Reducing affordable housing contributions – Good news for developers?

14 April, 2014
by: Cripps

In a recent review of economist Kate Barker’s 2004 report on housing supply, the Home Builders Federation has confirmed that England now has a shortfall of over a million homes.

 

The Barker Review concluded that 210,000 private homes needed to be built each year to allow for England’s growing population and to prevent an unsustainable rise in house prices. However, with an average of just 115,000 homes having been built each year since the Barker Review, a deficit of more than a million homes now exists and the Office for National Statistics reported at the end of March that house prices across the country have surged 6.9% in the year to January. The increase has pushed up the average cost of a home in Britain to £254,000.

 

It is clear therefore, that more needs to be done to encourage housing developments and to unlock currently unviable sites.  One of the ways the Government intends to address this issue is contained in proposals of the Planning Performance and Planning Contributions Consultation which was launched on the 23rd of March. The consultation, as well as reassessing when a Council will be deemed to be underperforming, puts forward measures to limit when affordable housing provisions can be used in section 106 agreements.

 

Specifically, the consultation seeks views on proposals to restrict the use of section 106 affordable housing provisions for sites containing 10 units or less (with a maximum combined gross floor space of 1,000 square metres) and residential extensions or annexes (Rural Exception sites excluded).  The consultation also seeks views on proposals to restrict affordable housing provisions in section 106 agreements in relation to buildings which are brought back into any use. Here it is proposed that affordable housing obligations will only apply proportionately for any increase in floor space and not in relation to any reused building.

 

At first glance these measures seem to be a positive move and will encourage smaller scale development and brownfield development.  The measures relating to the reuse of existing buildings provide developers with more site options that will not attract affordable housing obligations. This ‘recycling’ proposal will be in addition to sites where developers are already taking advantage of permitted development rights which allow a change of use from office to residential without a specific planning application and without, therefore, any related section 106 agreement obligations at all.

 

However, the need for affordable housing is also increasing and there is a real concern that these proposals, if enforced, will simply mean more pressure on larger developments to make up for and provide the affordable housing and/or contributions towards affordable housing which have been lost elsewhere. The consultation closes on 4 May 2014 so watch this space!

Reviewed in 2015

Reviewed in 2015

Reviewed in 2015