Blyth Valley Borough Council this week lost its Court of Appeal fight to revive its policy setting a high target for affordable housing for new residential development.

The council's policy was quashed in May by a High Court judge who said that property in the area was already "as cheap as chips".

The judge backed a challenge brought by three housing developers, who put rivalries aside to attack the policy in the Blyth Valley Core
Strategy Development Plan, and ruled that the policy was "unsound".

He ordered the Council to reconsider it, and now the Court of Appeal has backed that decision.

In the May ruling, Mr Justice Andrew Collins said that a Government planning inspector on whose recommendation the Council had adopted the policy had failed to consider the economic viability of a policy that set a target of 30 per cent affordable housing in new residential development, and required an element of affordable housing in every development of ten homes or more.

However, at a hearing earlier this month, lawyers for the Council sought to persuade Lords Justice Keene, Lloyd and Hughes at London's Court of Appeal to overturn that decision, and reinstate the policy.

The Council claimed that the judge wrongly substituted his own judgments on the merits of the policy for those of the expert planning inspector who had considered it and reported back to the Council.

It said that the judge wrongly said that the question he had to answer was whether the 30 per cent target was one which was flawed because of the lack of consideration given to its economic viability.

In giving the Court of Appeal's ruling Lord Justice Keene said: "The version of the policy eventually adopted by the appellant depended on the recommendation of the inspector and the legal validity of that policy depends upon the inspector having reached findings and conclusions which were properly open to him and which were not vitiated by errors in his approach.

"Unhappily that is not the situation which emerges once one analyses the inspector's report.

"He failed to reflect the requirement as to the need for an informed economic viability study as part of the process leading to a policy requiring a particular percentage of affordable housing.

"His approach was also vitiated by his perhaps understandable but erroneous application of a presumption of soundness, and his finding that there was no evidence that sites would not come forward if a 30 per cent requirement were imposed is incomprehensible.

"I am satisfied that the process leading to the adoption of the policy was legally flawed. Mr Justice Collins was right to quash that policy."

During the May hearing, Mr Justice Collins had said that a different Government inspector in a previous planning inquiry had found Blyth Valley Council's area to be one of the lowest housing cost areas of the country, adding that it appeared property there is "as cheap as chips".

However, that had not stopped the Council, and a different planning inspector, from approving Policy H4 of the Core Strategy that set a target of 30 per cent of affordable housing, and lowered the threshold for developments requiring an element of affordable housing from 15 to 10.

Persimmon Homes (North East), Barratt Homes and Millhouse Developments brought the case to court, claiming their housing plans were prejudiced by the Council policy, which dramatically reduces the profitability of development schemes.

The policy stated: "A target of 30 per cent of affordable housing will be sought as a proportion of all new housing developments in the Borough.

"This policy will apply to all new housing developments capable of providing ten dwellings or more."

However, the developers argued that, prior to this policy being recommended by the inspector, and finalised by the Council, two other Government inspectors had found in planning inquiries that such a proportion of affordable housing was not needed in the area.

In one of those inquiries, in relation to a planning application for 850 homes in West Blyth, a inspector concluded that he doubted whether even a ten per cent figure should be applied, adding: "That is, even if there is a sound case to be made for any specific provision where Blyth is a low housing cost town in one of the lowest housing cost areas of the country."