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Government announces small site exemption from section 106 affordable housing contributions

National planning policy will be changed to exempt developments of 10 homes or fewer, with less than 1,000 square metres of floorspace, from planning obligations imposing contributions towards affordable housing, the UK government has announced.01 Dec 2014

The government committed in its 2013 Autumn Statement to consult on the proposed new threshold, in order to address the "disproportionate burden" it said section 106 obligations could place on small scale developers. The department for communities and local government (DCLG) has now confirmed that the government will press ahead with the plans, following a consultation that ended in May.

In a response to the consultation (10-page / 334 KB PDF), released last week, the DCLG said that developers and development representative bodies had generally expressed their support for the proposals but that local authorities had generally opposed the plans. According to the response, the government had decided to change national planning policy to introduce the exemption, which would apply to both affordable housing contributions and other "tariff style contributions" and include residential annexes and extensions within its ambit.

The DCLG noted that some local authorities had raised concerns that a 10-unit threshold would disproportionately impact on rural areas and National Parks. Councils would, therefore, be given the option to apply a lower threshold of five units or less within designated rural areas, including National Parks and Areas of Outstanding Natural Beauty, the response said. Where the lower threshold was applied, developments of between six and 10 homes should only pay contributions as cash payments following completion, the DCLG said.

According to the response, none of the changes will be applied to Rural Exception Sites, allocated by local authorities for affordable housing provision in local planning documents.

"Small builders are being hammered by charges, which have undermined the building industry, cut jobs and forced up the cost of housing," said secretary of state for communities and local government Eric Pickles in a statement accompanying the release of the response. "By getting rid of these five- and six-figure charges, we will build more homes and help provide more low-cost and market housing."