Now that the housing market is reviving and developers are demanding that planners release more land, it’s vital to ensure that a high proportion of the homes built are affordable. Planners can do this through the obligations they can impose when they give planning permissions, but there is little encouragement for them to do so. Why I this and what should be done about it?
Planners have been able to ensure new development leads to more affordable housing since 1990, through powers known variously as planning obligations, affordable housing requirements or more technically ‘section 106 agreements’. They can be used to secure part of the scheme for new affordable homes or alternatively to get financial contributions from developers to be used elsewhere. Under previous governments, these obligations had massive importance. In 2010, as the chart by Savills shows, some 60 per cent of new affordable housing resulted from section 106 agreements.
When the recession began in 2008, private housing starts fell by nearly half and despite recent improvement are still only two-thirds of what they were in 2007. Since it took power, the coalition has been struggling to revive housing production, and part of the blame for delay in the market’s recovery has been pinned on unrealistic section 106 agreements. In September 2012 the government claimed that sites for 75,000 new homes were being blocked, but it later emerged that the survey quoted referred to all reasons for delay, including lack of finance and of mortgages for housebuyers. Then the Growth and Infrastructure Act, passed in April last year, allowed developers to challenge ‘unviable’ requirements and get rid of ‘bureaucratic barriers’ that stop schemes from going ahead. Planning minister Nick Boles said, ‘We want homes built. We want them built now, and if that means fewer of them can be affordable, because more of them have to be market, because market values have decreased and the potential for cross-subsidy has therefore declined, so be it.’
Wariness of section 106 is not confined to the coalition. Roberta Blackman-Woods MP, Labour’s planning spokesperson, said that it would be reviewed and potentially replaced with a ‘community investment fund’. But with so much pressure on local authority budgets, how could we ensure that such a fund was spent on affordable housing, in the right places?
Evidence about the declining use of section 106 is hard to find because detailed statistics are no longer collected. But we know that 4,820 homes were built through planning obligations in 2012/13, without needing grant from the Homes and Communities Agency to make them viable. At the same time the Guardian revealed last September that thousands of affordable homes were being dropped from large schemes because of obligations being reduced or removed.
Yet the market has now revived, developers are showing healthy profits and the government wants to build 55,000 affordable homes per year from 2015. The case for reinstating the use of section 106 agreements to their pre-recession levels is now a strong one. In part this is because we can’t afford not to: in the year before the recession, planning obligations were worth £5 billion when total government investment in affordable housing was £7 billion. In part it’s because if developers don’t have to include affordable homes in new developments they won’t, and a lot of land and potential for mixed communities will be lost. On-site, in-kind provision is efficient, builds mixed communities and guarantees access to sites in even the most challenging circumstances. But the most important reason is that, if the next government has an annual target such as the 200,000 homes set by Ed Miliband, it’s imperative that a high proportion of them are affordable. If we don’t make much fuller use of planning obligations this will be an almost impossible task.
Original post and comments: Guardian Housing Network