Case Review: Stonewater (2) v Wealden District Council: Social Housing Relief, CIL and Section 106 Agreements

The case of Stonewater (2) Ltd v Wealden District Council [2021] EWHC 2750 (Admin), is an interesting case which considers some important issues relating to the application of Social Housing Relief under the Community Infrastructure Levy Regulations 2010 (as amended), the level of evidence required to be submitted to obtain this relief, and the interpretation and application of Section 106 Agreements securing affordable housing in this context.

The facts of the case can be summarised as follows, Stonewater, a not-for-profit registered provider, acquired the site which had the benefit of outline planning permission for a residential development of 169 dwellings, together with an accompanying Section 106 Agreement securing 35% affordable housing, amongst other obligations.  Stonewater sought to provide the entire 169 dwelling development as affordable housing and accordingly applied to Wealden District Council for Social Housing Relief for the total 169 dwelling scheme, under the Community Infrastructure Levy Regulations 2010 (as amended).  The CIL liability payable for the permitted scheme, if the Social Housing Relief was not applied, amounted to £3,066,009.

The Council refused two applications submitted by Stonewater for Social Housing Relief on the basis that Stonewater had submitted insufficient evidence to demonstrate that 100% of the dwellings would be secured and delivered as affordable housing, and that the existing Section 106 Agreement limited the affordable housing to be delivered to 35%, and on that basis an over provision of affordable housing was considered to be unlawful. The Court agreed with the Council's reasoning, leaving Stonewater with a significant CIL contribution to be paid.

In light of this case, the following key points need to be considered where a claim for Social Housing Relief is to be submitted on a development scheme which seeks to provide affordable housing above the levels secured in an existing Section 106 Agreement:

• It is for the applicant to demonstrate to the Council, through the submission of sufficient evidence that any over provision of affordable housing will in fact be delivered in order to benefit from the Social Housing Relief available under the CIL Regulations. Whether the applicant's evidence is sufficient is a matter of judgment for the Council, subject to the usual public law principles.
• On sites subject to an existing Section 106 Agreement, the terms of the agreement will need to be carefully considered to see if the level of affordable housing provision is fixed at a set percentage or number of dwellings.  Where an existing Section 106 Agreement fixes the affordable housing provision on the site it may be necessary to agree a fresh Section 106 Agreement, or a deed of variation with the Council to secure 100% of the dwellings as affordable housing. It may also be necessary to vary the terms of the existing planning permission to reflect any changes to be made. Whilst there is no express requirement that the use of the qualifying dwellings has to be secured by way of a planning obligation, or other legal mechanism, in order for the Social Housing Relief to apply, without such variations any over provision may not be considered to be lawful by the Council. This will be a relevant and material factor for the Council to consider in its assessment of the evidence in respect of any application for Social Housing Relief under the CIL Regulations.

We regularly advise our clients on the entry into, and negotiation of Section 106 Agreements and the application of the CIL Regulations.  We are able to assist you in seeking to agree flexible and workable obligations whether you are a developer or individual landowner.

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