There has recently been much debate on how extra care housing should be categorised within the use classes. Whether it falls within Class C2 or C3 was often seen to dictate whether a requirement for affordable housing arose. A High Court case has now provided some clarity, suggesting that the use class that these developments fall into is less determinative than previously thought. But does this mean the situation is now clear cut?
When is a dwelling not a dwelling?
Rectory Homes Ltd v Secretary of State for Housing, Communities and Local Govt [2020] EWHC 2098 (Admin); [2020] PLSCS 156 concerned a proposed “housing with care” development that contained 78 residential units, each with their own front door and facilities which allowed for independent living. The question was whether these private units would count as “dwellings” under the relevant policy of the South Oxfordshire Core Strategy and therefore be required to provide 40% affordable housing. Rectory Homes argued these units couldn’t be dwellings as they fell clearly within class C2 rather than C3. The planning inspector dismissed Rectory Homes’ planning appeal, deciding that, despite the fact the homes fell within class C2, they were still “dwellings” for the purpose of the policy.
On further appeal to the High Court, Mr Justice Holgate agreed. His judgment noted that class C3 doesn’t cover all types of properties being used as dwellings. Just as, for example, class C4 contains dwellings used as homes in multiple occupation, a class C2 development could contain dwellings for people in need of care. It doesn’t matter how the developer refers to the properties. If they are residential units containing the facilities which enable them to be used as private, independent dwellings, then they sit within the definition of “dwelling” as set out in case law, regardless of how they are referred to in the plans and what element of care is provided.
In this particular case, the policy was not drafted in a restrictive manner. It made no distinction between dwellings in different uses. In fact, there was nothing to suggest that the policy makers had only intended for class C3 dwellings to be covered. The question of whether the dwellings fell into class C2 or C3 was almost irrelevant. What mattered was whether the development contained dwellings or not, regardless of their use. As Mr Justice Holgate found that it did, Rectory Homes was bound to provide 40% affordable housing.
More affordable homes of all kinds?
Although this case ultimately rests on the specific wording of the policy, it clearly increases the risk that similar developments will be expected to provide affordable housing going forward. At the very least, these types of developments now come with more uncertainty as developers and operators get to grips with what relevant policies might mean to them. This could lead to some developers thinking twice about bringing forward extra care accommodation, and they may instead opt for more “traditional” care structures like nursing homes that offer no independent living, in order to avoid the burden of affordable housing.
The effects aren’t necessarily going to be restricted to extra care developments either. There’s no reason why other developments that come within class C2, or class C4 for instance, can’t be deemed to provide residential accommodation in the form of dwellings. If the policy is broad enough and the units allow private domestic existence, it won’t matter how the developer chooses to describe them or what the relevant use class is.
How will it work in practice?
When it comes to the provision of affordable housing, this case may have left us with more questions than answers. Whether on-site, off-site or financial contributions will be expected often depends on the wording of policies, but where those policies were prepared with C3 uses in mind, they may not always translate well to other uses. Both the adopted and emerging London Plan, for example, suggest that affordable housing should be provided onsite except in “exceptional” circumstances. However, this might not be the most appropriate solution for extra care sites and could pose operational difficulties.
There is also a question as to the type of product that local planning authorities will expect. The adopted London Plan dictates that the affordable provision should be split 60% social and affordable rent and 40% intermediate. How would this be reflected in an extra care setting? Will developers follow the build-to-rent sector and adopt a discount-to-market levels approach? Will LPAs allow this? Clearly, unless a plan deals explicitly with these questions already, LPAs now have a lot to consider and developers face a lot of potential uncertainty.
Don’t worry just yet…
Ultimately, there might not be any obligation to provide affordable housing for some sites. Whether a C2 development is required to do so still depends on the wording of the policy. If a certain class is specified as having to comply with the affordable housing obligations, that could exclude any others not specified.
Also, given the uncertainties, arguments for viability can, and should, be made. What is clear is that developers bringing forward these types of development need to do their homework on the local policy position, and should no longer be surprised by demands for substantial amounts of affordable housing.
Rosie Shields is an associate in the planning team at Hogan Lovells
