Affordable housing at ten units and the rural option
Affordable housing contributions are not sought below major development, meaning 10 dwellings or 0.5 hectares. In designated rural areas under the Housing Act 1985 a plan may set a threshold of five units or fewer.
The affordable housing threshold ten units question has a short answer and a long footnote. National policy says contributions towards affordable housing should not be sought from developments that are not major development, and major means 10 or more dwellings or a site of 0.5 hectares or more. The footnote is that in designated rural areas a local plan may set a lower threshold of five units or fewer, which changes the arithmetic on exactly the small schemes most likely to come forward in a village. Get the designation wrong and a nine-unit scheme you costed as contribution-free arrives with a commuted sum attached.
The national threshold and what sits behind it
Major development for these purposes is the same definition used across the development management system: 10 or more dwellings, or a site area of 0.5 hectares or more where the number of dwellings is not known. The 0.5 hectare limb catches outline applications and is the one most often overlooked, because a nine-unit scheme on a generous plot can still be major by area.
The threshold is a national policy position, so it binds the decision maker through section 38(6) of the Planning and Compulsory Purchase Act 2004 only to the extent the development plan is silent or out of date. The current National Planning Policy Framework was re-issued on 17 August 2026 with policy-coded chapters in place of the old paragraph numbering, so check the current wording and its policy code rather than quoting a number from an older copy.
Below the threshold, the policy does not forbid a council from asking. It says contributions should not be sought. In practice that means a plan policy requiring affordable housing from a six-unit scheme outside a designated rural area is vulnerable, and the right response at application stage is to say so in the Affordable Housing Statement rather than to negotiate.
The lower threshold in designated rural areas
Designated rural areas are those designated under section 157(1) of the Housing Act 1985. The designation covers National Parks, National Landscapes (the areas formerly called Areas of Outstanding Natural Beauty) and areas designated as rural by order. The order-designated areas are the ones that catch people out, because they include parishes and districts that nobody would describe as remote and they do not appear on a constraints map alongside flood zones and conservation areas.
Where a local plan has taken up the option, two things can happen. The plan may require on-site affordable housing from schemes of five units or fewer upwards. Or it may set the threshold at five or fewer and provide that for schemes of six to ten units the contribution is taken as a commuted sum rather than in kind, which is the mechanism national guidance on planning obligations contemplates for that band.
Check three documents before you fix a unit count: the adopted plan's affordable housing policy and its stated threshold, whether the site sits in a section 157 area, and any affordable housing supplementary planning document setting out the formula. The order designations are held centrally and your land agent may not have them to hand.
| Scheme size | Outside a designated rural area | Inside, where the plan sets a lower threshold |
|---|---|---|
| 1 to 4 dwellings | No contribution sought | Contribution may be sought if the plan says five or fewer |
| 5 to 9 dwellings | No contribution sought unless the site is 0.5 ha or more | Contribution sought, often as a commuted sum from six units |
| 10 or more dwellings | Full policy provision applies | Full policy provision applies |
How local plans apply the policy
The threshold tells you whether a contribution is sought. The plan policy tells you how much, in what tenure, and where. Percentages vary widely between authorities and often vary within one authority by value zone or by brownfield and greenfield status, so the only reliable figure is the one in the adopted policy with its supporting evidence base.
National policy also expects a proportion of the affordable homes on major sites to be available for affordable home ownership, with a list of exemptions covering build to rent, specialist and supported housing, self-build and custom build, and rural exception sites. The tenure mix that results is usually the subject of more negotiation than the headline percentage, and we look at that in detail in the piece on affordable housing tenure split on major sites.
One honest uncertainty: the interaction between the national starting point, the plan percentage and any First Homes requirement has moved more than once through written ministerial statements. Verify the current position on gov.uk at the point you fix your appraisal rather than relying on a policy note written last year.
