NHF says 32,000 affordable homes could be lost as a result of proposed section 106 flexibility on small sites

The National Housing Federation has warned that proposed flexibilities to help SME housebuilders deliver on smaller sites could drastically reduce affordable housing development, particularly in rural areas.

The government in its consultation on changes to the National Planning Policy Framework, said it is exploring enabling developers to discharge section 106 affordable housing requirements through cash payments to local authorities instead of providing the homes on site.

The move, which would only apply to sites of between 10 to 49 units, is being considered to help SME housebuilders, which the government says are disproportionately affected by uncertainty and delay through section 106 negotiations.

But the NHF yesterday said if it goes ahead the change could affect the delivery of 32,000 homes over the next decade and could lead to the loss of half of all new affordable homes in rural areas.

An NHF spokesperson said: “Historically financial contributions have rarely matched the true cost of affordable homes and seldom result in new delivery, with local authorities in many cases returning unspent funds to developers as they do not have the capacity or resource to bring forward delivery.”

The NHF said the change would disproportionately affect rural communities, where nearly half of delivery is on sites of fewer than 50 homes.

An MHCLG spokesperson re-iterated no decisions have yet been taken on the future of section 106 agreements but said the government is “committed to making the process simpler and more transparent”.