Vacant building credit: the affordable housing offset

The vacant building credit lets a developer bringing a vacant building back into use, or demolishing and replacing it, deduct the existing gross floorspace of that building from the floorspace used to calculate the affordable housing contribution. It sits in national Planning Practice Guidance on planning obligations, not in statute, and it applies only where the building has not been abandoned. On a scheme where the existing building is large and the uplift modest, the credit can reduce the contribution to nothing.

That last point is why councils examine these claims closely. The credit is national policy, upheld by the Court of Appeal in the West Berkshire litigation in 2016, and a local plan policy cannot simply disapply it. What a council can do is test whether the building in front of it is really vacant within the meaning of the guidance.

What the credit does to a contribution

Affordable housing requirements are normally expressed as a percentage of units or floorspace above a threshold. The credit changes the base the percentage is applied to. Instead of the whole proposed floorspace, the calculation runs on the net increase, so the arithmetic is proposed gross internal area minus qualifying vacant floorspace, and the affordable percentage attaches only to what is left.

Where the redevelopment adds little floorspace, the credit can wipe out the requirement entirely. Where a five-storey block replaces a two-storey warehouse, it takes a slice off the top and no more.

The credit does not touch other obligations. Contributions towards education, open space, highways works and health infrastructure sit outside it, as does the Community Infrastructure Levy, which has its own separate relief for existing lawful floorspace in continuous use for six of the previous three years. The two mechanisms look similar and are not the same, so do not import the CIL test into a vacant building credit argument.

The vacancy and abandonment tests

The guidance withholds the credit where a building has been abandoned. Abandonment is a legal concept with a settled set of factors drawn from case law: the physical condition of the building, the length of time it has been out of use, whether any other use has intervened, and the evidence of the owner's intentions over that period.

No single factor decides it. A sound building empty for two years while an owner marketed it for letting is unlikely to be abandoned. A roofless barn with saplings through the floor, unused for fifteen years and never marketed, almost certainly is. The middle ground is where the arguments live.

Two further points catch people out. Deliberately emptying a building to claim the credit invites a refusal of the claim, and several authorities say so directly in their supplementary planning documents. And the credit is aimed at buildings that are empty in fact, so a building still in lawful use on the day of the application, even at low occupancy, is not vacant at all. Establishing what the lawful use actually was is a separate exercise, and the same evidential standards apply as in any material change of use assessment.

How the credit is calculated

Work in gross internal area throughout and be consistent, because mixing gross internal and gross external floorspace is the fastest way to have your figures rejected.

1. Measure the existing building's gross internal floorspace from a measured survey, not from the title plan or an estate agent's particulars.
2. Identify which parts are actually empty. Where a building is part occupied, only the vacant part qualifies.
3. Measure the proposed gross internal floorspace on the same basis.
4. Subtract the qualifying vacant floorspace from the proposed floorspace to give the net increase.
5. Apply the adopted affordable housing policy percentage to that net increase.
6. Convert the resulting floorspace back into units or a commuted sum using the council's own methodology.

Step six is where schemes diverge. Some authorities convert by average unit size, some by habitable rooms, some run the whole thing as a commuted payment. Ask for the council's worked method before you build your own, and put both calculations in the Affordable Housing Statement so the officer can follow the reasoning.

Where councils resist

The most common objections are predictable, and each has an answer if the evidence was gathered early.

Councils argue abandonment where the building has been empty for years. They argue that the vacancy was manufactured, particularly where leases were terminated shortly before the application. They argue that the building was in use on the relevant date. They argue that the credit does not apply because the existing use was residential, which is a live point of dispute, since the guidance is framed around bringing vacant buildings back into use and some authorities read it as excluding vacant dwellings.

They also, occasionally, argue that local plan policy overrides the guidance. It does not simply disapply it, though the guidance is a material consideration rather than a rule, and a decision-maker who gives reasons can depart from it. Expect that argument at committee if the scheme is politically difficult.

Where the credit is refused and the contribution is unaffordable, the fallback is a Viability Assessment prepared to the RICS professional standard on financial viability in planning. That is a different argument with a different evidence base, and it is slower, so run the vacant building credit case properly first.

Evidence to submit with a claim

Assemble the evidence before the building is emptied, not after. A claim built from documents that all post-date the application looks exactly like what the guidance is designed to catch.

• A measured floorspace survey of the existing building, with drawings, showing gross internal area by floor and by part.
• Lease and tenancy history covering at least the ten years before the application, with dates of termination.
• Marketing evidence: agents' particulars, letting brochures, listing dates, asking rents, records of viewings and offers.
• Business rates records showing the vacancy period and any empty property relief claimed.
• Utility accounts and consumption readings covering the vacancy.
• Dated photographs of the building's condition, ideally a sequence rather than a single set.
• A short statement of the owner's intentions across the period, supported by board minutes or correspondence where a company owns the asset.

Councils sometimes return applications where the affordable housing position is unresolved, so submit the calculation and the supporting evidence as part of the original pack rather than promising it later. The reasons applications get returned as invalid are frequently this mundane.

An illustrative office to residential offset

The figures here are illustrative and chosen to show the method.

A developer owns a 2,400 m2 gross internal office building, vacant for three years, marketed continuously through two agents, rates paid at the empty rate. The proposal demolishes it and builds 3,600 m2 of flats. The adopted policy seeks 35 per cent affordable housing by floorspace.

Without the credit, the requirement attaches to 3,600 m2, giving 1,260 m2 of affordable floorspace. With the credit, it attaches to the net increase of 1,200 m2, giving 420 m2. On the council's average unit size of 70 m2, that is the difference between roughly 18 affordable homes and six.

Both figures should appear in your statement. Showing the council what the requirement would be without the credit demonstrates that you understand the policy rather than hoping nobody checks the base.

Browse the report types a mixed-use redevelopment usually needs on PlanScope's report index, then draft the affordable housing narrative around the calculation above.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.