Off-site provision and commuted sums
National policy expects affordable housing to be provided on site unless off-site provision, or a financial contribution of broadly equivalent value, can be justified on the evidence. The justification usually rests on one of a small number of arguments: the scheme is too small to support a viable management arrangement for a registered provider, the site has an abnormal service charge structure, or the plan itself directs small-site contributions into a pooled fund.
Commuted sums are calculated by formula in most authorities, typically as the difference between open market value and the transfer value a registered provider would pay for the equivalent floor area. Ask for the formula and the base date. These figures are indexed, so a sum agreed in heads of terms and completed nine months later will have moved, so read the indexation clause in the section 106 agreement closely. The wider mechanics of obligations at different scheme sizes are set out in our guide to obligations and the levy at different scheme sizes.
Viability at the threshold
Schemes clustered just above the threshold are where viability arguments are most common and least successful. National guidance on viability puts the burden on the applicant, assumes that a scheme complying with up-to-date plan policies is deliverable, and expects the benchmark land value to be established as existing use value plus a premium rather than as the price actually paid.
That last point decides most cases. If you paid a residual land price that assumed no affordable housing, that is not a planning reason to reduce the obligation. A Viability Assessment that stands up has to show a genuine abnormal: contamination remediation, a retaining structure, an off-site highway works cost under section 278 of the Highways Act 1980, or a heritage repair liability. And it has to be prepared on the RICS basis and published, because viability evidence submitted with an application is expected to be made publicly available.
Illustrative example: an 11-unit scheme on a brownfield plot in a district with a 30 per cent policy requirement. The applicant tested a nine-unit layout with larger plots, which fell below the unit threshold but came in at 0.54 hectares, so it was still major by area and still attracted the policy. The viable answer was 11 units with on-site provision and a reduced tenure ask supported by a published appraisal. The figures are illustrative rather than drawn from a real scheme.
Evidence the authority expects
A statement that does its job is short and answers five things: the unit count and site area against the major development definition, whether the site is in a section 157 designated rural area, the adopted policy requirement and its source, the proposed provision by tenure and unit type with a plan showing distribution, and the proposed section 106 mechanism including any staircasing or cascade to an alternative registered provider.
Settle the threshold question before you settle the layout. A scheme that drops from 10 units to nine to escape the policy and lands at 0.52 hectares has spent design fees for nothing.
Enter your postcode on PlanScope to see which reports a scheme at or near the ten unit threshold is likely to need.
This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. For specialist technical reports, including viability appraisal, qualified professional input may be required.
Frequently asked questions
What counts as major development for affordable housing?
Ten or more dwellings, or a site area of 0.5 hectares or more where the number of dwellings is not known. The area limb catches outline applications and generous plots, so a nine-unit scheme on 0.55 hectares is still major. Check both limbs against your red line before assuming a scheme sits below the threshold.
Which areas are designated rural areas?
Areas designated under section 157(1) of the Housing Act 1985. That covers National Parks, National Landscapes and areas designated as rural by order. The order-designated areas include parishes that nobody would call remote, and they do not usually appear on a standard constraints search, so check the designation specifically.
Can a council ask for affordable housing from a six-unit scheme?
Only where the site is in a designated rural area and the local plan has set a lower threshold, or where the site is 0.5 hectares or more. Outside those situations national policy says contributions should not be sought from non-major development, and a plan policy requiring them is open to challenge at application stage.
When is a commuted sum acceptable instead of on-site homes?
National policy expects on-site provision unless off-site provision or a financial contribution of broadly equivalent value can be justified on the evidence. Small schemes often qualify because a registered provider cannot manage a handful of units economically. Ask the council for its formula and the base date, and read the indexation clause in the agreement.
Will a viability argument reduce the affordable housing requirement?
Rarely on its own. National guidance assumes a scheme complying with up-to-date policy is deliverable and sets the benchmark land value as existing use value plus a premium, not the price paid. A viability case needs a genuine abnormal cost such as remediation, a retaining structure or section 278 highway works, prepared on the RICS basis and published.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.