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

Vacant building Credit was introduced by the government in a ministerial statement on 28th November 2014, as an incentive ‘to tackle the disproportionate burden of developer contributions on small-scale developers, custom and self-builders’.

Vacant Building Credit (VBC) applies to any building that has not been abandoned and is either brought back into lawful use or is demolished and replaced by a new building. The developer will be offered a financial credit against the vacant floor area, however, affordable housing will be required for any increase in floorspace.

Following an increase in floor area, the Local Planning Authority (LPA) should calculate the level of affordable housing contribution required from the development, as set out in their Local Plan. The LPA should then issue a credit which is equivalent to the gross floor area of the vacantbuilding(s) that are to be demolished or brought back into lawful use as partof the scheme, then deduct from the affordable housing requirement, VBC applies as a credit against both onsite affordable housing and offsite contributions.

Reference to vacant buildings is referred to in the NPPF (2021) at para 64:

"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."

And The PPG at paras 26-28. 

The inclusion of vacant building credit in the NPPF seeks to incentivise the developer to build on brownfield sites, and indeed to utilise the vacant building credit. Brownfield sites can be overlooked by developers due to the high level of abnormal costs often associated with developing that specific type of land.

This emphasises the importance in considering the planning and related viability implications of demolishing a building(s) prior to the grant of planning permission. Demolishing following the achievement of planning permission can often greatly assist making brownfield sites viable options for development.

There is some discretion to the application of vacant building credit. When considering how it should apply, local planning authorities can consider national policy in relation to brownfield sites, including:

  • Firstly, whether the building has been made vacant solely for the purpsoe of re-development, and;
  • Secondly, whether the building is covered by an extant or recently expired planning permission for the same (or substantially the same) development.

An example of how vacant building credit 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 and vertical extension to create commercial space, offices, and 24 residential apartments.

Date of application: September 2019

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

The calculation:

a table showing the calculations for vacant building credit

The result: A reduction from the policy compliant 7 onsite dwellings to 1.35 dwellings (1 onsite unit + 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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