Vacant building credit against the ten unit threshold

The vacant building credit reduces what you pay towards affordable housing. It does not reduce the number of homes in your scheme, and that distinction decides most arguments about the vacant building credit threshold. A redevelopment of 12 flats on a brownfield site is major development whether or not a vacant warehouse stood there, so the affordable housing policy is engaged, the application is publicised as a major, and the determination period is 13 weeks. What the credit changes is the size of the contribution once the policy bites.

Planning Practice Guidance on planning obligations sets the credit out. Where a vacant building is brought back into lawful use or is demolished and replaced, the applicant should be offered a credit equivalent to the existing gross floorspace of the vacant building, to be set against the affordable housing requirement for the new scheme.

What the credit does to an affordable housing requirement

Think of it as a discount applied to the requirement, not an exemption from it. The authority works out the affordable housing the scheme would otherwise provide under its adopted policy, then deducts the proportion of the new floorspace that matches the vacant floorspace being replaced or reused.

Two consequences follow. A redevelopment that puts back roughly the same floorspace as it removes can end up with a very small requirement. And a scheme that replaces a single storey building with six storeys keeps most of its obligation, because the credit is fixed by what existed rather than by what is proposed.

The credit applies to the affordable housing contribution. It does not touch the Community Infrastructure Levy, which has its own separate relief for existing in-use floorspace with its own six month occupancy test, and it does not reduce other section 106 heads of terms such as education or open space. Developers conflate these regularly, and the appraisal that assumes one offset covers all of them will be wrong by a wide margin.

Proving vacancy, and the abandonment question

The guidance withholds the credit from buildings that have been abandoned. Abandonment is a question of fact, and the courts have looked at four things: the physical condition of the building, the length of time it has been out of use, whether any other use has intervened, and the owner's intentions. A sound building emptied two years ago and marketed since is not abandoned. A roofless shell with trees growing through it is.

Build the evidence file as though the point will be contested, because it usually is.

• Business rates records showing liability and any empty property relief
• Marketing particulars, agents' reports and records of viewings or offers
• Insurance schedules and records of security, inspection and maintenance
• Utility accounts, including capped or standing-charge-only supplies
• Dated photographs of the interior as well as the exterior
• Correspondence with the last occupier and the terminated lease

Councils also resist the credit where a building has been emptied for the purpose of claiming it. The guidance does not reward a landlord who serves notice on a tenant and then applies. If your client's tenant left for commercial reasons, document those reasons.

Measuring the floorspace that counts

The offset is a ratio of floorspace, so the measurement is the arithmetic of the whole argument. The guidance refers to existing gross floorspace. In practice authorities ask for a measured survey, usually on a gross internal area basis, and will not accept figures lifted from a 1980s approved drawing without a check.

Settle these points on the drawing rather than in correspondence later:

1. The basis of measurement, named and stated as a note.
2. Whether ancillary and detached structures are included, and which ones.
3. Whether unheated or derelict parts of the building are counted.
4. The date of survey and who carried it out.
5. The proposed floorspace on the same basis, so the ratio compares like with like.

Where part of the building is still in use, only the vacant part can generate credit, and the boundary between the two needs to be drawn on a plan.

Why the credit does not change the unit threshold

Major development is defined in article 2 of the Development Management Procedure Order 2015 by reference to the number of dwellings, the floorspace and the site area. Ten or more dwellings, or a site of half a hectare or more where the number is not known, makes a residential scheme major. The national affordable housing threshold sits at the same ten unit point, with provision for lower thresholds in designated rural areas.

None of that is affected by the credit. A nine unit scheme with a large vacant building gains nothing from the credit, because it is below the threshold anyway. An eleven unit scheme is above it, and remains above it, however much vacant floorspace is being replaced. That also settles the procedural questions that follow from scale, including publicity, the determination period, the need for a Statement of Community Involvement where local policy asks for one, and whether the decision goes to committee.

Where the credit does interact with the threshold is in the appraisal. A scheme sitting at nine units sometimes makes more sense at twelve once the credit is applied, because the marginal affordable requirement after the offset is smaller than the value of three extra homes. Run that arithmetic before you fix the unit count.

An illustrative offset calculation

This example is illustrative. Figures for a real site depend on the adopted policy and the measured survey.

A vacant two storey office of 600 m² gross internal area is demolished and replaced with 14 flats totalling 1,200 m² gross internal area. The adopted policy seeks 35 per cent affordable housing on major sites.

On a floorspace basis the requirement halves. Some authorities apply the credit to units rather than floorspace, and some convert it into a commuted sum, which changes the answer and the negotiation. Ask the case officer which method the authority uses before the appraisal is signed off, and set out your own method and inputs in the Affordable Housing Statement so the officer can follow it without a meeting.

Local policy and how much weight the guidance carries

Planning Practice Guidance is a material consideration. An adopted local plan policy is part of the development plan, and section 38(6) of the Planning and Compulsory Purchase Act 2004 requires the determination to be made in accordance with the plan unless material considerations indicate otherwise. Where a plan adopted after 2014 addresses the credit directly, that policy is the starting point and the guidance is argued against it.

So read the development plan first. Check the affordable housing policy, any affordable housing or planning obligations supplementary planning document, and the committee reports on comparable schemes in the authority. Where the plan is silent, the national guidance does the work. Where the plan is explicit and recent, expect the officer to follow it.

The tenure split matters as much as the quantum once the offset is agreed, and the policy will usually specify it, so settle the tenure mix the policy asks for at the same time rather than reopening it at the section 106 stage.

Where the credit is refused

Four situations account for most refusals. The building was abandoned rather than vacant. The building was emptied to create the claim. The floorspace evidence did not stand up to scrutiny. Or an adopted policy disapplies the credit in that authority, or restricts it to particular types of building.

A fifth is subtler. Where the existing building is in lawful residential use, replacing it does not generate a credit for the loss of those homes, and the scheme may also face a policy requiring replacement of the existing units. Check the lawful use, not the current occupancy.

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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.