A policy to exempt small developments from having to make affordable housing contributions has been quashed by the High Court. In the far reaching ruling handed down on Friday the 31st ofJuly, the High Court ordered that the policy be removed from the government's national planning practice guidance.

Reading Borough Council and West Berkshire District Council had jointly asked the High Court to quash the planning guidance which exempts small development sites from the need to have affordable housing included on them. The two councils claimed that the policy, which was introduced in a ministerial statement in Parliament last November, would reduce the amount of affordable housing across the country by 20% and would have a particular impact in their areas, as well as providing a windfall to landowners and developers.

Mr Justice Holgate quashed the policy, which excluded developments of 10 homes or fewer, or 1,000 square metres or less, from the requirement to provide or contribute to affordable housing provision. In rural areas, a lower threshold of five homes would apply.

The judge ruled that part of the policy was incompatible with the legal framework for planning. As a result of his decision he ordered that the government pay the councils' £35,000 legal costs incurred while bringing the case to court. The government has now removed paragraphs from a section on planning obligations in the national planning practice guidance related to the small development policy and the vacant building credit.