Appeal allowed: Lancaster Road, Cockerham, Lancashire LA2 ODZ - Successfully removing existing unviable S106 affordable housing from commenced stalled site via S73 application.
APP/A2335/W/25/3359581
S106 Management were pleased to assist PWA Planning and Wilson & Co Properties in removing an existing unviable affordable housing contribution on a commenced but stalled site of 24 dwellings in Lancaster local authority.
This case has substantial implications for all other consented or commenced sites struggling to deliver their affordable housing obligations in the current environment.
The subject site has suffered from substantially increased costs relating particularly to required amendments to the scheme, stagnant values, and difficulty disposing of the affordable homes originally consented.
These are not uncommon issues in the current market environment, with a nearby housing estate at St Michaels also stalled. S106M have assisted many clients over the last several years with similar situations through appropriate S73 viability assessments.
Unfortunately, in this case the local authority refused the original S73 on incorrect legal grounds, betraying a misunderstanding of the relationship between S73 and S106 agreements. We have found this misunderstanding common, despite recent case law including Norfolk Homes Ltd v North Norfolk District Council & Norfolk County Council [2020] EWHC 2265 XXX making this point clear.
This misunderstanding was unfortunately carried through to the appeal, which resulted in a successful partial award of costs for unreasonable behavior, along with the council’s failure to engage with the drafting of the associated s106 agreement, requiring conversion to a unilateral undertaking at additional cost.
S106M assisted throughout the application and appeal process, providing detailed viability modelling and negotiation services, culminating in a statement of common ground (SOCG) and appearing at the hearing.
The SOGC led to the council’s viability consultant agreeing at the hearing that ‘if this evidence was presented prior to the commencement of the development, he would advise the Council that it would be unviable to deliver the agreed level of affordable housing’.
The allowed appeal has the effect of removing the requirement to deliver onsite affordable housing (30%, 7 units), in order to ensure that the stalled development can now proceed to completion and deliver much-needed homes to the local area.
The Appeal also demonstrates that viability should not simply be treated as an academic exercise. There are specific ‘real world’ local factors at play in this case, such as a revised more expensive drainage scheme being required, and a nearby similarly stalled housing development which increased the weight the Inspector assigned to completing the scheme even without the original affordable housing contribution. It is important to make the case correctly with the appropriate information to ensure that viability can be weighed accordingly. A key takeaway is that the Local Plan Viability policy should be applied contemporaneously to any S73 application, allowing factors that could not be known (at the outline stage for instance) to be brought into account.
The Inspector’s decision will be of particular interest to property and planning professionals as it is the first to bring together detailed commentary on the interrelationship between S73 applications to vary conditions relating to plans, how these can apply to tenure mix and affordable housing, that viability and deliverability should be given ‘substantial weight’ in such circumstances where there is a clear real-world threat to the deliverability of the site, and that it is appropriate for a new s106 agreement with reduced affordable housing to be agreed as part of an s73 application (rather than simply amending an existing obligation via S106A).
These issues have all been tested in isolation elsewhere, but this appeal brings together a strategic approach that S106 Management has successfully applied on many sites: revising affordable housing requirements on commenced or previously consented sites that have viability issues that threaten deliverability.
Robin Furby, Managing Director of S106 Management, attended the Hearing representing the applicant on viability matters. He commented as below:
‘This is an excellent decision that really just underlines everything we have been saying to councils for years now. Which is that when circumstances require it, previously agreed affordable housing delivery should be removed if the deliverability of the scheme is threatened. Costs have gone up, values are stalling, RPs aren’t acquiring, more and more small schemes like this are under threat. If the government want to meet housing targets then a more pragmatic approach to delivery is required. Councils should stop fighting on the basis of poor legal understanding and get on board with assisting delivery. There is now a clear strategic route for any housebuilders or developers to take if their existing obligations are threatening viability and deliverability. We can help bring housing forward. Viability matters more than ever.’
The applicant, Byron Wilson for Wilson & Co Properties, commented:
'This appeal outcome reinforces the principle that viability must remain central to decision-making where delivery is at risk. Our application was grounded in detailed evidence of increased abnormal costs,static sales values, and the absence of any realistic tenure partner from the council’s own Registered Provider list. The refusal to engage with this evidence, combined with a misinterpretation of the legal framework around S73 and S106 agreements, not only delayed much-needed housing but exposed the council to a partial costs award. Our experience highlights a growing issue across the sector: many SME developers are facing materially changed circumstances post-consent, and planning authorities must be prepared to reassess obligations in line with current conditions. We are pleased that the Inspector has recognised these challenges and provided a clear route to delivery in this case. Our priority is and always has been getting much-needed quality homes built—this result allows us to do exactly that.'
The applicant’s agent, Matthew Wyatt for PWA Planning commented:
‘This is a vital decision that brings much-needed relief to our client. They embarked on delivering a high-quality housing scheme only to be hit with unforeseen abnormal costs, making the consented on-site affordable units undeliverable. The local authority's initial refusal to renegotiate was a significant concern. While the importance of affordable housing is clear, this appeal confirms that where genuine viability issues threaten delivery, adjustments to planning obligations are not only possible but necessary. This decision offers a clear path forward for developers facing similar challenges, ensuring that homes can still be built.’
