Affordable Housing supply failure - the Section 106 fallout

On 9 November 2015 the Housing and Planning Minister Brandon Lewis wrote to planning authorities and council leaders urging them to review the delivery of affordable housing in their areas. The Department for Communities and Local Government has accepted that the reduction in funding (as noted in the letter regarding budget cuts) has adversely affected the projected delivery of affordable housing through the current affordable housing provider/developer relationship in Section 106 Agreements. The minister appears to be concerned that the anticipated lack of delivery will create a deficit in the five year housing supply, putting further pressure on councils to deliver more land for housing.

The letter encourages councils to look on changes to Section 106 Agreements favourably, especially where the changes are tenure-related but retain the overall housing numbers. It also encourages councils to accept “viability lite” review (our term). Worryingly, DCLG is suggesting these changes would probably not need to go to committee for approval, which pre-supposes that officers have delegated approval to take decisions of this nature. We would urge caution on this point, as each authority has different rules.

Finally, the letter says that the Government still intends to introduce the dispute resolution process for Section 106 agreements which has been subject to consultation. It’s not clear if this is aimed at the process being imminent or just a gentle nudge to councils not to be unreasonable if developers come to them with proposed changes.

The full letter can be found here. For more detail about the Section 106 dispute resolution process, see our previous article on it.