Government Consultation – Temporary Increase to Affordable Housing Threshold

On the 6th August 2020 the UK Government published a Consultation Document entitled “Changes to the Current Planning System”. This document sets out proposed measures to improve the effectiveness of the current UK Planning System. One of the items included is the potential of a time-limited increase to the threshold at which affordable housing must be provided on residential development sites. This is apparently “to support SME builders as the economy recovers from the impact of Covid-19”. The proposal is raising the threshold for the scale of development allowed before there is a requirement to provide affordable housing to around 40-50 units.

The current position is governed by National Planning Policy which sets out that contributions for affordable housing should be sought from developments that are not small. Anything delivering fewer than 10 units, has a site area of less than 0.5 hectares (or in rural areas, Local Planning Authorities are able to set a lower threshold), should find that there is no affordable housing necessary. There are various exceptions and differentials but that is the broad picture.

It would appear that the over-arching aim of the change that is proposed is to stimulate the economic recovery for small-to-medium sized developers (SMEs) by reducing the burden of developer contributions on sites that they are more likely to focus on, hence the 40-50 unit limit. All of this is going to be consulted on. A written Ministerial Statement is expected sometime in the autumn, although I am not sure it specifies which autumn!

It appears that the Government are hoping that such a significant jump in the affordable housing threshold will allow smaller sites to be brought forwards where there are issues in terms of viability at present. I guess the issue is that all sites will benefit from this change if they are within the size threshold and in certain areas of the country a site of up to 40-50 units can prove particularly exciting to developers and indeed some larger PLC developers are already considering smaller sites. If you think about it, originally a 50 unit site in a local authority area that had a 30% Affordable Housing Policy, would mean that there would only be 35 market value houses delivered. If that jumps to 50 market value units then it is almost the same as having an 80 unit site with affordable housing as that would deliver almost 50 market value properties.

You would also imagine that there will be lots of objections to this proposal from other bodies, non-developers, who will be concerned about further dents into the supply of affordable housing in the UK.

I think there is a long way to go on this debate so we shall just have to keep our ears to the ground.

As ever, if you want to discuss anything further, then please do not hesitate to contact me.

David Cowburn BSc (Hons) FRICS FAAV
Director – Cowburn Land