Appeal 6003285

The appeal is dismissed.

In the banner heading above, I have used the description of the proposed development as given on the planning application form. That was also the description used by the Council when the application was validated and the evidence before me does not clearly confirm whether the applicant agreed to its amendment before the application was determined.

The different description on the decision notice also referred to a new shopfront. That benefits from a separate planning permission granted in April 2024, reference 24/AP/0523 (the shopfront permission). Although it is shown on some of the drawings, the Planning Statement stated that the shopfront was not included in this application and that the approved plans were provided for reference purposes only. I have nevertheless noted that there is planning permission for the new shopfront and that it is relevant to the viability evidence. I have also noted that the shopfront was included in the description of the very similar development for which planning permission was granted in July 2024 (ref 22/AP/0183).

In response to the appellant’s final comments, the Council has clarified that the Strategic Housing Market Assessment (SHMA) referred to in their statement of case is the most recent version, dated 2019, and that the 2014 date given was an error. A copy of the 2019 SHMA has been provided, and the appellant had the opportunity to provide further comments in response.

Planning permission 22/AP/0183 was for substantially the same development, apart from some changes to external materials and detailing at the rear. However, planning permission was granted with the benefit of a legal agreement which provided amongst other things for a financial contribution of £420K to be paid to the Council and applied by them towards the delivery of affordable housing within the Borough. No similar contribution is proposed in this case. The reason for refusal relates to the absence of the affordable housing contribution, as well as additional planning obligations sought by the Council, namely a late stage review, a financial contribution towards outdoor amenity space shortfall, highway works and a CPZ (controlled parking zone) parking permit restriction.

A Unilateral Undertaking (UU) dated 17 March 2026 was provided while the appeal was in progress, to address the other planning obligations listed in the reason for refusal. Following the Council’s comments on its effectiveness, a second version of the UU was submitted, dated 20 April 2026, along with supporting evidence in response to the points made. The second UU is substantially the same, apart from the date and the amount of the outdoor amenity space contribution, which has been increased in line with the Council’s comments. Both main parties have had the opportunity to comment on the effectiveness of both versions of the UU, and I have taken all comments received into account.

Against that background, the main issue in the appeal is whether the proposed development makes suitable provision for affordable housing, having regard to the provisions of the development plan and National Planning Policy Framework (the Framework).

In the Southwark Plan adopted in 2022, Policy P1 requires amongst other things that development that creates 9 homes or fewer must provide the maximum amount of social rented and intermediate homes or a financial contribution towards the delivery of new council social rented and intermediate homes with a minimum of 35% subject to viability. The supporting text highlights a shortage of social rented and intermediate homes in Southwark, which is described as a priority in the delivery of new homes. At a strategic level, the plan includes a target for 50% of all new homes to be social rented and intermediate tenure, to tackle housing affordability issues in the Borough.

The SHMA evidence underpinning the Southwark Plan identifies that the need for social rented and intermediate housing is approximately 71% of the Borough’s total housing need. Data is also quoted which confirms that some 93% of households in the Borough have a household income that requires social and intermediate housing. Those local circumstances provide the context for the requirements in Policy P1.

In the London Plan 2021, Policy H4 also sets a strategic target for 50% of all new homes across London to be genuinely affordable. Measures to achieve that include a requirement for affordable housing on all major development, but a footnote to the policy states that Boroughs may also require affordable housing contributions from minor housing development in accordance with Policy H2 [name]. Policy H2 defines small sites as being those under 0.25ha and the appeal site is well within that threshold. Policy H2 aims amongst other things to significantly increase the contribution of small sites to meeting London’s housing needs, and to diversify the sources, locations, type and mix of housing supply. While it is a general housing policy, not specifically relating to affordable housing, it emphasises the importance of small sites in meeting overall housing needs. At a Borough level, those include the very significant affordable housing need described in the SHMA and Policy P1.

The Framework states in paragraph 64 that where a need for affordable housing is identified, planning policies should specify the type of affordable housing required. While the expectation is for affordable housing to be provided on site, there is provision for an appropriate financial contribution in lieu where that can be robustly justified. However, paragraph 65 states that provision of affordable housing should not be sought for residential developments that are not major development.

