Section 106 proposals under NPPF could reduce housing provision, sector bodies warn

The plan for Section 106 requirements comes with the introduction of ‘medium’ sites, categorised as having between 10 and 49 homes.

The proposal would allow developers of these sites to make cash contributions to fulfil their Section 106 requirements in lieu of providing social or affordable homes.

The government believes the change would help smaller house builders unlock developments “to help bring competition and diversity to the market, and support faster building out”. But the affordable housing sector has reacted with concern to the idea.

In its response to the consultation, the Chartered Institute of Housing (CIH) said it disagreed with the proposal. In its statement, the CIH said: “It is vital that we do not lose the significant contribution of affordable homes already being delivered through this [Section 106] process on medium sites.

“For the limited circumstances where cash payments in lieu of on-site delivery are used, by local authority discretion, this money should be ringfenced for new affordable homes, delivered working with registered provider partners within a clear timeframe and provide specific protections for rural areas.”

It also said that the inclusion of accessibility standards was “a missed opportunity” to provide a commitment to build all new homes to higher standards.

Megan Hinch, policy manager at CIH, said: “CIH welcomes the government’s commitment to reforming the planning system to deliver much-needed affordable homes, including support for rural housing, social rent, and stronger links between housing, infrastructure and climate change.

“However, we are concerned about the potential loss of affordable homes through changes to developer contributions on medium sites and urge the government to review this proposal to protect this vital route for meeting local housing needs.”

The National Housing Federation (NHF) was also critical of the Section 106 proposals, warning that they would reduce supply of new low-cost housing, “weaken mixed communities and harm rural delivery”.

Kate Henderson, chief executive at the NHF, said: “Replacing on-site delivery with cash contributions rarely results in new affordable homes.

“This approach depends on local authorities having the capacity, land, funding and expertise to bring forward alternative schemes – conditions that too often don’t exist. In some cases, councils have even had to return unspent funds to developers, despite housing associations being ready to deliver.

“Cash in lieu must remain the exception, not the rule. When used, funds should be channelled directly to housing associations to ensure every pound delivers real, timely and locally targeted affordable homes.”

The NHF’s response did welcome a number of proposals in the NPPF, including the suggestion of a nationally set minimum proportion of social rent, which it said should be set at a minimum of 20% on medium and large sites.