Small developers could be hindered by UK court ruling on affordable homes

Posted on: August 6th, 2015

The UK courts have delivered a blow to small residential developers, potentially making schemes of up to 10 homes economically unviable, according to legal experts.

The decision, which concerns the exemption small residential developers have previously had from contributions towards affordable housing, will particularly affect urban residential development and small rural sites.

The exemption was introduced by the government to encourage residential developers to bring forward smaller housing schemes and to redevelop compact urban and rural spaces to help meet the chronic housing shortage.

However, two local authorities, Reading and West Berkshire, have successfully challenged this exemption, arguing that it would have a negative effect on affordable housing numbers.
‘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 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.

Meanwhile, real estate industry in the UK has seen an 11% growth in jobs due to the recovery in the property market. Jobsite Indeed research found that opportunities for trainee estate agents, quantity surveyors and property managers are among the top five. London, Manchester and Birmingham top the list for vacancies.

Also, the number of people actively looking for careers in this industry has increased 10% since 2014, which the firm says suggests that job seekers are starting to realise the potential within this market.

‘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.