As described above, the Southwark Plan has a clear focus on the delivery of affordable housing in the context of evidenced need and local circumstances, including on sites which are not major development. It was adopted relatively recently, in 2022, at a time when national policy already included similar requirements to those now found in Framework paragraph 65. While the appellant has questioned whether an affordable housing contribution should, in principle, be sought for this non-major development, no more recent or contradictory evidence regarding the current level of affordable housing need, or alternative approaches to the application of Policy P1, has been presented.

My attention has been drawn to the March 2026 London Plan Guidance: Support for Housebuilding, which includes a time-limited emergency route in respect of affordable housing, departing from the requirements in Policy H5 of the London Plan. However, in order to be eligible for that route, residential developments must still meet adjusted affordable housing thresholds, which this proposal does not. As such, this recent guidance does not affect the application of the relevant development plan policies in this case.

The Framework is a very important material consideration, but it is not part of the development plan and the requirements in Policy P1 are applicable to the proposed development. On-site provision can be impractical for small schemes such as this, and Policy P1 specifies that financial contributions may be provided in lieu of on-site provision on sites of 9 homes or fewer. Such contributions are to go towards the delivery of council homes. In the circumstances of this particular case and based on the evidence before me, in my judgement the provisions of Framework paragraph 65 do not outweigh the requirement for a financial contribution towards affordable housing to be made, in accordance with Policy P1.

The appeal site contains a part three, part four storey building plus basement, which incorporates two adjacent units within a terrace fronting [address]. They are of brick construction, with a historic mansard roof above one unit. On the ground floor, there is a substantial shopfront extension to the front and another single storey extension at the rear. These modern, flat roofed additions together make the ground floor considerably larger than the upper floors.

Currently, there is a single Class E1 unit on the ground floor. This was apparently used as a restaurant when the application was determined but was in retail use at the time of my site visit. The basement provides additional commercial floorspace, 1 As defined in the Town and Country Planning ([name]) Order 1987 (as amended) with the plans showing toilet facilities below the former restaurant, but access to that level was blocked off at the time of my site visit.

Above the shop, the first, second and third floors are substantially unused apart from a limited amount of casual storage. They are also in a generally dilapidated condition. All three upper floors are accessed via a single staircase, which is located towards the rear of the shop unit.

Prior approval reference 24/AP/2488 was granted in December 2024 for change of use of ancillary storage areas on the upper floors to two flats (the prior approval scheme). The application was made under Schedule 2, Part 3, Class G of the Town and Country (General Permitted Development) (England) Order 2015 (as amended), which relates to change of use of a building from a use within Class E to a mixed use including up to two flats. However, while that extant approval is an important consideration in relation to the viability evidence, there is no evidence before me to suggest that it has been implemented. I have considered the appeal on the understanding that the upper floors currently provide ancillary storage for the Class E use.

The current shopfront differs from the details on the existing elevation drawings. There is one display window and a roller shutter, which now incorporates the previous doorway to form a single large opening. The evidence does not confirm whether those apparent shopfront alterations have been approved. In any case, whether considered on the basis of the ‘as existing’ elevation drawing or the current shopfront, there is only a single entrance into the ground floor unit, with no separate entrance to the upper floors.

The shopfront permission remains extant but has not been implemented. A single elevation drawing was approved, which indicates what appears to be two adjacent shop frontages, each with a display window, fascia sign and entrance doorway. The appeal proposal would incorporate the same alterations, but the front elevation drawing has been re-labelled to indicate that one of the two entrances would be for the residential units above. However, the shopfront permission is for ‘installation of new shopfront’ and neither the approved drawing nor the decision notice makes any reference to change of use or alterations to the internal layout of the ground floor.

A succession of viability appraisals has been provided on behalf of both parties, initially while the application was under consideration and subsequently for this appeal. The appellant’s most recent appraisal was produced by S106 Management (S106M) and is incorporated in their Appeal Viability Statement dated 17 December 2025. In response, Strettons provided an updated appraisal on behalf of the Council, dated 3 March 2026. I have reviewed the earlier viability evidence, but have focussed on those most recent appraisals, which most clearly set out the inputs which have or have not been agreed during the course of the application and appeal.

