WIREDGOV

A call is being made for government to rethink the exemption that allows developments of fewer than 10 units, and empty buildings, to avoid having to contribute towards affordable housing.

The Local Government Association (LGA) is asking for a more flexible system to be introduced so that contributions, known as Section 106 obligations, can be asked for from developers of smaller sites if the needs of local communities warrant them.

The change in guidance would allow councils to reflect local market conditions and agree contributions with developers at an early stage. This will ensure that viability concerns are addressed and lengthy negotiations avoided.

Councils are keen to support measures to increase home ownership, but affordable housing needs to be a key component of this. Ambitions to build more homes to meet the needs of communities should include an adequate supply of affordable housing appropriate to the development and the need.

That involves working closely with developers to get the best deal for local people while allowing development to go ahead. Councils already support the delivery of small-scale housing sites and brownfield sites.

LGA Housing Spokesman Peter Box said:

"Councils have a crucial role in tackling the housing shortage and ensuring good quality and affordable homes where they are needed and with the infrastructure required to support them.

"However, there is evidence that these reforms are hampering the ability of councils to secure new homes and also impacting on planning applications already in the system, with some developers seeking to remove previously agreed affordable housing contributions.

"Councils are acutely aware of the importance of striking a balance between the requirement for affordable housing on new developments and the potential effect on developments across their area.

"This is best achieved through robust and transparent viability assessments that are much more sensitive to local conditions and improvements to the system that will see s106 agreements agreed with developers upfront to avoid lengthy delays in negotiations.

"Local authorities already support the delivery of small scale housing sites and brownfield sites to meet housing needs and enable economic growth. This includes negotiating affordable housing contributions with developers on a case-by-case basis to enable development to come forward wherever possible."

In a recent survey carried out by the LGA, which represents more than 370 councils in England and Wales, almost 80 per cent of councils said the introduction of the exemption had hampered their ability to build affordable homes.

In addition to exemptions to Section 106 payments, there are also proposals to take away capital receipts from the sale of council assets, reductions in social rents and reductions in grant subsidies.

Seventy-seven per cent of planning officers said the new exemption policy would result in a decrease in new affordable homes in their areas, while 66 per cent said the change was having a negative impact on planning applications already in the system.

The most common was a refusal by developers to pay affordable housing contributions which had been agreed in principle before the announcement was made last year (31 per cent).

The second impact most experienced by councils was the withdrawal and re-submission of planning applications with the affordable housing element removed.

Changes announced both in last week's Budget and before, have made it more difficult for councils to ensure the right level of affordable housing is built. In addition to exemptions to Section 106 payments, there are also proposals to take away capital receipts from the sale of council assets, reductions in social rents and reductions in grant subsidies.

The LGA's survey also found:

• 85 per cent of respondents said that the vacant building credit would result in a smaller number of new affordable homes and/or a decrease in financial contributions towards new affordable homes
• More than nine in 10 respondents who had previously accepted financial contributions towards affordable homes said the new policies would result in a decrease in financial contributions towards new affordable homes in their area
• Councils were already varying levels of affordable housing contributions required on sites of less than 10 units to enable development to be brought forward, before the new policy was introduced.

Section 106 Exemptions Survey 2015

Case studies

Herefordshire Council

On one site a planning application had been approved for 15 new dwellings, five being affordable. Following the national policy changes, a planning application was re-submitted for the same site for only 10 dwellings, none being affordable. On another site a planning application submitted for 10 units refers to the changes in national policy and proposes no affordable houses. Prior to the policy changes the application would have generated four affordable dwellings or a financial contribution, subject to viability.

Scarborough Borough Council has identified a loss of £350,000 as a result of the loss of financial contributions on development schemes under 10 dwellings on planning applications that are still being considered or have already been approved. They have calculated that 26 affordable homes will also be lost through the applying the Vacant Building Credit on schemes where planning applications are still being considered or have already been approved.

In the North York Moors National Park recent housing completions have totalled around 30 homes per year, half of which were delivered through rural exception sites with the remaining from single plots. Since the national policy changes, the National Park has received three planning enquiries for sites of 10 units or less which under the old arrangements would have resulted in seven units of affordable housing. Now just one of these sites will deliver a financial contribution.

Notes

Background

Methodology

1. In 2014, new s106 affordable housing exemptions came into force. These included new rules that introduce into national policy guidance a threshold beneath which affordable housing contributions should not be sought. The threshold is for developments of ten units or less (and which have a maximum combined gross floor space of no more than 1,000 square metres).
2. Councils are able to apply a lower threshold in areas designated as ‘rural' under S157 of the 1985 Housing Act, which includes National Parks and Area of Outstanding Natural Beauty. In these areas, Local Planning Authorities (LPAs) should not seek an affordable housing contribution from sites of five units or less.
3. The LGA surveyed local authorities to establish the impact of these new exemptions. The results of which are intended to feed into lobbying and advocacy work and used in discussions with Ministers about the impact these changes will have on the delivery of affordable housing in local areas.
4. The LGA has developed proposals for improving the section 106 process. This includes applicants identifying at pre-application stage whether a planning application would include agreement to local plan requirements. If not, they would be required to provide information on what it does agree, alongside robust evidence on why it cannot achieve the other requirements. This would make the process of agreeing section 106 contributions faster and more transparent. Pre-application discussions and early engagement can identify potential issues with proposed developments before an application is submitted. This provides a route to agreeing an in principle package of planning obligations and highways contributions associated with the development early in the planning process. http://www.local.gov.uk/documents/10180/6869714/LGA+submission+Section+106+Planning+Obligations+-+speeding+up+negotiatio....pdf/f8516485-9b57-48aa-af93-2ee8c557129b
5. An online survey comprising 10 questions was sent electronically to heads of planning in all 326 councils in England. It was in the field between 3 February 2015 and 11 March 2015; reminders were sent to non-responding councils during the data collection process.