Vacant building credit and affordable housing contributions

Vacant building credit reduces an affordable housing contribution by the gross floorspace of the vacant building you are reusing or replacing. Where it applies, the contribution is calculated on the net increase in floorspace rather than the whole scheme, which on a conversion of an empty office block can cut the requirement to nothing.

It is guidance rather than policy in a local plan, which is why councils resist it and why the argument is usually about whether the building counts as vacant at all.

What the credit does to an affordable housing requirement

The mechanism is arithmetic. Instead of applying the local plan's affordable housing percentage to the total floorspace or unit count of the proposal, the authority applies it to the uplift: proposed gross floorspace minus the existing gross floorspace of the vacant building.

Take a scheme of 3,000 m² of residential floorspace on the site of a 2,000 m² vacant warehouse, in an authority seeking 30 per cent affordable housing. Without the credit, the requirement bites on 3,000 m². With it, the requirement bites on the 1,000 m² uplift, so the affordable element falls to roughly a third of what it would otherwise be. That example is illustrative, and the mechanics of how each authority converts floorspace to units vary.

The credit is expressed as a financial credit equivalent to the existing floorspace, so on schemes where the contribution is a commuted sum the adjustment is straightforward. Where the policy requires on-site units, the conversion from floorspace to units is where most of the negotiation happens.

The conditions for claiming it

The Planning Practice Guidance on planning obligations sets out the credit and its limits. The building must be vacant, it must be brought back into use or demolished and replaced, and the credit does not apply to buildings that have been abandoned.

Beyond that the guidance is short, which cuts both ways. It gives no minimum vacancy period, no marketing requirement and no evidential standard. Authorities fill the gap with local plan policy or supplementary guidance setting their own tests, commonly a vacancy period of one to five years and a requirement to show the building was not emptied to claim the credit.

Whether such local tests are lawful has been argued repeatedly. The Court of Appeal upheld the guidance itself as lawful in 2016 after the High Court had quashed it. A local policy that effectively disapplies the credit is a different question, and the answer turns on the wording of the plan and the weight the decision maker gives to the guidance. Expect a debate rather than a clean answer.

What counts as vacant and what counts as abandoned

Vacancy is a question of fact: nobody is using the building for its lawful purpose. Abandonment is a legal conclusion that the use has ceased for good, drawn from the physical condition of the building, the length of the period of non-use, whether any intervening use has taken place, and the owner's intentions.

A building can be vacant for five years without being abandoned, if it has been maintained and marketed and there is evidence of an intention to re-let. A roofless shell that has been empty for fifteen years with trees growing inside it is the other case.

The distinction has a practical consequence. An abandoned building loses its lawful use, which affects more than the credit: it affects the fallback position, any argument about the existing use value in a viability case, and the planning unit itself. Advisers sometimes argue abandonment for one purpose and deny it for another in the same submission, which an officer will notice.

Deliberate vacancy is the other battleground. Where a building was tenanted until the applicant served notice to create a vacancy, authorities argue the credit should not apply because the scheme is not bringing an empty building back into use. The guidance does not say that in terms, and the argument succeeds or fails on the facts.

Evidence of vacancy

Assemble this before the application rather than in response to a committee report:

• business rates records showing empty property relief and the dates it ran
• utility accounts and consumption data showing minimal or no usage
• lease documentation, surrender deeds or notices showing when occupation ended
• marketing particulars, agents' reports and records of enquiries and offers
• dated photographs of the interior and exterior across the vacancy period
• an energy performance certificate and any condition survey carried out during the period
• maintenance and insurance records, which rebut abandonment

Marketing evidence does double duty. It shows vacancy, and it answers the authority's likely argument that the building could have been retained in its existing use. Where an agent has marketed the premises at a realistic rent for a sustained period without success, that is the single most useful document in the bundle.

Set the evidence out in the Affordable Housing Statement rather than burying it in a covering letter, and state the floorspace figures with the measurement basis you used.

How the credit is calculated

Gross internal area is the usual basis, although the guidance refers to gross floorspace, so state which you have measured and why. Then:

1. Measure the existing gross floorspace of the vacant building, excluding any part that is not vacant.
2. Measure the proposed gross floorspace of the development.
3. Subtract the first from the second to give the net uplift.
4. Apply the local plan's affordable housing requirement to the uplift.
5. Convert the resulting floorspace figure into units or a commuted sum using the authority's own methodology, and show the working.

Partial vacancy is the awkward case. Where a building is half let, the credit applies only to the vacant part, and the floorspace split needs to be measured and evidenced rather than estimated from a floor plan.

Demolition and replacement works the same way as conversion. The credit attaches to the floorspace that existed, not to the building surviving.

Authority resistance and common refusals

Three objections recur. The first is that the building has been abandoned, which if accepted removes the credit entirely. The second is that the vacancy was engineered. The third is that local plan policy sets a vacancy test the building does not meet.

A fourth, less often stated, is simple arithmetic resistance: the credit reduces affordable housing delivery against targets the authority is measured on, so officers look for a reason to disapply it. Anticipate that by making the evidence difficult to argue with and by addressing abandonment head-on in the submission instead of waiting to be asked.

Where the authority refuses to apply the credit, the options are to negotiate the conversion from floorspace to units, to agree a review mechanism in the section 106 agreement, or to appeal. If circumstances change after completion, a deed of variation under section 106A is the route to adjusting what was agreed.

Interaction with viability evidence

The credit and a viability case are different arguments and should be kept apart. The credit adjusts the policy requirement before viability is considered. A Viability Assessment then tests whether the adjusted requirement can be delivered.

Running them together weakens both, because an authority can argue that the existing use value relied on in the viability appraisal is inconsistent with the vacancy relied on for the credit. Set out the credit first, establish the adjusted requirement, then appraise.

One further trap. The Community Infrastructure Levy has its own existing floorspace offset, and the test there is almost the opposite: regulation 40 of the Community Infrastructure Levy Regulations 2010 allows the deduction of retained or demolished floorspace only where the building has been in lawful use for a continuous period of at least six months within the three years before permission first permits development. A long vacancy that strengthens the affordable housing credit can therefore destroy the levy offset. Model both before choosing a strategy, and note that other levy reliefs work on their own conditions, as the self-build exemption shows.

Rates, charging schedules and plan policies all change, so take the affordable housing requirement from the adopted plan and the levy position from the current charging schedule rather than from a previous appraisal.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it.