Uncertain future for senior living sector?

Many applications have been delayed due to this ambiguity and many senior living schemes have ended up at appeal with Planning Inspectors presiding over whether a scheme falls within the C2 or C3 use class and if affordable housing policies should be applied. Within this context, there has been ongoing calls for better clarity in the planning system in relation to these matters with some suggesting that a new use class should be created for particular types of senior living.

New planning guidance released last year pointed to the challenges around use class but states that it is up to the local planning authority to consider into which use class a particular development may fall. In the matter of affordable housing, the guidance outlines that plans should set out the contributions expected from development and left the door open for applicants to make a viability case as part of the planning process. For most, this guidance made no material change in terms of how senior living applications were assessed.  

When changes to use classes were announced this year, some wondered whether the Government had responded to calls for a new use class for the senior living sector. However, the announcement on 21 July 2020 relating to reform of the Use Classes Order confirmed that there would be no change to the C2 or C3 use classes. Details on the changes proposed can be found here and these changes will be effective from 1 September 2020.

Since the use classes reform was announced, a High Court decision relating to an ‘extra care’ scheme in South Oxfordshire District Council has been released which contends with matters relating to use class and including the interpretation of planning policy relating to affordable housing. The planning application was refused by South Oxfordshire and subsequently dismissed by the Planning Inspector in 2019 who concluded that the failure to provide a sufficient number of affordable homes would cause "very substantial harm.” The Applicant sought to challenge the Inspector’s decision on several grounds including their interpretation of the Use Classes Order and interpretation of policy on affordable housing.

The classification of the proposed ‘extra care’ as a C2 use was not disputed.

The key question in the challenge was whether the proposal for ‘extra care’ which fell within the C2 use class would be required to provide affordable housing in accordance with the development plan. The development plan seeks affordable housing from sites where there is a net gain of three or more dwellings, subject to viability. The Claimant’s case was centred on the premise that as the ‘extra care’ fell within the C2 use class, and did not fall within the C3 use class, the units within the ‘extra care’ could not amount to a dwelling which would trigger the requirement to provide affordable housing under the development plan.

Mr Justice Holgate noted the development plan’s interchangeable use of the words "Dwelling", "House", "Home" and "Unit.” He observed that the policy did not use the word “dwelling” as a term restricted to the C3 use class and that there was no reference to use classes within the policy at all. He also surmised that the “language of the Order does not support the Claimant’s argument that the extra care accommodation proposed could not represent dwellings” which would trigger the affordable housing policy in this case, going on to state “I have decided that the correct interpretation of a “dwelling” is not confined to proposals for dwellings for use within the C3 Use Class.” This decision makes it clear that a C2 use classification for ‘extra care’ did not automatically exempt the Claimant from the affordable housing policies. The grounds to challenge the appeal were dismissed with the decision issued on 31 July 2020.

It is likely that this decision will place a greater emphasis on applying policy to senior living schemes on the basis of whether they comprise "a unit of residential accommodation which provides the facilities for day-to-day private domestic existence" rather than their use class. Furthermore, unless a policy specifically states C2 uses are exempt, decision makers are likely to apply policies to senior living schemes in C2 use which comprise this type of accommodation. It is noted that this approach is already being implemented by some authorities.

For some senior living operators, the decision will cause concern, solidifying the difficulties of making a senior living scheme with high proportions of communal and service areas and on-site care services stack up financially. For others, it is expected that the decision may alleviate some ambiguity in the planning process, making it clear from the outset that viability processes are essential in both plan and decision making processes. While for others, it is likely to spur on their development of affordable models of senior living for incorporation into their portfolios.

Perhaps the ambiguities around use class and implications for affordable housing and other financial obligations will be nullified if the recent planning reform comes to pass. The Government released its eagerly anticipated Planning for the future paper on 6 August 2020. Amongst other things, it proposes improved infrastructure delivery in all parts of the country and reform of developer contributions to ensure developers play their part. It suggests section 106 contributions (including affordable housing) and Community Infrastructure Levy be replaced by a standardised ‘Infrastructure Levy’ which would be a value-based rate charge with the aim to raise more revenue and deliver at least as much if not more on-site affordable housing than the present. The paper also suggests that the need to consider site viability would be swept away. It is very clear that more detail is needed to understand the implications that these planning reforms may have for the senior living sector and no doubt senior living operators will be keen to participate in the consultation for this paper which runs initially until 11:45pm on 29 October 2020.