The government announced last week that on sites of ten units or less developers will no longer need to provide affordable housing. The policy change has been implemented to drive up self-build, small scale and brownfield development. Whilst there are limited exceptions for some rural areas, the changes are not welcome within the affordable housing sector. As a consequence, Registered Providers will need to protect their development plans.
The Government consulted in March of this year on measures to encourage small scale developers including those wishing to build their own homes. The consultation included the introduction into national planning policy of a threshold beneath which affordable housing contributions would not be sought.
The driver behind the consultation was to aid delivery of small housing sites. Small scale developers have long cited the payment of affordable housing and other contributions as placing a disproportionate burden on delivery of developments – due to protracted or stalled negotiations over the scale of contributions and the level of contributions making sites unviable.
Ten unit threshold
The response to the government consultation has now been issued, together with a written statement from the Minister of State for Housing and Planning. For sites of ten units or less (with a maximum combined floor space of 1,000 square metres) affordable housing and tariff style contributions for infrastructure will not be sought. This means that on sites of ten units or less no Section 106 Agreement will be required to secure affordable housing contributions.
Rural Areas
Local authorities may choose to implement a lower threshold of five units in respect of sites located within a limited number of specified rural areas.
Where the five unit threshold is applicable and is implemented, the payment of affordable housing and tariff style contributions on developments of six to ten units is to be sought only as a cash payment, payable after completion of the units within the development.
Rural Exception Sites
The changes to national planning policy will not apply to rural exception sites. These are small sites solely for affordable housing within and adjoining designated rural settlements. These communities generally have a population of 3,000 or less and must be identified as a rural settlement within a series of statutory instruments.
A blow for affordable housing?
There has already been much comment on how the changes will adversely impact on the provision of affordable housing, particularly in some rural communities that are not covered by the limited exceptions. Even where the five unit threshold is available, its implementation is at the option of the local authority.
Although rural exception sites are not affected by the changes, they are already by their nature 100% affordable and are generally only delivered by organisations within the affordable housing sector.
The funding of new rural exception sites is likely to be negatively impacted by the deficit created by the removal of the requirement for affordable housing contributions on sites of ten units or less.
Brownfield sites
It is also worth highlighting that the changes do not only affect rural schemes but any ten unit or less site, whether it be in the countryside, a town or in the inner-city.
It will not just be small scale developers who will avoid affordable housing obligations. Large developers who have been able to absorb the cost of provision of affordable housing on smaller schemes can now increase their profit margin.
One has to question whether schemes will now be designed with a smaller number of units to take advantage of the changes and whether measures will be put in place to prevent clever phasing of larger developments from taking advantage of the ten unit threshold.
The phasing of developments to circumvent affordable housing and other contributions is a risk that Registered Providers and other organisations in the sector need to be mindful of. It is probably advisable for them to raise this in their wider discussions with the local authority so as to prevent creative phasing of developments to avoid contributions becoming the norm.
Need to protect
We also recommend that Registered Providers urgently review planned developments (particularly those where they are taking s106 units) that are not yet under contract or are conditional on planning to ensure that the changes do not result in the affordable housing element being removed or where there is scope for the development to be re-planned or phased to take advantage of these changes. There are a number of initial steps that Registered Providers can take to protect their development plans.
For more information on this article please contact Nicki Winstanley at nwinstanley@hylandlegal.uk or on 0161 312 3400.
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This article has been provided for your general interest and information only. It is not legal advice and should not be acted on or relied upon in any way. It does not create a solicitor client relationship between Hyland Legal and any other person. Appropriate legal advice should be taken before applying any information in this document to any facts and circumstances, before taking or refraining from legal action or before taking a decision on any issue.
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