Council affordable housing policy: thresholds and sums

The national position is that affordable housing contributions should not be sought from developments that are not major, meaning fewer than 10 homes or less than 1,000 m² of floorspace, with a lower threshold available in designated rural areas where authorities may apply a figure of five units or fewer. Everything above that is set locally, which is why the affordable housing policy threshold council by council is the first thing to check when appraising a site.

Above the threshold the questions multiply: what percentage, what tenure mix, on site or as a payment, and what happens when the numbers do not work.

Where the threshold sits and how local policy varies

Read three documents in order. The adopted local plan policy sets the threshold, the percentage and usually the tenure split. Any affordable housing supplementary planning document explains how the council calculates contributions and commuted sums. A made neighbourhood plan can add its own requirement, and where it does it forms part of the development plan.

Watch for two local variations. Rural exception thresholds apply in designated rural areas, National Landscapes and National Parks, where the lower figure applies. And some authorities apply a floorspace threshold alongside the unit threshold, so a scheme of eight large houses can be caught by the 1,000 m² test.

Where a neighbourhood plan sets a different policy from the local plan, the later document generally prevails on the point of conflict. Understanding when a neighbourhood plan outranks the local plan matters, because affordable housing is one of the topics parish councils most often address.

Site subdivision to fall below a threshold is treated as what it is. Councils assess whether a site has been artificially divided, and a phased application on adjoining land in the same ownership will be aggregated.

Percentage, tenure mix and unit size

The percentage is expressed either as a proportion of units or of habitable rooms. The two produce different answers, so check which measure your policy uses before assuming the number.

Tenure mix is set locally within a national framework. National policy expects at least 10 per cent of the total number of homes on major sites to be available for affordable home ownership, subject to exceptions including where the scheme is for build to rent, specialist accommodation or on a rural exception site. The remainder is normally split between social rent, affordable rent and intermediate tenures according to the council's evidence of need.

Unit size expectations come from the local housing needs assessment. A council with evidence of demand for family social rent will resist a scheme offering only one-bedroom affordable units, however compliant the percentage.

Three practical drafting points. Set out the tenure by unit and by bedroom count in a schedule. Show where each affordable unit sits on the layout, because pepper-potting expectations are common and clustering attracts objection. And confirm that affordable units are of the same external appearance and material specification as the market units, because tenure-blind design is a routine policy requirement.

On-site provision versus a payment in lieu

Policy almost always prefers on-site provision. Payment in lieu, a commuted sum, is accepted where on-site delivery is impractical or where a registered provider will not take a small number of units in a scheme.

The calculation basis differs between councils. Common approaches are the difference between the market value and the affordable value of the units that would have been provided, or a published formula per square metre. Some councils publish an updated figure annually. Ask for the current calculation before you appraise, because the difference between approaches is material.

Small clusters are the practical problem. Registered providers frequently decline to manage fewer than about ten units in a single scheme, and that unwillingness is evidence supporting a commuted sum. Get it in writing from more than one provider.

Where a sum is agreed, the section 106 should state the amount, the index used, the trigger for payment and how it will be spent. An unindexed sum payable on completion three years later has lost value that nobody recovers.

First Homes and discounted market housing

First Homes are a form of discounted market sale housing with a minimum discount to market price, a price cap after discount and an eligibility test for purchasers, secured in perpetuity by a restriction on the title. National policy requires a proportion of affordable housing secured through developer contributions to be delivered as First Homes.

Two consequences for the scheme. The First Homes element counts towards the affordable home ownership requirement rather than sitting alongside it. And the price cap constrains which unit types work, because a large family house discounted by the minimum percentage can still exceed the cap.

Figures for the discount and the caps are set nationally and have been revised, so check the current position before modelling.

Other intermediate products, including shared ownership and discounted market rent, sit in the same category. The council's policy will state which it accepts and in what proportions.

Vacant building credit

The credit applies where a vacant building is brought back into use or demolished for redevelopment. The developer is offered a financial credit equivalent to the existing gross floorspace of relevant vacant buildings, set against the affordable housing contribution.

It is argued about more than any other part of this policy area. The recurring disputes are whether the building was abandoned rather than vacant, whether it was vacated deliberately to obtain the credit, and whether the building was in use for the purposes the guidance contemplates.

Evidence the vacancy properly: rating records, lease history, utility accounts, marketing evidence and dated photographs across the period. And be realistic. A building emptied six months before an application, in a scheme where the same owner served notice on the tenants, will not attract the credit.

What the statement needs to cover

An Affordable Housing Statement should answer the policy point by point, in the order the policy sets them out.

1. The policy requirement, quoted with its reference.
2. The scheme total by units and habitable rooms.
3. The affordable provision offered, by tenure, bedroom count and unit type.
4. The location of each affordable unit on the layout.
5. The registered provider position, where one is engaged.
6. The delivery trigger proposed for the section 106.
7. Any shortfall, with the reason and the evidence.

Where the offer falls short of policy, the statement has to be supported by a Viability Assessment, and councils appoint their own reviewer at the applicant's cost. Professional review is strongly advised, and the appraisal should assume publication.

But do not treat viability as the default route. An application that offers policy-compliant affordable housing determines faster, avoids review mechanisms in the agreement, and removes the argument that consumes most of the determination period on major schemes.

To assemble the documents a major residential application needs, browse the report types by category.

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.