Affordable housing thresholds and small site exemptions

The affordable housing threshold in national policy is ten dwellings, or a site of 0.5 hectares or more. Below that, contributions should not be sought, with one substantial exception: designated rural areas, where authorities may apply a threshold as low as five units. For a self-builder or small developer, that exception is the difference between a scheme that works and one that does not.

The threshold is national policy rather than statute, so the local plan controls the percentage, the tenure mix and the mechanism. What national policy controls is the floor below which nothing should be asked for at all.

Where the national threshold sits

Affordable housing contributions should not be sought from developments that are not major development. Major development for housing means ten or more dwellings, or a site of 0.5 hectares or more where the number of dwellings is not known.

Two consequences follow for small schemes.

Nine dwellings on a quarter-hectare plot attracts no affordable housing contribution under national policy in most authorities. Ten dwellings on the same plot attracts the full policy requirement, which in many districts is 30 or 40 per cent of the units.

That is a cliff edge rather than a slope, and it is the single biggest reason small residential schemes are designed at nine units. Designing to stay under a threshold is legitimate. Splitting a site to achieve the same result is not, and the difference is discussed below.

Where a scheme does cross the threshold, national policy has also at times required a proportion of the affordable housing secured through obligations to be delivered as a specified product, and the detail of those requirements has changed more than once. Check the current national position and the adopted local plan together rather than working from a scheme completed two years ago.

Lower thresholds in designated rural areas

The rural exception is the part small developers most often miss.

In designated rural areas, authorities may apply a lower threshold. Designated rural areas for this purpose include areas designated under section 157 of the Housing Act 1985, National Parks and National Landscapes, formerly known as areas of outstanding natural beauty.

Where a council applies the lower threshold, the structure national guidance describes is a threshold of five units or fewer, with contributions from developments of between six and ten units sought as a financial payment rather than on-site units, and commuted until after completion of the development.

Three things to check before you rely on any of this.

Whether the district actually contains designated rural areas, since section 157 designations are parish-based and patchy.

Whether the adopted local plan applies the lower threshold, because it is a choice rather than an automatic consequence of designation.

Whether the plan follows the national structure on cash payments and commuted timing, since some plans depart from it and the plan is what the decision is made under.

For a self-builder converting a barn or building two houses in a village, the answer is usually that nothing is sought. For a six unit scheme in a National Landscape parish, it may not be.

Vacant building credit and how it is calculated

Where a scheme brings a vacant building back into lawful use, or demolishes it for redevelopment, national guidance provides for a credit equivalent to the existing gross floorspace of the relevant vacant buildings to be deducted from the affordable housing contribution.

The arithmetic is proportionate. The credit reduces the contribution by the proportion that the vacant floorspace bears to the proposed floorspace, so a scheme replacing a building of similar size can extinguish the requirement entirely.

The credit does not apply to buildings that have been abandoned, and abandonment is a question of fact turning on the physical condition of the building, the length and circumstances of non-use, whether there has been an intervening use and the owner's intentions. Councils scrutinise vacant building credit claims closely, and the evidence to assemble is the same evidence you would gather to prove a lawful use: rating records, tenancy history, utility accounts, dated photographs.

Claim it explicitly and early. A credit raised for the first time in response to a draft section 106 is treated as an afterthought.

On-site provision against a commuted payment

On small schemes the practical question is whether the council will accept money instead of units.

Policy generally prefers on-site provision, because it delivers mixed communities and homes in the location where the need arises. Off-site provision or a commuted payment is normally acceptable only where it can be robustly justified, and where the alternative delivers equivalent or better outcomes.

Three arguments that succeed on small sites:

1. No registered provider will take a handful of scattered units, which is a real constraint below about ten affordable homes and can be evidenced by written enquiries.
2. Service charge arrangements on a small block make the units unmanageable for a provider.
3. The site is in a designated rural area where the policy structure itself contemplates a financial payment.

Get the written refusals from providers before the application, not during it. An assertion that nobody will take the units carries no weight. But three emails from named providers, with dates, do.

What an Affordable Housing Statement has to show

An Affordable Housing Statement should be short and specific.

It needs the total unit count and the affordable count, the tenure split by number and by habitable room, the size and type of each affordable unit, the plot numbers, the intended registered provider or the marketing route, the transfer mechanism, the trigger points for delivery and any nomination arrangements. Where the offer is a payment, it needs the calculation and the formula it comes from.

The statement should also say plainly where the offer departs from policy and why. Officers write their report from your document, and a statement that hides the shortfall in an appendix produces a report that treats it as a deficiency rather than a negotiated position.

Viability and the reduced offer

Where the local plan sets out the contributions expected, and the scheme complies with those policies, it should be assumed to be viable. The burden of showing otherwise sits with the applicant.

A viability case has to be prepared properly. The relevant professional standard for financial viability in planning sets out the approach to benchmark land value, developer return and inputs, and councils appoint their own reviewer. A Viability Assessment that assumes a land price paid in a stronger market, or a return above the range the reviewer accepts, will be rejected and will cost you three months.

Assume the assessment will be published. National guidance expects viability evidence to be made publicly available, and confidentiality is the exception rather than the norm.

On a small scheme, the cost of a contested viability process frequently exceeds the contribution in dispute. Do the arithmetic on that before starting.

Subdividing a site and the artificial split

Councils treat related applications over the same landholding as a single scheme where the phases are obviously connected.

The indicators they look for are common ownership or a shared option, a shared access, a coordinated drainage or infrastructure strategy, applications submitted close together, and a site that reads on the ground as one parcel.

Genuine phasing is different from artificial splitting. Where phases are separated by years, by different landowners, or by an infrastructure constraint that the first phase resolves, the case for treating them separately is real. Where two applications for nine houses land on the same officer's desk in the same fortnight, it is not.

Inspectors have taken the same approach on appeal. If the intention is to develop the whole site, say so, apply for the whole site, and negotiate the contribution.

You can browse all 66 PlanScope report types to see which supporting documents your scheme needs, or enter your postcode to check the constraints on the site.

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.