The parties have reached agreed figures for Gross Development Value (GDV), build costs and the majority of other inputs. The key factor affecting the outcome of the viability appraisals is the different approaches taken to the [name] (BLV). Both parties have valued the ground floor and basement on an existing use plus basis, reaching broadly similar figures. Both have also included a component for alternative residential use of the upper floors. However, they disagree considerably as to the value which should be attributed to the upper floors as a component of BLV.

Strettons have included a component which reflects the value of planning permission 22/AP/0183 for five flats, taking into account the affordable housing contribution. In contrast, S106M include a higher value derived from the extant prior approval for two flats, in combination with the shopfront permission. The S106M figure for BLV is around £1,285K; over twice [name] valuation of around £612K.

Strettons also considered the implications for BLV of the prior approval scheme. However, they have assessed that scheme as having a nil net value on the grounds that the flats would have a suppressed value due to the only means of access being through the Class E unit. Taking that into account, in their appraisal, the value of the prior approval scheme would not exceed the costs of conversion. Consequently, they advise that particular form of alternative residential use should not contribute to the BLV.

The outcome of the different approaches taken is that Strettons conclude on behalf of the Council that a financial contribution of £385K could viably be made, whereas S106M conclude on behalf of the appellant that no contribution is viable.

Planning Practice Guidance (PPG) confirms that alternative use value (AUV) may be informative when establishing BLV. However, among the factors which should be considered are whether it can be demonstrated that the alternative use could be implemented on the site. In this case, that rests on whether residential use of the upper floors could be implemented, with independent access, through a combination of the prior approval scheme and the shopfront permission, or whether any such residential use would not be truly self-contained, being only accessible via the Class E ground floor unit.

The prior approval scheme was described as being for two self-contained flats. The plans shown that one would be on the first floor, with the other occupying the second floor and mansard extension. On each level, the accommodation would be self-contained, but the flats could only be reached via the existing staircase, which the plans confirm would remain the same. That is located in the rear corner of the original building, well back from the street frontage. It can only be reached from the shop floor, and the prior approval plans do not include any alternative means of access from the street or elsewhere. Therefore, based on the prior approval scheme alone, the two flats could not be accessed independently from the Class E unit.

If the shopfront permission was also implemented, there would be two doorways at the front. However, the second doorway would still be some distance from the staircase, near the back of the shop. Therefore, those approved alterations would still not provide direct or self-contained access to the staircase. In order to create a fully self-contained residential entrance, a new internal corridor would have to be created.

Due to the layout of the building, with its large single storey shopfront, any such internal corridor would have to be of more than insignificant length, in order to connect the new doorway with the staircase. While internal alterations may not of themselves require planning permission, in this case their only apparent purpose would be to facilitate separate residential use of the upper floors. In those circumstances, internal alterations can be indicative of a change of use having taken place, potentially triggering a requirement for planning permission. Even if the shopfront and internal alterations were undertaken first, as soon as the upper floors had been converted to residential use, the use of the second entrance and the associated ground floor circulation space would, on the face of it, be solely for residential purposes.

Neither the prior approval scheme nor the shopfront permission grants permission for change of use of any part of the ground floor to residential. Furthermore, the permitted development rights under which prior approval was granted include conditions restricting ground floor residential uses. Any alternative layout which did not comply with those conditions would not benefit from the relevant permitted development rights. As such, based on the evidence before me, even if the prior approval scheme and the shopfront permission were both implemented, there is considerable uncertainty whether two self-contained flats on the upper floors, with separate access from the street, could be implemented without a further planning permission being obtained.

The only approved scheme which includes a residential entrance from the street is planning permission 22/AP/0183, which the [name] takes into account. In the context of that planning permission, the Council has indicated that some loss of Class E floorspace could be acceptable, to provide a residential entrance. However, the requirement for planning permission also triggers the policy requirements in Policy P1, including the affordable housing contribution. That has not been factored into the appellant’s viability evidence and would impact the BLV and the likelihood of the scheme for two flats being implemented in preference to

The Council’s viability evidence does not ignore the prior approval scheme or dispute that it could be implemented. However, it attributes a lower value to those two potential residential units, due to the lack of a separate access, which would be below the cost of conversion of the upper floors. The basis on which that lower value has been derived is disputed, but no alternative basis for valuing flats lacking separate access has been proposed. The appellant’s alternative valuation is based on the same value per square metre as used for the proposed five flats, which would benefit from self-contained access, so is not directly comparable.

