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Guidance

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4. Vacant Building Credit (VBC)

The purpose of this Advice Note is to clarify for applicants how we apply Vacant Building Credit in line with the NPPF/NPPG.

Planning Basis

The purpose of the Vacant Building Credit is to incentivise brownfield development and regeneration by reducing affordable housing obligations on qualifying sites.

NPPF and NPPG

Paragraph 63 of the NPPF (Feb 2019) states that:

To support the re-use of brownfield land, where vacant buildings are being reused or redeveloped, any affordable housing contribution due should be reduced by a proportionate amount equivalent to the existing gross floorspace of the existing buildings. This does not apply to vacant buildings which have been abandoned.

The NPPF definition of brownfield (previously developed) land is relevant in interpreting this policy, specifically:

(the site) occupied by a permanent structure, this excludes:

  • land that is or was last occupied by agricultural or forestry buildings
  • land in built-up areas such as residential gardens, parks, recreation grounds and allotments
  • land that was previously developed but where the remains of the permanent structure or fixed surface structure have blended into the landscape

The NPPG provides further clarification that

  • credit equivalent to the existing gross floorspace of relevant vacant buildings when the local planning authority calculates any affordable housing contribution which will be sought. Affordable housing contributions may be required for any increase in floorspace (Paragraph: 026 Reference ID: 23b-026-20190315).
  • the planning authority calculates the amount of affordable housing contributions requires as per the Local Plan. A ‘credit’ should then be applied which is the equivalent of the gross floorspace of any relevant vacant buildings being brought back into use or demolished as part of the scheme and deducted from the overall affordable housing contribution calculation. This applies either to the number of affordable dwellings to be provided or where an equivalent financial contribution is agreed
  • the existing floorspace of a vacant building should be credited against the floorspace of the new development. Paragraph: 027 Reference ID: 23b-027-20190315

The Eligibility for VBC is set out in NPPG Paragraph: 028 Reference ID: 23b-028-20190315, specifically

The vacant building credit applies where the building has not been abandoned.

The courts have held that, in deciding whether a use has been abandoned, account should be taken of all relevant circumstances, such as:

  • the condition of the property
  • the period of non-use
  • whether there is an intervening use; and
  • any evidence regarding the owner’s intention

Each case is a matter for the collecting authority to judge.

The policy is intended to incentivise brownfield development, including the reuse or redevelopment of empty and redundant buildings. In considering how the vacant building credit should apply to a particular development, local planning authorities should have regard to the intention of national policy.

In doing so, it may be appropriate for authorities to consider:

  • whether the building has been made vacant for the sole purposes of re-development
  • whether the building is covered by an extant or recently expired planning permission for the same or substantially the same development

Additional Definitions

The NPPG does not provide definitions of what constitutes buildings or vacant.

For the purpose of VBC,we apply the definitions of ‘building’ and ‘in-use building’ as set out at Part 5, 40 (11) of the Community Infrastructure Levy Regulation as amended by the Community Infrastructure Levy Regulations 2014 (as amended). These regulations state that a ‘building’ does not include buildings:

  • into which people do not normally go
  • into which people go only intermittently for the purpose of maintaining or inspecting machinery
  • for which planning permission was granted for a limited period

CIL regulations also provide a framework for “in-use” (i.e., not vacant) which requires lawful use for a continuous period of at least six months within the three years ending on the day planning permission first permits the chargeable development.

Therefore,we consider VBC is only available where Applicants can evidence that the building is currently vacant and has not been in continuous use for any 6 month period within the preceding 3 years from the day the planning application is validated.

Furthermore, to benefit from vacant building credit the is, the whole physical building structure needs to be vacant, not just a single planning unit or part of the building.

The national guidance does not specify how to calculate floorspace. For consistency Gross Internal Area (GIA) will be used for both vacant and proposed floorspace.

Teignbridge Local Plan

The starting point for any proposal seeking Vacant Building Credit must be the affordable housing policies set out in the adopted Teignbridge Local Plan 2013-2033 and calculations will be based on full affordable housing obligation.

VBC is not a post-viability calculation, it is a stand-alone viability subsidy targeted at bringing brownfield sites into use.

