Our day in the Court of Appeal

The Royal Courts of Justice

On Friday (19 September 2014) our team of lawyers and I were in a rather unassuming room in the otherwise splendid Gothic Revival Royal Courts of Justice just off Aldgate. In Court 76, three very senior and experienced Lord Justices sat in their modest, rather refined, Court of Appeal apparel to pass judgement on a niche point of our legal case.

In short, we didn’t win in the Court of Appeal on Friday. But our Judicial Review (JR) continues regardless. If I, as a layman, were to read anything into the hard questioning the learned judges gave our barristers, I’d say they thought we had a strong and interesting point to make come the JR-proper, in October.

It’s was not vital to our case against Hackney, Newmark and Sainsbury’s that we won this particular argument in the Court of Appeal, but it would have helped us make our point later on. And it could even have had significant and positive implications for the entire affordable housing sector.

One of the key complaints of our campaign against the development of the 53 homes above a 4,100m2 Sainsbury’s is that the acknowledged harm to the seclusion and ecology of Abney Park, to the heritage setting of it’s listed gates and to the wider Stoke Newington Conservation Area, has almost no public benefit to offset it.

The proposed homes are certainly high-spec. Perhaps a canny decision by the developer in this awkwardly skewed, middle class part of an otherwise quite diverse borough. Of all the areas of Hackney, Stoke Newington is surely amongst the least affordable. The lack of tube has done little to temper house prices in the area and there are few pockets of land that we can reasonably expect to offer anything meaningful in the near future, to those key workers in dire need of affordable homes.

Part of successive government’s solutions to the housing crisis was to make private developers build a proportion of “affordable” homes with each large development they build. It’s down to each local authority to set the specific targets but here in Hackney we have a fairly typical target of 50%. That is to say, in each development of ten or more homes, at least half should be “affordable”. And of those, 60% should be for rent and a quarter of those for rent should be “social”.

The term “affordable” is a misnomer. It’s defined as 80% of market value – whether that be rent or outright purchase. In London, 80% of a hyper-inflated market could hardly be considered “affordable” to most people; let alone those key workers who qualify for “affordable” homes. It’s an issue that’s being played out nationally and there are plenty of campaigners working hard to get that definition changed.

Notwithstanding that, over the last few years, local authorities have seen ever decreasing numbers of affordable homes being delivered or proposed. A couple of years ago, 35% seemed fairly typical for new planning consents in Hackney. In the last year it’s been even lower. 0% is far from rare, with 15-20% being typical. As each site gets built with zero or maybe 15% affordable homes, that’s a development opportunity locked in at the unsustainably low rate for the lifetime of the building – 50, 75, maybe 100 years or more. We simply don’t have the land in urban areas to sustain that skewed mix of tenures.

In Newmark’s case, the figure is 17%. Just nine of the 53 flats at Wilmer Place will be “affordable”; of those nine, four flats are for “affordable” rent, two large flats will be offered at a social rent and the other three will be offered on a shared ownership basis.

The reason this developer, like most of the others, got permission for something that fails to deliver 50% – contrary to Council policy –  is that, in response to the downturn, the Government allowed developers to negotiate if they could demonstrate that they wouldn’t make enough profit; or in other words, that it wouldn’t be commercially “viable”. The Government were told that without this point of negotiation, developers would just stop building houses altogether.

The developers have to do more than just say they wouldn’t make enough profit. They must make a solid case. Normally that’s in the form of a “viability assessment” – a set of documents that use various figures and often a complex mathematical model – to say that in order to make an acceptable profit (the industry seems to have settled on 20%), they can only budget to build a given number of affordable homes. That “given number” might well be zero if the figures in the assessment support it.

No sooner had the Government allowed developers to negotiate on viability, than a branch of the valuation and surveying industry popped up offering to minimise developers commitments to affordable housing and “planning gain”. Like so many professional services, you get what you pay for. The smarter surveyors can do all sorts of modelling and tweaking to ensure the “guesstimates” they produce favour the developer and not the affordable housing requirements of the local authority.

This technique would be less of an egregious abuse of the system if it were open to scrutiny. But by convention, it isn’t. The industry advises itself to submit all viability claims separate to the planning application documents and to assert that they are private and confidential. As a result, the only people to see these documents are the planning officers and the Council’s own surveyors. For larger schemes the documents might also go out to another firm of surveyors within the industry, for scrutiny. But none of these documents are released to the public. In fact they aren’t even released to members of the Council’s own Planning Sub-committee.

There is no solid legal basis for this secrecy. It’s just convention dictated by the developers. And they get away with it because they claim that if they had to submit them to public scrutiny, they would lose some commercial advantage and would not come forward with development schemes. The same threat that got them the concession on viability in the first place. With the vast power and legal might of the development industry being brought to bear on them, local authorities are disinclined to challenge the claim. They’d rather some (very profitable) development went ahead with little or no affordable housing that risk the developers carrying out their threats of stopping developing or taking them to court or an expensive planning inquiry.

