Oxford council aims to impose a 70% affordable housing quota on all developments – 20% more than London mayor Ken Livingstone's – and experts predict that other councils will follow suit.
At the same time, social housing quango the Housing Corporation is to warn firms not to rely on public funding for affordable housing.
Oxford made the move last month in supplementary planning guidance issued on the back of a High Court victory. A judge, ruling on a case brought by a coalition of housebuilders last year, declared that the council had not abused its powers by using supplementary guidance to increase the affordable housing tariff on new developments (2 November, page 15).
Nigel Moor, planning director at planning consultant RPS, said the council's latest guidance revealed how costly the ruling would be.
He said: "On the back of Oxford, a lot of councils are going for a lot more affordable housing. If a council has got an up-to-date housing needs survey and can demonstrate need, it can do it. Councils are buoyed up by the fact that there has been quite a bit of litigation."
The Housing Corporation will also warn housebuilders that if they delay asking for its funding until they have agreed affordable housing levels with councils, they may find that the available money has been allocated to other schemes.
This move by the corporation is part of a strategy to build more social housing in areas lacking sufficient affordable homes.
The government wants 200,000 homes built in the South-east to tackle the housing crisis. With less than £1bn in grants across the country, about half of which is for London and the South-east, the corporation aims to allocate its funding carefully – particularly as demands seems likely to grow.
The corporation's warning will be issued at the launch of its National Investment Strategy document for 2004/5.
Steve Douglas, the corporation's director of investment and strategy for London, said housebuilders must consult the corporation at an early stage of a development so it can earmark funds to cover the construction of social housing.
Douglas said: "The message from now on is we need an early involvement – housebuilders should not assume that they are going to get funding."
A spokesperson for the House Builders Federation said: "I'm quite sure that individual members of the HBF are getting the corporation involved at an early stage."
Alan Cherry, chairman of Countryside Homes, welcomed the step by the corporation. He said: "Any proposal that assists in the development of affordable housing is a good thing. Often there is a gap between the cost of the social housing package and the price a housing association can afford to pay. Bridging that gap is important."
He added that the corporation's grant needed to be increased.
Former housing minister Lord Falconer and his successor Lord Rooker have lobbied the Treasury for more money and it seems likely that the grant will rise after next week's comprehensive spending review.