For small windfall sites of 15 units or fewer (i.e. policy compliant non-allocated sites) the Teignbridge affordable housing requirement set out in WE2 calculation allows up to 4 dwellings to be developed without making provision for affordable housing. (See 4.7 of the Teignbridge Local Plan 2013-2033). This netting off of 4 dwellings is intended to improve the viability of small infill and brownfield sites and, coupled with VBC, should enable qualifying brownfield sites to be brought back into effective use.

For any site within an allocation area, even a small brownfield sub-parcel of an allocation area, affordable housing requirements are fixed for the whole of the allocation and the percentage applies to the total number of proposed dwellings or residential floorspace (i.e. no netting off of 4 dwellings).

Is the proposed development eligible for Vacant Building Credit?

Vacant building credit will only be available where the building meets the relevant criteria and robust evidence is provided. VBC is not available for buildings demolished prior to the date when an application has been validated.

National Planning Policy Guidance explicitly excludes rural exception sites from any restrictions on seeking planning obligations.  The NPPF definition of exception sites are those of small scale where the principle of market housing wouldn’t ordinarily be accepted. It therefore follows that the VBC should not be applied in circumstances where this might result in no affordable housing being provided on an exception site. VBC will not therefore applied to rural exceptions sites.

Application for Vacant Building Credit

Applicants who consider that their proposals are eligible for VBC should set out their evidence in a VBC Statement as part of their planning application.  This may be included in the Planning Statement or as a separate document.  VBC should be considered before any viability assessment is undertaken.

The VBC Statement should provide the following information and evidence:

Criteria

Evidence Requirement

Brownfield Site

Confirmation that the site meets the NPPF definition of brownfield/previously developed (excludes agricultural buildings)

Existing Buildings are Vacant

And

the whole building is vacant

Applicants will need to show that the building is currently vacant and has not been in continuous use for any 6 month period within the preceding 3 years from the day the planning application is validated.

Evidence such as Council Tax or Rates records will be required to determine whether or not a building is vacant.  Sworn statements and photographic evidence may provide further evidence.

If any part of the building is occupied or has been occupied within the last 3 years then it will not qualify. 

Evidence that the building has not been made vacant for the sole purpose of redevelopment

VBC will not be applied to building/s that have been vacated solely for redevelopment. Applicants will be expected to demonstrate that the vacancy has arisen for other reasons.  Sources of evidence may include:

  • Estate agent particulars and details of marketing and enquiries
  • Corporate tax records or accounting statements
  • Sworn statements as required.

Confirmation that building is not abandoned

The Applicant must demonstrate that a building is not an “abandoned building” having regard to the working definition of abandonment in the decision of the Court of Appeal in Hughes v Secretary of State for the Environment [2000] which identifies 4 relevant factors: 

  • The physical condition of the building; 
  • The length of time for which the building has not been used for its permitted purposes; 
  • Whether it has been used for any other purposes; and
  • The owner’s intentions.

If the proposal is covered by an extant or recently expired planning permission for the same or substantially the same development, VBC will not be applied.

Details Required for calculation of VBC

Applicants should clearly state the following as part of the VBC statement:

  • Policy Compliant level of Affordable Housing
  • GIA floorspace of the existing building (with floorplans submitted for confirmation) (rounded to nearest m2)
  • GIA of proposed residential development (rounded to nearest m2) (note non-residential floorspace is not included in the calculation)

NOTE: we may agree VBC in principle on Outline applications but cannot assess the deduction proportion until floorspaces to be developed have been approved.  In these cases, potential for VBC deductions will be referenced in a s106 agreement.

In some cases we will agree commuted sums for offsite provision of affordable housing (as per Local Plan Policy WE2 (d) and NPPF para 62).  For such off-site contributions which have been exceptionally and robustly justified, the Council’s offsite affordable housing tariff as set out in the 6 Sept 2016 Executive Report (index linked) and will be applied to the net number of affordable dwellings which would be required after the credit has been applied. Note that the off-site contribution payments are regularly reviewed to take account of BCIS cost increases.  Housing officers will provide an up to date schedule when calculating VBC.

