"...Although he had planning permission, Mr Davies’ house was subject to a restrictive covenant not to do anything which would be a nuisance or annoyance to his neighbours. Unfortunately Mr Davies’ proposed extension would have reduced the river view of five inland properties and the owners of those properties objected on the ground that they would find this ‘annoying’...."
If planning permission included the restrictive covenant, then the neighbours have done nothing but uphold their rights. And why should have they forfeited their 'view'? Some properties values depend very much on the view they offer.
It is the issuers of the restrictive covenant, not the neighbours, the obstacle.
Any social housing development cannot override this just by claiming the moral right that there will be homeless people being housed. The neighbours have done nothing else but using the restrictions to protect the value and enjoyment of their assets, this is what most commonsense people would do in most similar circumstances.
Of course this case might be used by NIMBYs. But that's no different from any other law. As any other law any citizen having access to it will use it for whatever reason, good, bad or indifferent...
In the presence of restrictions as the one in this case, it is up to the social developer to pursue and promote a strategy inclusive of anyone who might oppose a development. How in practice to do this, and how well and effetively this is done, will depend on how resourceful the developper is.