Planning agreements ‘do little to increase the number of affordable homes’

These are among the main conclusions reached in the final report from a major evaluation of the use of ‘Section 106’ (S106) planning agreements, funded by the Joseph Rowntree Foundation, with the Housing Corporation, the Countryside Agency, the Royal Institute of Chartered Surveyors and the Royal Town Planning Institute. The study, by teams at the Universities of Sheffield and Cambridge, included a survey of more than 100 English planning authorities and case studies in 40 districts.

The researchers calculated that S106 agreements, together with rural exceptions policies that allow social housing in otherwise restricted country areas, have resulted in fewer than one in ten housing completions – around 12,000 homes – being made affordable each year. Reasons why this figure was lower than the Government’s own estimates included the limited number of eligible sites and competing demands on the funds secured through planning gain. In addition, many housing developments were too small to reach the threshold where authorities were able to use their S106 powers. The study also found that:

• Most social housing achieved through S106 agreements was built in London and the South East where market house prices are high. The resulting homes were usually offered for rent on a separate part of the site from sale homes.
• Homes achieved through S106 in the Midlands and North were more likely to be offered under low-cost home ownership schemes, intended to improve the social mix on new estates.
• The contributions from developers were usually modest when measured against the overall costs of a development. At seven out of ten sites where S106 was used to secure a developer’s contribution towards affordable housing, the resulting homes were also subsidised by the Government’s standard Social Housing Grant.
• In high-cost areas, the developer’s contribution often did no more than reduce the cost per home to a level where it qualified for public subsidy. In the South, this helped make schemes more viable on recycled ‘brownfield’ land where developers faced the extra costs of site clearance and decontamination.
• Even with developer contributions and Social Housing Grant subsidies, the Registered Social Landlords (RSLs) responsible for the affordable homes had often contributed to the construction costs from their own funds.
• Although the relevant legislation has been in force for more than a decade, many authorities are still unsure about the extent of their powers, including their ability to set site thresholds and targets, and to demand specific types of tenure.

Prof. Tony Crook of the University of Sheffield, a co-author of the study, said: “Local authorities are becoming more experienced at using Section 106, but the negotiating process is often prolonged and the financial contributions achieved towards affordable housing are relatively small. The overall policy needs clarification, but councils also need to improve their negotiating skills and make greater use of external help, including the expertise of RSLs.”

Prof. Christine Whitehead of the University of Cambridge said: “The main result of S106 agreements has been to alter the geography of new, social housing rather than the number of affordable homes being built. Extensive use of Social Housing Grant means that fewer than 30 per cent of affordable homes on Section 106 sites are in addition to the numbers envisaged under the Government’s standard subsidy programme. However, S106 agreements have enabled affordable homes to be located on ‘brownfield’ land and other high-cost sites where they could not otherwise have been included.”