“There’s less money in the system.” “There are no grants.” “Land values have skyrocketed.” are oft-heard retorts by local government chiefs and councillors,  brow-beaten by the hideous complexity of the issue. They are largely buying the industry’s fibs because they haven’t done the research that proves otherwise. There never were grants to meet the policy targets of the local authorities – they were only ever given for “additionality” – affordable homes above target levels. And the reason land prices have sky-rocketed, is precisely because planners have not defended their policies and developers routinely achieve the ludicrously inflated “hope values” they paid for the land.

The only people left to argue are the general public and communities affected. And in truth they have very limited legal avenues.

Buzz off Sainsbury's
A “large” planning matter ought to be determined by a Local Planning Authority within 13 weeks and public consultations are typically just 21 calendar days. This is shorter, even, that the statutory 20 working days (26-29 calendar days) a council has to respond to a Freedom of Information request to see the viability information.

Even in the case of complex planning applications such as Wilmer Place, the additional 40 days a local authority has to to conduct an internal review when it refuses an FOI request, plus a further 20 which the Information Commissioner’s Office (ICO) might give the authority (and did in our case), gives a local authority 80 working days (4 months), to exhaust all avenues before the ICO will even begin to consider a complaint on its merits. This timescale is plainly at odds with the planning regime where the Government’s desire is to expedite planning decisions and their appeals in much shorter timescales.

In those rare cases where the community have pursued a claim with the ICO to see viability documents, they have typically taken two years to resolve, by which time, disclosure is academic, the planning decisions having been granted 18 months earlier. Completists might like to see the outcomes at Heygate (Elephant & Castle), Earl’s Court, Walthamstow Stadium, Oaklands College, St Alban’s, or Lakota Building, Bristol.

In each of those cases the ICO or the High Court, has conceded that key information ought to have been in the public domain at the outset and have ordered it’s disclosure. There have been specific exemptions for certain trade secrets but release of the bulk of the information – and all the important figures – has been ordered.

We find ourself in that very scenario. The Council is digging in it’s heels. Off the record, individual officers of the Council aren’t entirely unsympathetic, but as a corporate body they feel bound to support the development industry’s claim that it’s information is confidential. When much, if not all of it, is publicly available or derived from “text book” valuations.

The “Viability Con” is really dull and technically complex when you get down to the nitty gritty of valuation reports. But it’s crucial that councils and the Government tackle this. It’s hard to express the scandal in a way that is easy enough to digest such that it will have some political bite. But The Guardain’s Olly Wainwright had a good go last week. It’s a long piece but lays out the issue as clearly as it ever has been in the mainstream press. I had a good go at pressing my points in response. Radio 4’s Face the Facts had a stab at the issue at the start of this year after The Bureau of Investigative Journalism did some excellent research over a year ago.

It was an exquisitely rare delight to see Camden and Islington councils tear apart Royal Mail’s plans to redevelop Mount Pleasant. Their report was made public and although redacted had copious commentary that rubbished Royal Mail’s claim that only 12% affordable housing would be viable. As Royal Mail stopped co-operating, the councils’ third-party surveyors did the maths from scratch and discover that providing 50% affordable homes would still be profitable. Most likely even more when finally built and sold. But with the application slated to be called in by the Mayor of London, it remains to be seen whether any good will come of it.

As it stands, today, we’ve yet to see the viability reports for Wilmer Place. The Court of Appeal wouldn’t order disclosure. The ICO is considering our claim but is unlikely to come to a decision before our JR in October. So we’ll be arguing in the High Court that, amongst other things, we haven’t seen the viability info, but we should have seen it. If the High Court agrees, it won’t necessarily lead to disclosure. They might simply quosh the planning permission and set us back at the start of the same old path of having to ask the Council for the info all over again. And whilst they resist disclosure and grant yet another planning permission, they’ll do so hoping we’ll give up our legal challenges.

I hope it doesn’t come to that. In the face of a defeat against our Judicial Review, the Council should be able to use the ruling against them as a reason to be tougher on developers. In fact it is already looking at the issue in it’s member-led Scrutiny Commission on Living in Hackney.

It needs a strong will and a strong case to fight the might of the development industry. Let’s hope this JR goes a considerable way to doing that.

One comment

  • Lynn Brooks

    With the diversity of the wildlife in Abney Park,isn’t there some rare species of birds or bats whose habitate will be compromised by the developement?
    The charity for birds, RHBS,has one of the largest memberships of all charities including a woman peer who used to live in Lordship Rd?Pk.
    Maybe they could start a campaign to protect one of the most diverse bird populations in Inner London.
    is there a charity / pressure group for Victorian buildings/ historic cemetariies /English heritage, or is the Salvation Army interested in protecting “their “cemetery?
    Just brainstorming…..
    Thank you & good luck