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Section 106 replacement will deliver ‘at least as much’ affordable housing, says government
Overhauls to the planning system replacing Section 106 agreements with a new flat rate levy will deliver “at least as much, if not more” on-site affordable housing, the government has claimed.
The Planning White Paper, published today and titled Planning for the Future, proposes scrapping Section 106 and the Community Infrastructure Levy in favour of a nationally set value-based charge for developers.
This Infrastructure Levy system for securing social benefits from development will “sweep away months of negotiation of Section 106 agreements and the need to consider site viability,” the document said.
“We will ensure that affordable housing provision supported through developer contributions is kept at least at current levels, and that it is still delivered on site to ensure that new development continues to support mixed communities,” it added.
In his foreword to the paper, housing secretary Robert Jenrick said the reforms “seek a significantly simpler, faster and more predictable system” where all developers “pay a fair share of the costs of infrastructure and the affordable housing existing communities require”.
Ahead of the document’s publication as initial details emerged last night, housing sector figures raised concerns that plans to axe Section 106 could deal a blow to the delivery of social and affordable housing.
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Section 106 planning agreements see developers deliver affordable homes in exchange for permission to build and are the biggest contribution to affordable housing supply.
In 2018/19, the mechanism accounted for 49% of all affordable homes completed in England.
But the government said in its white paper that the system, introduced in 2001, is “complex, protracted and unclear”.
More than 80% of planning authorities agree that planning obligations cause delay, the document said, adding that the current system acts as a barrier for smaller builders and creates “uncertainty for communities about the level of affordable housing and infrastructure that development will bring”.
The new Infrastructure Levy mechanism for developer contributions will respond to local needs and be transparent, consistent and buoyant so that price uplifts are captured, the government claimed.
It will be charged on the final value of development – with a minimum threshold below which nothing would need to be paid – and be levied at the point of homes being occupied.
Councils would have the power to decide how to spend the Infrastructure Levy – with schools, transport and health provision also funded through the mechanism.
However, affordable housing could be ringfenced, the consultation suggests, with local authorities able to demand on-site provision and specify tenures.
It also moots an alternative whereby councils, or affordable housing providers acting on their behalf, could have “first refusal” to purchase a set proportion of on-site properties at cost price to use for affordable homes.
Exemptions from planning obligations will be removed – meaning schemes developed through permitted development rights (PDR) would be subject to the Infrastructure Levy.
At present, PDR developers dodge the need to provide affordable housing or infrastructure.
Developers would also be “incentivised to deliver high build and design quality for their in-kind affordable homes”.
If no social landlords want to purchase low-quality affordable homes built by developers, councils could be able to demand cash contributions instead, the document proposes.
The new levy system forms part of widespread changes to planning laws contained within the white paper.
A consultation on the proposals will run until 29 October.