Even if I were to accept the appellant’s view that Strettons’ 50% deduction on the value of the prior approval flats is over-stated, the outcome of their appraisal indicates a healthy level of viability. In general terms, Strettons’ approach more convincingly reflects the AUV of the upper floors and the appellant’s viability evidence does not convincingly establish that a financial contribution is unviable.

Although no affordable housing contribution is offered, a late stage review (LSR) mechanism is included in both versions of the UU. The requirement for a LSR is found in the Council’s Development Viability SPD 2016, to be applied where development does not provide policy compliant affordable housing due to viability. It is, therefore, relevant to the current proposal. The LSR may enable a financial contribution towards affordable housing to be secured, but only in circumstances where the GDV is higher than expected and/or build costs are lower. The LSR formula does not revisit the application viability appraisal as a whole.

The relevant application-stage inputs are agreed between the parties in the most recent versions of the viability appraisals and the figures in the UUs are consistent with those. The LSR cap in the UUs is consistent with the approach in the Council’s Affordable Housing SPD 2025 and GLA Guidance and the sum per habitable room is as given in the Council’s Section 106 and [name] 2025 (s106 & [name]) for minor applications within [name] 2.

Along with other payments, the LSR contribution would be index linked to [name]. However, the Council advises that it should be linked to Building Cost Information Service (BCIS) General Building Costs Index, as specified in the Council’s s106 & [name]. The s106 Agreement attached to planning permission 22/AP/0183 was also indexed to RPI, but that predates the s106 & [name] which was adopted in 2025. This aspect of the UU does not therefore fully accord with the Council’s current guidance on planning obligations. Nevertheless, there is a mechanism for any contribution to increase in line with RPI.

When reviewing the UUs, the Council cast doubt on whether the LSR and other planning obligations were adequately secured, on grounds that a mortgagee with an interest in the land is not party to the UUs. Both parties have provided evidence of title including [name] and [address] records relating to the site. The appellant’s most recent evidence indicates that charges formerly registered at [address] have been satisfied and that the mortgagee referred to no longer has an interest. [name] acknowledge that the Council’s slightly earlier evidence indicated otherwise, it appears the situation may have changed while the appeal has been in progress. For purposes of this appeal, I have proceeded on the understanding that there is no longer any party who could prevent the LSR from being secured.

Overall, the approach to the LSR mechanism in the UUs appears sufficiently consistent with the relevant SPDs and GLA Guidance. It would meet the tests in the CIL Regulations2, being necessary to make the development acceptable in planning terms, directly related to the development and fairly and reasonably related in scale and kind. As far as can be determined from the evidence before me, the UUs would be effective in securing the LSR mechanism. Affordable housing: conclusion

The LSR may secure a contribution towards affordable housing provision, but there is no certainty that would be the case, and it would not be an adequate substitute for an initial affordable housing contribution if that can viably be made. For the reasons given above, I have concluded that an affordable housing contribution in accordance with Policy P1 of the Southwark Plan is justified, and could viably be made, but no such contribution is included in the UUs.

For that reason, I conclude that the proposed development does not make suitable provision for affordable housing. It conflicts with Policy P1, and with the strategic priorities in the development plan for delivery of affordable housing, as outlined 2 Regulation 122(2) Community Infrastructure Levy Regulations 2010 above. In the circumstances of this particular case, the provisions of paragraph 65 of the Framework do not outweigh the conflict with the development plan as a whole.

The UUs provide for a number of other planning obligations, responding to those listed in the reason for refusal. However, those would be to address requirements arising from the development proposed, rather than to secure additional benefits. The open space contribution would mitigate a shortfall in private and communal open space on site, in accordance with the s106 & [name]. [address] would be limited to restoration of the highway following any damage or defects arising from the development, and the wording in the UU does not indicate that any highway improvements would be secured. The restriction on additional parking permits within the [name] would mitigate potential pressure on local parking facilities as a result of this car-free development, thereby avoiding harm, but not offering any net benefit.

