Last edited 07 Aug 2015

Vacant building credit

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[edit] Introduction

The vacant building credit (VBC) came into force through the publication of planning guidance on 28 November 2014.

The vacant building credit applies to any building that has not been abandoned that is brought back into any lawful use, or is demolished to be replaced by a new building. The developer is offered a financial ‘credit’ equivalent to the existing gross floor space of relevant vacant buildings when the local planning authority calculates affordable housing contributions.

Local authorities set affordable housing targets based on local circumstances. They can then use instruments such as Section 106 agreements (planning obligations) to require contribution to affordable housing from new developments. However, the vacant building credit means that the requirement would only apply to any increase in floor area, over and above that of an existing vacant building, not to the total floor area of the development. This is intended to encourage the development of brownfield sites.

The guidance states that, ‘Where the overall floor space increases in a proposed development, the local planning authority calculates the amount of affordable housing contributions required from the development as set out in their local plan which is then deducted from the overall affordable housing contribution calculation.’

The planning advisory services suggest that ‘It applies to both the requirement for a financial amount and to the provision of affordable units. There is no formula or approach given to the calculation of the financial credit. It will be up to the authority to develop one for their area.’ Ref Planning Advisory, Service Changes to government policy: November 2014

In addition, there is no definition for what a vacant or abandoned building is or how long it must have been vacant for.

Housing minister, Brandon Lewis MP said “...the policy removes a stealth tax” that hindered regeneration and encouraged empty properties. He suggested that the changes will help deliver more housing at no cost to the taxpayer and would have no “significant adverse effect” on the government’s affordable housing programme.

However, London boroughs and some of the biggest private property developers have opposed the introduction of the vacant building credit. Westminster City Council has said it will work to try and reverse the “deeply flawed” policy suggesting that it would put the delivery of affordable housing in London at serious risk, deepening the accommodation crisis afflicting the poorest people. Many councils outside London also believe the vacant building credit policy will make it more difficult to build affordable housing.

In February 2015, a cross-party group of London politicians called on Lewis to immediately suspend the vacant building credit. Ref Planning Resource, London politicians attack 'catastrophic' vacant building credit, 9 February 2015.

On 26 March 2015, guidance was updated to make it harder for developers to exploit the system or to reduce or avoid affordable housing contributions. Reg Gov.uk.

[edit] High Court ruling

In a landmark case at the High Court in July 2015, Justice Holgate quashed government policy on affordable housing exemption thresholds, as a result of the which, planning guidance on planning obligations was amended to remove paragraphs 012-023. In addition, the vacant building credit policy was quashed.

West Berkshire Council and Reading Borough Council challenged the policies arguing that the consultation process had been unlawful. Justice Holgate accepted that the government had failed to take into account "obviously material" considerations.

A spokesman for the Department for Communities and Local Government spokesman said that they would be seeking permission to appeal against the judge’s decision.

See R (on the application of West Berkshire District Council and Reading Borough Council) v Secretary of State for Communities and Local Government for more information.

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