Nomination rights in a section 106 agreement
Nomination rights decide who occupies the affordable homes a scheme delivers. Registered providers price the clause, so the drafting affects what the units are worth.
Nomination rights are the local housing authority's right to put forward households from its own register to occupy the affordable homes a scheme delivers. They sit in the section 106 agreement, or in a separate nominations agreement the section 106 refers to, and they decide who actually lives in the units a developer builds and transfers.
For a developer the clause looks administrative. It is not. Nomination rights are one of the terms a registered provider prices, so an aggressive nominations clause agreed without consulting the provider reduces what they will pay for the units and occasionally means no provider will take them at all.
What nomination rights give the authority
The right to nominate, not the right to let. The registered provider remains the landlord and retains responsibility for allocation, tenancy management and the assessment of whether a nominated household is suitable.
Two categories matter, and the percentages attached to each are the negotiation.
First lettings, meaning the initial occupation of each new home. Authorities usually expect to nominate to all of them, and that expectation is rarely worth resisting, because the whole point of securing affordable housing through the planning system is to meet identified local need.
Subsequent lettings, meaning re-lets as tenancies end over the life of the scheme. Here the percentage is negotiated, and a proportion below the first letting figure is standard. The remainder gives the provider capacity to manage transfers, decants and its own waiting list.
Local lettings plans and their limits
A local lettings plan is an agreement between the authority and the provider to apply particular criteria to a specific scheme or estate, for example a local connection to the parish, or a mix of household types intended to create a balanced community.
They are lawful and they can be useful. They also have limits. Allocation of social housing in England operates under the statutory framework in Part 6 of the Housing Act 1996, with an allocation scheme that has to give reasonable preference to defined categories of applicant. A lettings plan cannot displace that framework, and it has to be capable of justification under the public sector equality duty.
The practical failure mode is a lettings plan drafted into a planning obligation that the housing department has never seen. The obligation is enforceable by the planning authority. The allocation scheme is the housing authority's. Getting those two aligned before completion avoids an argument later about which document governs.
How nominations interact with the housing register
The register is the pool. A nomination is a referral from that pool to a specific property.
Three points a developer should understand before agreeing the clause.
The authority can only nominate people who are on its register and eligible for allocation under its scheme, so a very narrow local connection requirement can leave the authority unable to nominate at all.
The provider can refuse a nomination on defined grounds, typically affordability, unsuitability of the property for the household, or a failure to meet the provider's tenancy conditions. Those grounds should be stated in the agreement rather than left to argument.
Rehousing obligations arising elsewhere, such as from an estate regeneration scheme, can take priority within the authority's own scheme, which affects how quickly nominations arrive.
Registered provider concerns and why they price them
A provider looks at a nominations clause and calculates risk. The items that move their price.
| Clause feature | Provider concern |
|---|---|
| Nominations percentage on subsequent lettings | Loss of ability to manage transfers and decants |
| Length of the nomination period | Rent loss while a property stands empty |
| Absence of a fallback where no nomination arrives | Indefinite void with no remedy |
| Narrow local connection criteria | Small eligible pool and repeated voids |
| Nomination rights over shared ownership or discounted sale | Sales risk on products that need a buyer, not a tenant |
| Obligations binding the provider that it never agreed | Refusal to take the transfer at all |
The last row is the one that stops transactions. A section 106 completed between a developer and an authority can create obligations that bite on whoever owns the affordable units, and a provider that was not party to the negotiation will read the clause for the first time during due diligence.
Bring the provider into the drafting. It costs a meeting and it saves a deed of variation.
Void periods and the fallback
Every workable nominations clause has a fallback, and the absence of one is the single most common drafting defect.
The structure that works: the provider notifies the authority that a property is available, the authority has a defined period, commonly measured in working days, to nominate a suitable household, and if no suitable nomination is made within that period the provider may let the property itself in accordance with its own allocation policy.
Two refinements worth including. A second nomination attempt where the first nominee declines or is found unsuitable, with a shorter period attached. And a statement that a property let under the fallback does not extinguish the authority's rights on the next re-let.
Where the affordable homes are for sale rather than rent, nominations give way to an eligibility cascade with marketing periods at each tier, and the drafting questions are different. That mechanism is covered in the article on discounted market sale products rather than here.
Drafting a workable clause
The checks worth making before the agreement completes.
- First lettings and subsequent lettings are defined separately, with a percentage stated for each.
- The nomination period is a defined number of working days from a defined trigger, with a named method of notification.
- Grounds on which the provider may reject a nomination are stated.
- A fallback allows the provider to let from its own list once the period expires.
- The clause states whether it applies to shared ownership and discounted sale units, and if so on what different terms.
- Any local lettings plan is identified, and the mechanism for agreeing or varying it is set out.
- The obligation binds successors in title to the affordable units and is expressed to do so.
- Monitoring and reporting duties are proportionate and name who reports what, to whom and how often.
Point five catches people. Nomination language drafted for rented homes and applied without amendment to shared ownership produces a clause that nobody can operate, because there is no tenancy to nominate into.
Where this sits in the wider obligations package
Nomination rights are one of a set of affordable housing terms that together determine the value of the units: tenure mix, dwelling mix, transfer price basis, build specification, timing triggers and management responsibilities.
Treat them as part of the appraisal rather than as boilerplate. A clause that depresses the transfer price feeds through to the residual land value, and where viability is in issue that has to be evidenced in the same way as any other cost, against the benchmark land value assessment.
Where a scheme ends up providing a payment instead of units, the commuted sum mechanism replaces nominations altogether, and the authority secures the outcome through its own programme rather than through this scheme's homes.
The tenure mix, the products and the mechanisms securing each should all be set out in the affordable housing statement submitted with the application, and describing the nominations position there rather than leaving it to the legal drafting stage tends to produce a shorter negotiation.
An illustrative sequence on a 40 unit scheme with 12 affordable homes: the developer agrees heads of terms with the authority, shares the draft nominations clause with the two providers bidding for the units, incorporates the fallback period one of them asks for, and completes the agreement with a clause both providers can operate. The transfer price holds, and the scheme does not stall at the point where the affordable units have to find a home.
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.
Frequently asked questions
What do nomination rights actually give the council?
The right to put forward households from its housing register for the affordable homes on a scheme. The registered provider remains the landlord and keeps responsibility for allocation, suitability assessment and tenancy management. Nomination is a referral into a property, not a direction that a particular household must be housed there.
How do first and subsequent lettings differ?
First lettings are the initial occupation of each new home, and authorities usually expect to nominate to all of them. Subsequent lettings are re-lets as tenancies end, and the percentage there is negotiated. A figure below the first letting level is standard, leaving the provider capacity for transfers and decants.
Why do registered providers care about the clause?
Because it carries void risk. A long nomination period, a narrow local connection requirement or no fallback where nobody suitable is nominated all mean properties standing empty with no rent. Providers price that risk into what they will pay for the units, and some decline the transfer altogether.
What fallback should a nominations clause contain?
A defined period, usually in working days from a stated trigger, within which the authority must nominate a suitable household. If it does not, the provider may let from its own list under its allocation policy. Add a shorter second attempt where a nominee declines, and preserve the authority's rights on the next re-let.
Do nomination rights apply to shared ownership?
Not in the same form. Homes for sale need a buyer rather than a tenant, so the equivalent mechanism is an eligibility cascade with marketing periods at each tier of local connection. Nomination language drafted for rented homes and applied to sale products produces a clause nobody can operate.
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.