10-unit threshold introduced for Section 106 affordable housing + tariff style contributions

What happened?

On 28th November 2014 the Department for Communities and Local Government ("DCLG") published revised planning guidance introducing a new 10-unit threshold for Section 106 affordable housing and tariff-style contributions aimed at reducing planning costs for small scale and self-build development.

What the new guidance says?

  • The renewed guidance provides that contributions should not be sought from developments of 10-units or less, and which have a maximum combined gross floor space of no more than 1000 square metres.
  • In "designated rural areas", local planning authorities may choose to apply a lower threshold of 5-units or less. No affordable housing or tariff-style contributions should then be sought from these developments. "Designated rural areas" are National Parks and Areas of Outstanding National Beauty, as well as any additional rural areas designated by order of the Secretary of State.
  • If the 5-unit threshold is implemented then payment of affordable housing and tariff-style contributions on developments of between 6 to 10 units should also be sought as a cash payment only and be commuted until after completion of units within the development.
  • Affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension of an existing home.
  • "Tariff-style Contributions" are standardised contributions made to local authorities intended to provide common types of infrastructure for the wider area. The implementation of CIL (Community Infrastructure Levy) regulations will restrict such tariffs from April 2015.
  • The policy does also not apply to Rural Exception Sites: these are small sites where planning permission is granted for affordable housing in perpetuity in order to meet the housing needs of the local community.
  • A financial credit, equivalent to the existing gross floorspace of any vacant buildings brought back into any lawful use or demolished for re-development, should be deducted from the calculation of any affordable housing contributions sought from relevant development schemes. This will not apply to vacant buildings that have been abandoned.

Implications for Local Authorities

Despite the 5-unit threshold for "designated rural areas," it is likely that authorities, operating in tightly constrained areas that rely heavily on small site developments, will suffer under the new guidance. This could potentially lead to local councils favouring larger-scale housing developments in rural areas so as to meet their affordable housing targets or, conversely, some developers seeking to build fewer homes on smaller sites to avoid having to pay the contributions.

However, even for sites where a threshold applies, authorities can still seek obligations for site specific infrastructure (such as road access and the provision of adequate street lighting) to make a development acceptable in planning terms. Additionally, the reduction in affordable housing contributions could serve to make CIL more viable in rural areas, providing councils with an alternative revenue; perhaps something to be considered by local authorities assessing their draft CIL charging schedules.

See the new guidance in full:

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