Planning experts warn of section 106 disaster

An update to planning policy could prove a “disaster” for affordable housing negotiated through section 106 planning gain agreements, the ODPM was warned this week.

The concerns relate to a single paragraph in an update to PPG3 that is currently out for consultation.

Paragraph 16 of Planning for Mixed Communities states that planning obligations must include a “fallback mechanism” to ensure the delivery of affordable housing if “reasonably anticipated” levels of public subsidy are not forthcoming.

Critics argue that the comment gives the Housing Corporation free rein to pull out of “reasonably anticipated” funding arrangements. This could lead to councils asking developers for fewer affordable homes under section 106 because they fear they will not get corporation cash.

Richard Bate, partner at town planning consultant Green Balance, said he had been “simply horrified” when he spotted the insert.

He said: “This is hugely significant. The paragraph does not exist in [the original] PPG3 nor does it exist in the previous draft revision.

It says the local authorities are going to have to sort it all out if the Housing Corporation doesn’t provide the money, which is a disaster.

“Some local authorities won’t bother trying or won’t try so hard if they believe that at the last minute the Housing Corporation won’t bother to make the funds available.”

The change contrasts with paragraph 10 of the document, which says councils should make “realistic assumptions about levels of public subsidy likely to be available” – based on discussions with the Housing Corporation – when determining the number of affordable homes to be sought under section 106.

A Chartered Institute of Housing summary of the update also questioned whether the fallback mechanism could “be exploited”.

Jon Rouse, chief executive of the Housing Corporation, said the organisation welcomed the changes and the message to councils was “don’t make assumptions that the corporation is going to be there to pick up whatever cheque is required at the end of the process”.

He emphasised that 40% of schemes funded by the corporation were section 106 deals.

It might simply be that we don’t have enough money to fund all the sites that come forward under section 106.”

“Where I am coming from exclusively is that we have to provide value for money from the public purse.”

, while paragraph 16 itself confirms that any alternative arrangement caused by the reasonably anticipated public subsidy not arriving could involve “a different split between social rented and intermediate housing or a different proportion of affordable housing”.

It is raising the prospect of the Housing Corporation simply walking away from providing the funding that everyone had a reasonable expectation they would supply.