Vacant Building Credit

What is Vacant Building Credit?

Vacant Building Credit is a policy introduced by the UK government to incentivise the redevelopment of vacant buildings. It was announced in the Written Ministerial Statement (WMS) on 28 November 2014 and subsequently incorporated into national planning policy through the National Planning Practice Guidance (NPPG).

Key Objectives of VBC

1. Encourage Development: Stimulate the redevelopment of vacant buildings by reducing the financial burden of affordable housing contributions.
2. Utilise Existing Structures: Promote the efficient use of land and buildings, reducing the need for new land development.
3. Support Urban Regeneration: Contribute to revitalising urban areas and brownfield sites.

How VBC Works

VBC allows developers to offset the existing floor space of a vacant building against the affordable housing contribution required for a new development. Essentially, the policy provides a credit equivalent to the gross floor space of any vacant building brought back into lawful use or demolished for redevelopment.

Eligibility Criteria for Vacant Building Credit

Not all vacant buildings qualify for VBC. Specific criteria must be met to ensure the policy is applied appropriately.

Definition of a Vacant Building

A building is considered vacant if it is not in use. However, the definition of “in use” can be nuanced and is subject to interpretation by local planning authorities (LPAs).

Key considerations include:

• Duration of Vacancy: There is no statutory minimum period for which a building must be vacant, but the vacancy should not be contrived for the purpose of obtaining VBC.
• Last Known Use: The building must have been in lawful use before becoming vacant.

Exclusions

VBC does not apply in the following scenarios:

1. Abandoned Buildings: Abandoned buildings are not eligible for VBC. The distinction between vacant and abandoned buildings can be subtle and requires careful assessment.
2. Newly Built Structures: The policy does not apply to new buildings or extensions that increase the floor space.
3. Demolished Buildings: Buildings that have been demolished prior to the application for planning permission are not eligible for VBC.

Planning Considerations

Local planning authorities may impose additional conditions or requirements for VBC eligibility. Developers should engage with LPAs early in planning to understand local interpretations and policies.

Calculating Vacant Building Credit

The calculation of VBC involves assessing the vacant building’s gross internal area (GIA) and determining the reduction in affordable housing contribution accordingly.

Step-by-Step Calculation

1. Determine Existing Gross Internal Area (GIA): Measure the GIA of the vacant building to establish the baseline for the credit.
2. Calculate Proposed GIA: Measure the GIA of the proposed new development.
3. Apply VBC: Subtract the GIA of the vacant building from the GIA of the new development to determine the net increase in floor space.
4. Assess Affordable Housing Contribution: Calculate the required contribution by applying the affordable housing policy to the net increase in floor space.

Example Calculation

Assume a vacant building has a GIA of 1,000 square metres. A proposed redevelopment increases the GIA to 3,000 square metres. The affordable housing contribution is based on 30% of the total development.

• Existing GIA: 1,000 sqm
• Proposed GIA: 3,000 sqm
• Net Increase: 3,000 sqm – 1,000 sqm = 2,000 sqm
• Affordable Housing Contribution: 30% of 2,000 sqm = 600 sqm

Thus, the developer benefits from a reduction in the affordable housing contribution due to the VBC.

Benefits of Vacant Building Credit

For Developers

1. Cost Savings: Reducing the affordable housing contribution can significantly lower development costs, making projects more financially viable.
2. Incentive for Redevelopment: VBC provides a strong incentive to redevelop and repurpose vacant buildings, promoting urban regeneration.
3. Flexibility: Developers can utilise VBC to enhance project feasibility and align with broader planning and financial strategies.

For Local Authorities

1. Urban Regeneration: Encourages the revitalisation of vacant and underutilised properties, contributing to urban renewal.
2. Efficient Land Use: Promotes the reuse of existing buildings, reducing pressure on greenfield sites and aligning with sustainable development goals.
3. Economic Growth: Stimulates local economies by facilitating new development and investment.

Challenges and Considerations

While VBC offers significant benefits, it also presents several challenges and considerations for developers and local authorities.

Interpretation and Application

Local planning authorities can interpret what constitutes a “vacant” building differently. Developers should engage with LPAs early to clearly understand local policies and requirements.

Potential for Disputes

Differences in interpretation and application of VBC can lead to disputes between developers and local authorities. Clear communication and thorough documentation are essential to mitigate potential conflicts.

Impact on Affordable Housing Supply

Critics of VBC argue that it may reduce the overall supply of affordable housing. Local authorities must balance the benefits of redevelopment with the need to provide adequate, affordable housing.

Practical Steps for Developers

Early Engagement with Local Authorities

Developers should engage with local planning authorities as soon as possible to discuss potential projects and the application of VBC. This helps identify any local nuances and ensure alignment with planning policies.

Thorough Documentation

Comprehensive documentation of the building’s vacancy status, including evidence of its last use and vacancy duration, is crucial. This documentation will support the application for VBC and reduce the risk of disputes.

Professional Advice

Engaging professional advisors, including planning consultants and solicitors, can provide valuable insights and guidance on the application of VBC. Professional advice ensures compliance with legal and planning requirements and enhances the chances of a successful application.

Case Studies and Examples

Urban Redevelopment Project

A developer identifies a vacant commercial building in the city centre. The building has been vacant for over two years and is in disrepair. The developer plans to convert it into residential flats.

• Existing GIA: 2,500 sqm
• Proposed GIA: 6,000 sqm
• Net Increase: 3,500 sqm

By applying VBC, the affordable housing contribution is based on the net increase of 3,500 sqm rather than the total proposed GIA. This significantly reduces the developer’s financial burden, making the project more viable and contributing to urban regeneration.

Mixed-Use Development

A developer plans to demolish and replace a vacant warehouse with a mixed-use development, including retail and residential units. The warehouse has been vacant for one year, and the proposed development aligns with local planning objectives.

• Existing GIA: 1,200 sqm
• Proposed GIA: 4,800 sqm
• Net Increase: 3,600 sqm

The developer engages with the local planning authority early, providing thorough documentation of the warehouse’s vacancy. By leveraging VBC, the affordable housing contribution is calculated on the net increase, enhancing the project’s financial feasibility.

Conclusion

Vacant Building Credit is a valuable policy tool designed to encourage the redevelopment of vacant buildings, promote urban regeneration, and efficiently use existing structures. While it significantly benefits developers and local authorities, its application requires careful consideration and thorough documentation.

As DLS Solicitors, we are committed to providing expert guidance on the complexities of VBC. Whether you are a developer seeking to understand the policy’s implications or a local authority navigating its application, our experienced team is here to support you. By engaging early, documenting thoroughly, and seeking professional advice, stakeholders can effectively use VBC to achieve successful and sustainable development outcomes.

The redevelopment of vacant buildings contributes to urban areas’ economic vitality and aligns with broader sustainability goals. Vacant Building Credit is essential to this process, providing the necessary financial incentives to bring unused properties back into productive use. Through clear understanding and strategic application, VBC can play a pivotal role in shaping the future of urban development in England.