Despite national guidance stating that affordable housing contributions should not be sought on minor developments (currently defined as less than 10 units), many of our clients come to us with local authority requests for contributions on often very small sites. These sites are often not capable of bearing such costs and cannot feasibly offer onsite affordable units as housing associations will not take them.
This case involved the demolition of an existing bungalow and erection of a 3 storey block of 8 flats. Elmbridge LPA sought 1 unit onsite and a financial contribution of £81,000 cash.
S106 Management’s viability appraisal demonstrated a significant deficit. The council’s consultants challenged several assumptions – but made a number of errors in their appraisal, including a flawed existing use value, CIL being removed as a cost, and including a ground rent assumption when the terms of the homebuilders fund precluded this.
Such errors are unfortunately a common occurrence, and would in all likelihood not have been picked up by a layperson. However, S106 Management successfully challenged the issues and the council’s consultant agreed that in fact the development was unviable and no contribution should be sought.