Legal update
been successful on one occasion, when an affordable housing contribution was dropped – but the developer is very much on the back foot post-resolution because of the risk that the local authority will refuse to pass a further resolution to grant permission with a less demanding but more legally sound s106.
So, ensuring from the start that planning
agreements are Regulation 122-compliant is important and it is worth involving lawyers, on occasion, in negotiations before a report goes to committee for a resolution. Related to the legal test and back with the policy basis for assessment is the assessment of the form and function of the development being applied for. A long running debate between care providers and local authorities concerns the question of retirement living schemes and their status as residential institutions and as dwellings.
Close care schemes The issue is quite simply explained. The grant of planning permission for housing development means that affordable housing contributions are required. Affordable housing is generally required to be provided on site in residential developments of any scale. For other types of housing, payments of ‘commuted sums’ may be acceptable. These requirements make schemes less viable and, certainly in the care sector, create barriers to supply in a market which is experiencing ever-greater demand. But the courts’ interpretation of such schemes has not been especially encouraging for developers recently. In the 2020 High Court case of Rectory Homes Limited v Secretary of State for Housing Communities and Local Government, clarity was given on the question of whether retirement living schemes can be required to contribute towards affordable housing. Crucial to note in this case was that the council’s core strategy affordable housing policy was directed squarely at development comprising ‘dwellings’. It made no distinction between dwellings with different attributes – such as close care accommodation. The applicant in this case had tried to draw a distinction between its development and other types of housing by describing its application as use class C2 – ‘residential institutions’ and arguing that it was therefore exempt from the affordable housing requirement. A s106 agreement set out restrictions on occupancy of the units by reference to an age restriction and a base
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level requirement for some element of care need.
The High Court accepted that the units fell within C2. But none of this precluded the units from being ‘dwellings’ for the purpose of the council’s core strategy policy. Forty per cent affordable housing would be required. Characterising the development as falling within a particular use class is insufficient on its own – how the development functions in practice is key. The circumstances of this case were sufficient for the units to be regarded practically and functionally as ‘dwellings’ liable for a contribution. Close care is an interesting example
because it is designed to adapt from something which looks quite like independent market housing with a high degree of flexibility – to something with an intensive level of support akin to that of a traditional care home and backed up by relevant infrastructure such as lounge, dining hall, and treatment rooms. In this case, the fact that each of the 78 residential units was capable of being used as a dwelling independently of the rest of the estate was supportive of the proposal falling under the local planning authority’s affordable housing policy. It seems possible that the appeal and the High Court challenge could have been decided differently if the local authority’s policy had limited affordable housing contributions to development within named use classes
Better consideration of the issues can save a great deal of time and wasted cost
instead of the much more fluid concept of ‘dwellings’. This underlines the importance – for care home developers in common with developers of all other types – to have early and constructive conversations with local planning authorities as they commit to sites. And to pay close attention in assessing those local authorities in whose areas they wish to pursue new sites. Where quantum for planning
agreements is uncontentious, there are other issues that developers would be well advised to think about early on and which help to speed planning agreements to conclusion more quickly by addressing logistical, as well as legal questions.
Other legal issues in s106 agreements Away from the policy and lawfulness questions of development, much work in s106 agreements comes down to relatively bland questions about what land is covenanted – ‘who’ covenants and whether they have the ability to covenant. Closely related to that is the question of readiness. Insufficient thought being given to these questions causes nearly all the delay, in my experience. Better consideration of the issues – ideally in dialogue with lawyers at application stage rather than at the end of the process – can save a great deal of time and wasted cost.
In terms of what land is bound, the council will expect every owner of land within the application site plan to covenant – that is the default position. It is a good idea to put all likely covenantors on notice of this at the earliest possible stage so that they can be ready if they are required. This is especially important with any big institutional bodies, such as pension funds and banks.
www.thecarehomeenvironment.com November 2024
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