Government is considering enabling developers to pay cash in lieu of on-site affordable housing, which trade body warns will disproportionately impact rural delivery

The National Housing Federation has warned that proposed flexibilities to help SME housebuilders deliver on smaller sites could drastically reduce affordable housing development, particularly in rural areas.

kate hendo

Kate Henderson, chief executive of the National Housing Federation, is concerned about the impact of suggested changes to section 106 requirements on small sites

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.

However, the NHF today said if it goes ahead the change could affect the delivery of 32,000 homes over the next decade and could lead to the loss of half of all new affordable homes in rural areas.

An NHF spokesperson said: “Historically financial contributions have rarely matched the true cost of affordable homes and seldom result in new delivery, with local authorities in many cases returning unspent funds to developers as they do not have the capacity or resource to bring forward delivery.”

The NHF said the change would disproportionately affect rural communities, where nearly half of delivery is on sites of fewer than 50 homes.

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 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”.

Topics