Affordable housing tenure split on major sites

On a major residential site, how much affordable housing you provide is set by local plan policy, but what kind you provide is usually negotiated. The tenure split is the proportion of the affordable homes that are social rent, affordable rent, shared ownership or another intermediate product, and on a scheme of 50 homes it can move the residual land value more than the headline percentage does. National policy says little about the split. Almost all of the work happens in the adopted local plan, the council's housing evidence base and the conversation with a registered provider.

What national policy leaves to the local plan

The National Planning Policy Framework (August 2026 edition) defines affordable housing in its glossary and expects plans to identify the size, type and tenure of housing needed for different groups. It does not set a national tenure split. That decision belongs to the plan-making authority, informed by its local housing need assessment.

Affordable housing is normally sought on major development, which for housing means 10 or more dwellings or a site of 0.5 hectares or more. Below that, contributions are generally not sought except in designated rural areas under section 157 of the Housing Act 1985, where an authority may set a lower threshold. Rural exception sites operate on a different basis again and are usually 100 per cent affordable.

The products themselves are worth distinguishing, because councils and applicants often use the words loosely.

Check the current national position on First Homes before you build an offer around it, because the requirement attached to it has been revisited more than once since 2021.

Reading a tenure policy and the evidence behind it

A tenure policy usually reads as a ratio, for example 70 per cent rented and 30 per cent intermediate. Look behind it. The ratio comes from the authority's local housing need assessment, which counts households who cannot afford market rent and households who could buy with help. Those two groups rarely move in step, so an assessment published six years ago may no longer support the split the policy sets.

That matters because section 38(6) of the Planning and Compulsory Purchase Act 2004 requires decisions in accordance with the development plan unless material considerations indicate otherwise. An out of date evidence base is a material consideration. It is not a licence to ignore the policy, but it is a legitimate argument for a different balance where the scheme's own evidence points elsewhere.

London is the exception to the general rule that tenure is a local matter. London Plan Policy H6 sets a tenure split for schemes using the threshold approach: a minimum of 30 per cent low cost rented homes, a minimum of 30 per cent intermediate products, and the remaining 40 per cent determined by the borough. Schemes above the mayoral referral thresholds are tested against that split by the Greater London Authority as well as by the borough.

On-site provision measured against a commuted sum

Councils want the homes on the site. Off-site provision or a payment in lieu is normally allowed only where on-site delivery is demonstrably impractical, and the policy wording usually says so explicitly.

Two situations make the argument properly available. The first is a small number of affordable units in a single block with a service charge that no registered provider will take on. The second is a scheme where the affordable homes would be so few and so scattered that no provider will manage them, which is common where a policy percentage produces three or four units.

Commuted sums are calculated by formula in most authorities, and the formula is published in the affordable housing supplementary planning document. Get it before you model anything. A sum calculated on the difference between open market value and transfer value can exceed the cost of building the homes, which is the point of it.

Where the affordable homes sit and how they look

Clustering is the argument that follows tenure. Registered providers want their homes grouped for management efficiency, ideally with their own core and entrance. Planning officers want tenure blind design and even distribution so the affordable homes are not identifiable from the street.

Both positions are reasonable, and the compromise usually runs along these lines. Cluster the rented homes in groups of around 10 to 25 within a single core. Distribute the intermediate homes more widely, since shared ownership leaseholders pay the same service charge as private leaseholders. Use identical external materials, identical window proportions and a single refuse and cycle store arrangement across tenures. Avoid separate entrances of visibly different quality, which is the detail that draws objection at committee and appears in officer reports as a reason for refusal.

Space standards apply across tenures where a local plan has adopted the Nationally Described Space Standard, and the way housing mix and space standards change as schemes grow is worth checking before the layout is fixed.

Bringing a registered provider in early

The single most common cause of a stalled affordable offer is an applicant who agrees a tenure split with the council and then discovers no registered provider will buy it. Providers have their own acquisition criteria, and they are specific about unit mix, floor area, service charge ceilings, defects liability, lift provision above a certain storey and the proportion of one-bedroom flats they will accept.

Approach two or three providers before the tenure split is fixed in a heads of terms. Ask for their current acquisition standard in writing. And ask what they will pay, because the transfer price for social rent is materially below the price for shared ownership, which is what makes the split a viability question rather than a design one.

Providers are regulated by the Regulator of Social Housing, and the larger ones publish their development standards. If a provider will not take a scheme, that written position is evidence the council can weigh. A verbal report of a conversation is not.

Grant funding and what it does to the offer

Homes England grant through the Affordable Homes Programme, or Greater London Authority grant in London, changes the arithmetic. Grant allows a provider to pay more for the units or to take a deeper tenure such as social rent instead of affordable rent.

Two cautions. Grant is normally paid to the registered provider, not the developer, so the benefit reaches the scheme only through the transfer price. And most authorities treat grant as additional to policy compliance, meaning grant should buy more or better affordable housing rather than reducing the developer's contribution. Say which assumption you have made in the offer, because a viability assessment that quietly nets grant off the obligation is the sort of thing that gets tested line by line.

Setting the offer out in the statement

The Affordable Housing Statement is where all of this is recorded, and a good one is short and numerate. State the total number of homes, the affordable number and the percentage, then the tenure split by unit and by habitable room, since policies are sometimes expressed in habitable rooms rather than units and the two give different answers.

Set out a schedule by block and core showing which units are affordable, their size in square metres and their bedroom and bedspace count. Name the registered provider if one is engaged, or describe the marketing that has taken place. Explain any departure from the policy split and the evidence for it. State which section 106 heads of terms you propose, including the nomination arrangements, the cascade if no provider is found, and the mortgagee exclusion clause providers require.

An illustrative example. A scheme of 60 homes in an authority seeking 30 per cent affordable at a 70:30 rented to intermediate split yields 18 affordable homes, so roughly 13 rented and five intermediate. The applicant proposes 12 rented and six intermediate because the provider will only take three-bedroom rented units in a ground-floor duplex form that the block cannot accommodate. That is a policy departure of one unit, justified in writing by the provider, and it is a conversation rather than a dispute.

Applications at this scale also attract a wider evidence base, and the statutory consultees that appear as a scheme grows will each want their own document. Enter your postcode on PlanScope to see which reports a major residential site 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.