Vacant Building Credits - What is it and how can it be used?

What is Vacant Building Credit?

 

Vacant Building Credit (VBC) was first introduced by the Government 2014, as an incentive to bring back into use previously developed sites containing vacant buildings.

 

Paragraph 65 of the NPPF states:

 

“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”

 

The accompanying footnote (30) goes on to state:

         

“Equivalent to the existing gross floorspace of the existing buildings. This does not apply to vacant buildings which have been abandoned, or to major development on land within or released from the Green Belt, for which the ‘Golden Rules’ requirements set out in paragraphs 156-157 of this Framework should apply.”

 

In considering whether a building is applicable for VBC, Planning Practice Guidance (PPG) lists the following considerations:

 

• If the building has not been abandoned;
• Whether the building has been made vacant for the sole purpose of redevelopment; and
• Whether the building is covered by an extant or recently expired planning permission for the same, or substantially the same, development.

 

Many local planning authorities have now incorporated guidance on VBC into their Local Plan policies or supplementary planning documents. Whilst this should broadly conform with the Framework, this can often include the Council’s interpretation of 'vacant' or 'abandoned', and in some cases they require a period of marketing to be undertaken.

 

When successful, VBC can either reduce affordable housing, or remove it entirely.

 

How is VBC calculated?

 

The formula for calculating affordable housing is as follows:

 

(Difference between proposed and existing floorspace) divided by Proposed floorspace x Affordable housing policy requirement

 

As an example, DHA’s viability team were instructed to make a case that an existing building in Crowborough would benefit from the application of VBC. The building had been vacant but maintained since 2016 and as a result of a period of marketing, it had been established that it had not been made vacant for the sole purpose of redevelopment.

 

The client had prepared a planning application for demolition of the existing building and the construction of 11 units.

 

• Existing floorspace – 12,000 sqft
• Proposed floorspace – 16,000 sqft
• Affordable housing requirement – 35%

 

When applying the VBC formula, this would be calculated as follows:

 

• Difference between proposed and existing – 4,000 sqft
• Divided by the proposed floorspace – 4,000 sqft / 16,000 sqft = 0.25
• Multiplied by the affordable housing requirement – 0.25 x 25% = 8.75%

 

With the application of VBC, this reduced the affordable housing requirement from 35% (3.85 units) to 8.75% (0.9 units).

 

It had been established with the local planning authority that due to the quantum of affordable required, an off-site financial contribution would be more appropriate. In financial contributions terms, the application of VBC reduced this from £860,000 to £185,000, making a SUBSTANTIAL saving for our client.

 

If you have a site which may be eligible for VBC, please get in touch with DHA's viability lead, Danielle Lawrence, for further detail on how we might be able to support your planning application.