Allowing housebuilders to offer cash instead of onsite affordable housing on small sites ‘sensible move’ says HBF

The Home Builders Federation has said enabling housebuilders to pay cash in lieu of affordable housing on smaller sites is a “sensible move” given the lack of demand for section 106 homes from housing associations.

The housebuilder trade body’s stance puts it at odds with the position of housing association body the National Housing Federation, which earlier this week warned removing on-site affordable housing requirements on smaller sites would reduce affordable housing delivery, particularly in rural areas.

An HBF spokesperson said: “There is currently a lack of housing associations in the market to take on the section 106 homes provided by housebuilders as part of the planning agreements.

“This is particularly the case on smaller sites, with HAs even less keen to take on just a few homes. Allowing SME builders to pay a cash equivalent to the local authority is a sensible move that will ensure sites are not delayed by the absence of housing association purchasers and actually support the delivery of additional affordable housing elsewhere.”

He added that if a site does not come forward as a result of a lack of S106 purchaser, “no private or affordable housing results.”

The government in its consultation on changes to the National Planning Policy Framework said it is exploring enabling developers to discharge section 106 affordable housing requirements through cash payments to local authorities instead of providing the homes on site.

The move, which would only apply to sites of between 10 to 49 units, is being considered to help SME housebuilders, which the government says are disproportionately affected by uncertainty and delay through section 106 negotiations.

In its NPPF consultation the government said it will look at the “benefits and drawbacks” of the change.

It said: “Further consideration of this policy proposition would have to take into account its impact on the government’s manifesto commitments to strengthen the existing developer contributions system and to deliver the biggest boost in social and affordable housebuilding in a generation. It would also have to account for the need to ensure payments reflect an appropriate value, and the imperative that such payments could be spent effectively and quickly so as not to push social and affordable housing delivery timescales far into the future.”

An MHCLG spokesperson today re-iterated to Housing Today no decisions have yet been taken on the future of section 106 agreements but said the government is “committed to making the process simpler and more transparent”.