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Section 106 obligations: reducing the affordable housing requirement – renegotiation or appeal

Over the last couple of years, it has become increasingly common for disputes to arise as to whether or not a proposed development would be viable if it is required to carry an affordable housing obligation that is consistent with local planning policy.  A recent Court of Appeal decision provides an interesting insight into how differences between local planning authorities and developers may be resolved and is likely to encourage developers to resist an authority’s demands and take their chances at appeal.  A subsequent decision of the High Court demonstrates, however, that it cannot be assumed that an affordable housing obligation can be reduced at a later stage even if planning policy has softened.

In Vannes KFC v Royal Borough of Kensington and Chelsea, the Court of Appeal was asked to consider the legality of a decision made by a planning inspector on an appeal brought by Vannes against a refusal of its application for planning permission.  There was no dispute that the proposed change of use from hotel to residential was acceptable but one of the key issues at the Inquiry was whether or not the developer should be required to provide some affordable housing either on site or by way of a financial contribution to the Council.

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