[name] also include a planning obligation to secure compliance with a [name] dated October 2022. That statement was submitted with application 22/AP/0183 and is referred to in the s106 agreement attached to that planning permission. However, no such statement was submitted with the current application, and the [name] states that none is required. Consequently, the planning obligation for compliance with the [name] does not relate to the proposal which is before me. Nor is it necessary to make the development acceptable in planning terms. That aspect of the UUs does not meet the tests in the CIL Regulations, so the obligation for compliance with the [name] cannot lawfully be taken into account.

There are some additional areas of disagreement between the parties as to the effectiveness of the UUs. However, since the above obligations would be neutral within the planning balance, there is no need for me to consider further whether they are adequately secured. Nor, given the outcome of the appeal, is there any need to comment further on which of the two UUs would come into effect.

The appeal site is within the [address] Conservation Area (CA), the significance of which derives amongst other things from the strong linear character of [address] itself, the original 18th century plot widths where they can still be discerned, and the later evolution of this busy route, including introduction of the retail frontage set forward of the upper floors, from the 19th century onwards. The terrace from 308 to [address], which includes the appeal site, is a locally listed building. Its upper storeys help to reveal the evolution of buildings along the [address] through the 18th and 19th centuries, making a positive contribution to the significance of the CA. However, at street level, the poor quality modern shopfronts detract.

The new shopfront and replacement windows at the front would enhance the character and appearance of the CA, and the extent to which its significance can be appreciated from [address]. However, the shopfront alterations are not dependent on the outcome of this appeal, having the benefit of a separate planning permission. While they would be incorporated into the proposed development, they could equally be implemented independently, so as to enhance the existing Class E unit. Those alterations would also be secured if the extant planning permission for five flats was implemented.

The extensions and alterations to the rear would be less publicly visible and I concur with the Council’s conclusion that they would have a preserving effect on the CA. The external materials and detailing would be more subdued than those approved with planning permission 22/AP/0183, but the Council’s outstanding concerns relating to the external materials for that version of the proposal were to be addressed by conditions. Even when the amended external materials are taken into account, the extensions and alterations at the rear would preserve the character and appearance of the CA but not positively enhance it.

The proposal would make a minor but positive contribution to the supply and delivery of housing, on a small previously developed site. Indeed, although objections have been expressed by some interested parties, some support has also been expressed locally for the delivery of good quality housing meeting local needs, revitalising the appeal site and improving its appearance.

However, the same benefits could be secured by means of planning permission 22/AP/0183. While delivery of that scheme cannot be guaranteed, the appropriate planning permission is in place. The financial contribution secured by the existing s106 agreement is slightly higher than that now described as policy-compliant in the Strettons evidence, so that is a matter which may need to be resolved between the parties. Nevertheless, based on the evidence before me, I am not persuaded that there is any substantive impediment to implementation of planning permission 22/AP/0183 on viability grounds.

It is nevertheless possible that the landowner would elect to implement the prior approval scheme instead, despite the lack of self-contained access. If so, the contribution made to the supply of housing would be reduced from five flats to two, but that is a small difference in numerical terms. No relevant shortfall in housing land supply or delivery has been articulated in the evidence before me.

There would be no late stage viability review if the prior approval scheme is implemented. However, there is little certainty at this point whether the LSR would provide a tangible benefit, since it is dependent on unpredictable changes in build costs and gross development value. As outlined above, the other planning obligations offered would only mitigate the impact of the development and not contribute any net benefit.

Having concluded that the provisions of paragraph 65 of the Framework do not outweigh the requirements of Policy P1, in the context of evidenced local circumstances, the absence of a financial contribution for delivery of affordable housing is a matter to which I attribute significant weight. There is a reasonable prospect that all the benefits of the proposal can be secured through implementation of the extant planning permission for substantially the same scheme. Even when the alternative fallback position is taken into account, the net benefits of the proposal are inherently modest, and neither those benefits nor any other considerations outweigh the harm arising from the conflict with the

The proposal conflicts with the development plan and the material considerations do not indicate that the appeal should be decided other than in accordance with it. Therefore, the appeal should be dismissed.