Process for Calculating the Credit

Once we confirm that VBC is applicable to the proposal, and that the appropriate evidence has been provided, the following process will apply: 

  • we will confirm to the applicant that the VBC will be applied
  • In the case of Outline applications we will review the evidence and confirm the principle of VBC and make references in Section 106 agreements are necessary. The final deductions will not be assessed until the reserved matters application is submitted
  • we will confirm that policy-compliant level of affordable housing is proposed, or will agree the value of a commuted sum for offsite provision
  • we will check the submitted GIA floorspace of the existing building/s as a proportion of the proposed GIA floor space of the proposed redevelopment against plans and calculate/confirm the VBC discount proportion
  • we will apply the VBC proportional discount to the numbers of dwellings, or in the case of an offsite commuted sum to the calculated sum
  • we will confirm the required contribution of dwellings or sums with the applicant

Notes:

  1. For wholly residential schemes the total GIA of all proposed dwellings will be used, for mixed use schemes only the GIA of the proposed residential elements only will be used
  2. All calculations will be rounded to the nearest square metre
  3. Where a VBC calculation results in a part dwelling requirement this will be rounded up to the next whole affordable dwelling, e.g. 1.25 affordable dwellings after VBC has been applied will be rounded to 2 whole affordable dwellings
  4. Where VBC is applied, the affordable housing obligation will be sought as a percentage of the remaining floor space. For non-allocated or windfall sites this calculation is “net of 4 dwellings” as set out the table of affordable housing provision calculations found in 4.7 of the Teignbridge Local Plan 2013-2033).For allocated sites, affordable housing requirements are fixed and apply to all sites within the development area (even a small brownfield sub-parcel) and VBC is based on the full obligation

Worked examples of the application of the credit

Example 1 – based on policy-compliant affordable dwelling contributions

A proposal to provide a 25 unit (1875 m2 @ 75meach) 2 bed housing scheme on a Brownfield site, on which currently sits a vacant building of 300m2.  Where the scheme should provide policy compliant 7.5 dwellings – rounding to 8 AH (@30%) as per the Local Plan.  The process is simply to calculate and apply the Credit Proportion. 

  • VBC Proportion is (existing building GIA divided by the application development GIA)(300m2/1875 m2  Therefore 16% is deducted from the on-site affordable housing requirement as follows:

(Required dwellings – (credit proportion * required dwellings))

8 dwellings – (.16 * 8 dwellings) = 6.72 dwellings (rounding back to 7)

  • total number of affordable units required is 7

 Example 2 – Commuted Sums for Offsite affordable housing

The proportional calculation is applied on commuted sums set out in the our offsite affordable housing policy table.  This table is based on average floor sizes for dwellings, and standard build costs and plot values and are specific to the proposed dwelling mix.  The affordable housing obligations are calculated as a representative mix of the overall residential development. 

Taking the case above, a proposal to provide a 25 unit (1875 m2 @ 75m2 each) housing scheme on a brownfield site on which currently sits a vacant building of 300m2, but we have agreed it would not be desirable or practical to deliver the affordable homes within the development. Calculating the VBC proportion is the same as above:

  • VBC Proportion is (existing building GIA divided by application development GIA)    (300m2/1875m2) = 0.16 (proportion is 16%)

Therefore 16% shall be deducted from the off-site affordable housing requirement as follows:

  • 8 affordable 2 bed house offsite contribution tariff (2019 figures) is 8 x £78,976= £631,808
  • 16% discount is applied to the AH financial obligation
  • £631,808  -  (£631,808 * 0.16) = £101,089.28 VBC discount

Off-site contribution payable would be

£631,808  - £101,089.28 =  £530,718.72

Interaction with CIL

Applicants will need to be careful about the interaction of CIL credit for ‘in use buildings’. Existing ‘in-use buildings’ act as a credit on the ‘chargeable development’ CIL charge. Each square metre of existing building on the site, reduces the CIL by one square metre. The CIL Regs define the credit as applying to ‘in-use buildings’ and buildings meet this definition if the buildings are:

  1. present on the day that planning permission first permits the development; and
  2. contain a part that has been in lawful use for a continuous period of at least six months within the period of three years ending before the planning permission first permits the chargeable development.

The day planning permission first permits the chargeable development is the day the last reserved matter is approved (unless the applicant and LPA agree to defer until pre commencement conditions discharged).

Applicants should not seek to claim ‘in use’ buildings for CIL credit, while at the same time arguing vacancy for VBC. Applicants will need to consider both credits carefully and plan their development accordingly.  

Viability

If development viability remains an issue following application of the VBC then a viability appraisal would need to be submitted if a further reduction in the provision of affordable housing is sought.  It should reflect the impact of VBC and would need to demonstrate why the net affordable housing requirement cannot be met. 

For further information, please contact

housing@teignbridge.gov.uk

planning@housing.gov.uk