Small developers hit with affordable housing ruling

The decision for two councils to challenge a court ruling looks set to hit small residential developers, who will now see schemes of up to 10 homes become economically unviable, reports Richard Carr.

No longer encouraged

Richard Carr Small Developers

How will the recent court ruling affect small housing developers?

Reading and West Berkshire councils both challenged the exemption that residential developers received on affordable housing payments, claiming that it has a negative effect on affordable housing numbers.

The new ruling is likely to affect urban residential development and small rural sites, according to legal experts Coffin Mew.

The government originally saw the exemption as a way to encourage residential developers to bring forward and build small housing schemes. The government hoped that by doing so it would help meet the country’s current housing shortage.

Massive blow

“This decision is a major blow for smaller residential developers looking to bring forward schemes in urban environments,” said Nick Leavey, partner and head of commercial property at law firm Coffin Mew.

“The economic viability of small schemes is often on a knife edge, and this decision is likely to pull the rug from underneath those difficult to develop sites. It is also likely to have a negative effect on land values for future deals, exacerbating the housing crisis in the South East further. Nobody wins from this decision,” he added.

Job opportunities

As a result of the recent growth within the real estate industry in the UK, the number of jobs within the market has increased by 11%. Jobs within the market are currently the top vacancies on a number of job sites, whilst the number of people actively searching for careers in the industry has increased by 10% since 2014.

“The return of positive conditions in the UK housing market for both buyers and sellers, suggest it’s prime time for job seekers in this sector to take advantage of such opportunities,” said Gerard Murnaghan, Indeed’s vice president for the EMEA region.