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Published 5 July 2018
A developer that paid £13.25m for a site for the construction of 112 homes was refused planning permission for failing to abide by the Council's affordable housing planning policy and had to go to the High Court for a resolution resulting in significant delays (re Parkhurst Road Limited v Secretary of State for Housing CLG and LBI - April 2018).
With this decision the High Court issued a sobering reminder for housebuilders to think carefully as to the basis on which they bid for land and the related assumptions they make. In this landmark decision, the Court prioritised the affordable housing planning guidelines of the Council against the price paid by the developer and the viability assessment and reduced affordable provision consequent to that valuation.
Developers need to take heed of this decision and learn from its lessons:
• Tread carefully in potentially overpaying for land and do not assume that affordable housing requirements can be bypassed by the fact of the land price paid;
• Ensure that clear evidence beyond the viability impact of your land price is provided with any viability assessment; and
• Review market value concepts in light of Council planning guidelines or otherwise prepare for potential protracted disputes.
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