106 reasons to keep it

As the consultation period on the government's proposals for planning reform draws to a close, all sides of the industry are lining up to have their say on how the planning gain supplement should work alongside section 106 - and whether the government should proceed at all.

As the trade body for England's 1400 housing associations, the National Housing Federation's view is that the supplement is a good idea. It can ensure that new affordable housing is supported by infrastructure - and, as we all know, homes need infrastructure to become successful neighbourhoods.

But if those affordable homes are to be built in the first place, we must retain a strong section 106.

There are well-documented concerns from developers about the speed and transparency of section 106, and widespread acceptance that planning obligations have been a source of delay. But this system is increasingly important in delivering additional affordable housing in areas of most need.

A 2005 study by the universities of Cambridge and Sheffield estimated that more than 15,000 affordable homes a year are being provided through section 106, and the amount is likely to rise.

The additional benefit of section 106 is that it provides affordable homes as part of sustainable mixed communities, often on sites in high-value areas that affordable housing providers would otherwise be unable to secure. This is something that cash-based models such "roof taxes" - which some sections of the industry would prefer - would not always be able to deliver.

So far, the government has made encouraging noises about retaining section 106. Although the proposed system will be scaled back so that local planning authorities can make fewer demands, they will still be able to use section 106 to specify affordable housing requirements. During the consultation period, the ODPM has also revealed that, as part of its plans for the supplement, it will set section 106 deals on a "statutory basis".

To achieve an increase in housebuilding, it’s essential that this dual system works

This is potentially good news for housing associations and will go some way towards allaying fears that section 106 as a key delivery mechanism could be jeopardised as a result of the new tax.

If the government is to achieve its objective of a significant increase in housebuilding output, it's essential that this dual system works.

Equally, the supplement must not be designed so that it discourages landowners from releasing land for mixed-tenure development.

Like the rest of the development industry, housing associations will want assurance that the rate at which the supplement is levied will indeed be "modest" - after all, under the current proposals they will not be exempted from paying for wider infrastructure themselves.

Rationalising affordable housing requirements, alongside proposals to generate more cash for infrastructure, could help to achieve greater consistency of application by local authorities and increase supply through section 106.

If the ODPM can get the detail right, the new supplement, together with other reforms in the draft PPS3, could make a significant contribution. To achieve this, section 106 must be retained.