UK: Affordable Housing Planning Reform – Where Will It All End Up?

Last Updated: 16 December 2013
Article by Rob Bruce

Summary and implications

In this briefing, we consider recent changes in planning legislation relating to affordable housing, particularly:

  • applying to change affordable housing requirements;
  • permitted development rights for changing offices to residential; and
  • Community Infrastructure Levy proposals.

We find it possible to conclude that despite all of the supportive words from the Government, the legislative changes are indicative of the apparent low priority the Government is giving to affordable housing during economic hard times.

1. The Growth & Infrastructure Act

The Growth & Infrastructure Act 2013 came into force in April 2013, aiming to speed up development and encourage economic growth.

One of the key measures, introduced temporarily until 30 April 2016, is for interest holders in land to be able to apply to the local planning authority (LPA) either to modify or to remove an affordable housing planning obligation, enforced under section 106 of the Town and Country Planning Act 1990, if it results in the development not being economically viable. The LPA is obliged to deal with the application so that the development becomes economically viable.

The statutory obligation on the LPA is an onerous one that many authorities may disagree with and it is backed up by a significant sanction.

The applicant has a right of appeal on the merits if the LPA does not determine the application in accordance with its obligation, or if it fails to issue a decision within the required period.

What is the test for viability?

The Secretary of State for Communities and Local Government (the Secretary of State) provided guidance in April stating that:

"The test for viability is that the evidence indicates that the current cost of building out the entire site (at today's prices) is at a level that would enable the developer to sell all the market units on the site (in today's market) at a rate of build out evidenced by the developer, and make a competitive return to a willing developer and a willing landowner."

If modification of the affordable housing requirement is justified on that basis, then the guideline states that a viable affordable housing provision should be proposed, delivering the maximum level of affordable housing consistent with viability and the optimum mix of provision.

This gives the LPA an element of discretion about how to modify the affordable housing requirements and any application made by a developer must be backed up by robust viability evidence.

The application process is intended to be a quick one – with the LPA required to give notice of its decision within 28 days of receiving an application (subject to certain exceptions).


The new procedure is in addition to existing ones for modifying or removing section 106 obligations. Previously, if a council would not agree, an application to modify or remove the obligation could only be made after five years. That does not apply to the new procedure.

Given the clear intent of the legislation to make development economically viable and unlock stalled developments, it can be expected that decisions will fall in the developers' favour, where a development is unviable.

The LPA may be opening Pandora's box at an appeal if it does not take the opportunity to voluntarily renegotiate section 106 obligations where a development is unviable, or unreasonably refuses to modify affordable housing requirements on a formal application.

It is anticipated that the right to apply and, if necessary, to appeal to modify or remove the affordable housing requirements will strengthen the developers' negotiating hand.

2. Development rights for changing offices to residential

On 30 May 2013 permitted development rights were introduced in England to authorise a change of use from an office use (Class B1(a)) to a residential use (Class C3), without having to lodge a planning application. This right will expire on 30 May 2016, when the Government will consider whether to extend the period.

Although no planning application is now needed, a developer will have to apply to the LPA to determine if the LPA's prior approval is needed as to:

a) transport and highways impact on the development;

b) contamination risks on site; and

c) flooding risk on site.

Planning permission will also be required for any associated works that materially affect the external appearance of a building.

The LPA may seek to rely on the impact of transport and highways in built up areas to restrict the use of the permitted development rights. However, it will have to act reasonably or face having its decisions overturned by the Secretary of State or Planning Inspectorate and will not be able to use the prior approval process to object, except in the three circumstances above.


The consequences of the new permitted development rights could be severe. The LPA planning policies for residential development require a certain proportion of units to be allocated as affordable housing, but only if planning permission is required, which will not apply in the case of new rights.

If the Government extends these rights in the next three years, it could incrementally create a greater affordable housing burden to residential schemes that require planning permission. This may either result in an enhancement of profits on such developments or allow the residential units to be sold at a lower price, providing a market advantage over other residential developments of a comparable size that are subject to LPA planning policies requiring affordable housing.

Developers may now view residential developments requiring planning permission as too risky in locations with surrounding office buildings, leading to such schemes being mothballed. Such concerns are already arising amongst developers, with many residential developers now seeking out suitable office buildings.

3. Community Infrastructure Levy (CIL)

Although the CIL regulations were introduced in 2010, the introduction of the levy in a particular area is dependent upon the relevant planning authority adopting a CIL charging schedule.

The schedule sets out rates of charges to be levied as a development tax upon developments in a particular area.

How does CIL affect social housing?

The Government has recently published its response on the consultation on further regulatory reforms for CIL, which closed on 28 May 2013:

a) social housing relief the Government is now proposing to ensure that developments of affordable-rent properties will qualify for mandatory social housing relief and to provide for relief to be granted for communal areas in proportion to the social housing in the development; and

b) discounted houses – the Government is also proposing to enable local authorities to give discretionary social housing relief for discounted housing market homes.

The Government has dropped perhaps the biggest and most useful proposed change for social housing, which was to amend the definition of "infrastructure" in the CIL legislation to include social housing. Had this been included, CIL funds could have been spent on the provision of social housing.


Whilst the Government's response to social housing is a positive sign, the decision not to allow CIL funds to be spent on social housing is indicative of the apparent low priority the Government is giving to affordable housing during economic hard times, despite all of the supportive and encouraging words.

It is a decision that apparently promotes other developments before seeking to boost the supply of affordable housing.

Without more encouragement, it is difficult to see how housing costs for many will become affordable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.