Vacant Building Credit - What is it and when can it be used?

What is Vacant Building Credit?

The Vacant Building Credit is set out in the NPPF (2023) at para 65:

65. Provision of affordable housing should not be sought for residential developments that are not major developments, other than in designated rural areas (where policies may set out a lower threshold of 5 units or fewer). To support the re-use of brownfield land, where vacant buildings are being reused or redeveloped, any affordable housing contribution due should be reduced by a proportionate amount.

We theory the guidance is as straightforward as it sounds. If your development is equal in size or smaller than the existing buildings onsite, you should provide no affordable housing, and if its bigger the tariff for affordable housing is reduced pro rata (see calculation below).

Many local planning authorities are quote happy to follow government advice in this regard, but many, particularly all the London Boroughs, do not.

Planning law is driven by S38(6) of the Planning and Compensation Act which provides that an adopted local plan has primacy over the NPPF if there is a conflict between the two. The wording is below:

“If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise.”

In this context the ‘the plan’ is the adopted Local Plan and ‘material considerations’ are all central government guidance, for instance the National Planning policy Framework.

So, if your LPA is attempting to deny you the use of the Vacant Building Credit the first step is to look at the Local Plan – if it is silent on the VBC, then you are in a good position to insist that the LPA apply the VBC to your development (if appropriate).

Some LPA’s endeavour to overcome any shortcomings in their Local Plan by adopting Special Planning Guidance (SPG) or Special Planning Document (SPD). This approach is only effective if the underlying Local Plan mentions the Vacant Building Credit.

The VBC in many ways reflects reality, in that if there is an existing building on site, the site will have a reasonable existing use value, which will mean that affordable housing will not be viable in any event.

An example of how VBC can assist with reducing the requirement of affordable housing from the policy compliant level is set out below:

LPA: Exeter City Council

Type of development: Conversion of existing building in and vertical extension to create commercial space, offices and 24 no. residential apartments.

Date of application: Sept 2019

Policy requirement: 35% on-site units. The existing building accommodates 4 units; therefore, the policy requirement relates to 35% of 20 dwellings, which translates to 7 dwellings.

The Vacant Building Credit calculation:

The result: A reduction from the policy compliant, 7 on-site dwellings to 1.35 dwellings (1 on-site unit + an offsite financial contribution).

This is before any further negotiations regarding the viability of the scheme; thus, a far more favourable starting position for the applicant when considering the development costs and the balance of the application.

Please get in touch if you have any queries on Vacant Building Credit and how you may utilise this for your future developments.

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