Neighbourhood development policy to block new-build second homes is lawful

Earlier this month, the High Court held that the St Ives Neighbourhood Plan which requires all new open market properties to be sold as ‘primary residences’ is lawful.

The ruling dismissed a local developer’s argument that the Plan is incompatible with article eight of the European Convention on Human Rights (right to private life) and contrary to the requirements of European Union law to consider reasonable alternatives to the Plan’s policies.

Under the Localism Act of 2011, if a referendum called in relation to a neighbourhood plan receives more than 50% of voters’ support, the policies will carry real legal weight and the local planning authority must bring them into force.

Previously, more than 80% of local residents who participated in a referendum voted in favour of the Neighbourhood Plan with many of the voters citing second home ownership as the key contributing factor to soaring house prices in St Ives. These fears are not without merit as recent statistics produced by the town council indicate that at least 25% of private dwellings in the area are classed as second homes.

Whilst the judgment will be popular amongst residents, there are concerns that the prices of existing housing stock could be pushed up as a result of the restrictions only applying to new build homes. In addition, some developers have expressed concerns that the rules could make development prospects less attractive, which could also lead to upward pressure on house prices.

The ruling will without doubt increase the likelihood that other neighbourhood plans such as the Roseland Plan and The Lyn Plan that have advocated similar policies will become law. Similar restrictions will be able to be put in place by local councils if it can be shown that the high proportion of second homes in their district is having a negative impact on the sustainability of the towns and villages in their local neighbourhood.

It will be interesting to see how the implementation of such neighbourhood policies abides with the salient government ambition to build 200,000 homes per year up to 2020, with yet another constraint on developers in the provision of houses in accordance with free market demand.

For more information please contact Lucy Smallwood, Partner and Head of the Residential Development team on lucy.smallwood@michelmores.com.