to make provision for low-income workers employed within the area. However, no evidence was provided by Westminster to show that the CAZ was economically hampered by a lack of affordable housing, and the Westminster area itself is well-connected by public transport.
• Unacceptable as a planning obligation: the inspector did not consider that the policy would meet the tests necessary to be implemented through a planning obligation. Commercial development within the CAZ is already broadly acceptable in planning terms and does not require affordable housing to make it acceptable. Moreover, a generic tariff as proposed in the revised policy does not create a direct relationship with the development itself and a would be unlikely to be fairly and reasonably related in scale to the development.
• Generation of substantial financial contribution is not enough: although it was acknowledged that the policy would provide a significant source of funding for affordable housing in the area, this in of itself is not reason enough to include the policy in the City Plan.

The removal of this policy will no doubt be welcome news in the hotel development sector and the reasoning given by the Planning Inspectorate makes clear that similar policies are unlikely to be acceptable from a planning standpoint. However, the provision of affordable housing continues to be a key concern for local authorities and this is unlikely to be the final word on contributions from hotels and other commercial developments.

Alexandra Treacy is a Trainee Solicitor currently sat in our Planning team.