The small sites affordable housing contributions policy was introduced in November 2014 to help boost housing delivery and incentivise brownfield development. It introduced a national threshold of 10 units or fewer, beneath which affordable housing contributions would be waived. The policy was introduced to tackle the disproportionate burden of developer contributions on small scale developers, custom and self-builders.
Ministers criticised the moves by West Berkshire District Council and Reading Borough Council who challenged the policy and brought legal action as “a total waste of taxpayers’ money”.
Brandon Lewis, Minister of State for Housing and Planning, said, “We’re committed to building more homes, including record numbers of affordable homes – key to this is removing unnecessary red tape and bureaucracy that prevents builders getting on sites in the first place.
“Today’s judgment by the Court of Appeal restores common sense to the system, and ensures that those builders developing smaller sites – including self-builders – don’t face costs that could stop them from building any homes at all.
“This will now mean that builders developing sites of fewer than 10 homes will no longer have to make an affordable homes contribution that should instead fall to those building much larger developments.”
The ruling has been welcomed by the housebuilding industry. Brian Berry, Chief Executive of the FMB, said, “We welcome the Appeal Court’s decision to confirm the Government’s right to waive Section 106 affordable housing contributions for sites of ten units or fewer. It’s widely recognised that if we are tackle the long-term undersupply of new homes in this country, then we will need to see renewed growth in output from SME house builders. Today’s verdict will go a long way in backing these firms. It will make the economics of small scale development that much easier and should increase the use of small sites in sustainable locations for the delivery of new homes.”
Berry added, “Nearly one-in-two SME house builders know of sites they would otherwise be interested in developing, but which they believe would be unviable because of the likely combination of Section 106 and the Community Infrastructure Levy charges. These contributions are prohibitive for many smaller developers, killing off thousands of otherwise viable schemes, and acting as a serious barrier to expansion. The threshold’s reinstatement will protect the very smallest developments from being lumbered with unaffordable requirements, allowing them to bring forward small-scale, sustainable developments, which will ultimately be of huge benefit to everyone, local councils included.”