Good News for Developers? The Affordable Housing Contributions (Ten Unit Threshold) Bill 2014-15

The Affordable Housing Contributions (Ten Unit Threshold) Bill 2014-15 (the ‘Bill’) is expected to have its second reading in the House of Commons on 06 March 2015.

At present, local authorities in England can, by way of an agreement under Section 106 of the Town and Country Planning Act 1990, compel developers to build (amongst other things) a certain amount of affordable housing on a site by requiring a Section 106 Agreement to be in place before granting planning permission. Affordable housing is a generic term covering shared ownership, social rented and affordable rented properties.

Many developers, particularly on smaller developments, find that it is difficult to supply social housing in this way as it does not deliver ‘economies of scale’. In addition, the stigma that can be attached to affordable housing by the public can have a knock-on effect on the saleability of adjoining, non-social housing properties built on a site.

As currently proposed, the Bill would prevent local authorities from imposing social housing obligations in a Section 106 Agreement on developments of fewer than ten homes.

Supporters of the Bill are suggesting that this small change in the law could encourage developers to acquire land from landowners, build more homes, provide more jobs and really kick-start the economy. Critics, on the other hand, argue that supplies of affordable housing would dry up and, as the open market is already failing to provide enough homes that people on modest salaries can buy or rent, will lead to ghost towns and villages across the country.

We will, of course, keep you updated as the Bill progresses through Parliament.