What changes when a scheme includes affordable housing

The affordable housing statement threshold is the point at which a policy requirement engages, and in England that point is normally major development: ten or more dwellings, or a site of 0.5 hectares or more. Below it, national policy says affordable housing contributions should not be sought from residential development, with one significant exception for designated rural areas where an authority may set a lower threshold.

Cross the line and three things happen at once. A percentage requirement from the local plan applies to the scheme. A tenure mix has to be agreed, usually with a registered provider involved before determination. And the delivery has to be secured through a section 106 agreement with enough detail that the council can enforce it years later.

The thresholds that bring the policy into play

Designated rural areas catch more sites than developers expect, because they include National Parks and National Landscapes along with areas designated by order, and a five-unit scheme in one of them can carry a contribution that the same scheme ten miles away would not.

The site area limb is the one that trips people up. Nine large houses on 0.6 hectares is major development on area alone, so the requirement applies even though the unit count is below ten. Check both limbs before you assume the scheme is minor, and read our note on where the single dwelling line falls for how the category boundaries work more generally.

Tenure mix and what the authority will want

Affordable housing in national policy covers affordable housing for rent, discounted market sales housing and other routes to home ownership including shared ownership and rent to buy. Policy at national level has also required a proportion of affordable homes delivered through planning obligations to be First Homes, introduced by written ministerial statement in 2021, so check whether that requirement is still current when you scope the scheme.

Most authorities express the mix as a split between low cost rented accommodation and intermediate products, and they usually prefer rent. In London the structure is more explicit, with a threshold approach and a prescribed tenure split that determines whether a scheme follows the fast track or a viability route, as set out in our note on affordable housing tenure split on major sites.

Set out the proposed mix, the unit sizes by bedroom and bedspace, and the plot or apartment numbers in an Affordable Housing Statement rather than leaving them to be negotiated in the agreement. An officer who can see which units are which can report the scheme. One who cannot will ask for the detail and lose six weeks doing it.

On site provision against a commuted sum

National policy expects provision on the development site. Off-site provision or a financial contribution of broadly equivalent value is possible where it can be justified and where the agreed approach contributes to mixed and balanced communities, which is a higher bar than a preference for simplicity.

The arguments that succeed are specific. A scheme of flats where no registered provider will take a handful of units in a single core, with the service charge regime making them unviable for rented tenure. A site where the affordable units could only be delivered in a location that the provider's own management standards rule out. A phasing problem where on-site delivery would be years behind the market units.

Arguments that fail include that a commuted sum is more convenient, that the market units sell better without affordable neighbours, and that the council's own commuted sum formula produces a lower figure than on-site delivery would cost. The last one is an admission rather than a case.

Registered provider engagement

Involve a provider before you submit, because their requirements shape the drawings.

What they will ask about, in roughly the order they ask: the tenure and unit mix against their business plan, the unit sizes against the nationally described space standard, the proportion of units built to the higher accessibility standards, the service charge for each block and how it is apportioned, the stacking and whether affordable units sit above commercial space, the parking and cycle allocation, the defects and warranty position, and the acquisition price.

Their objections are predictable and worth designing out. Units above a commercial unit with a shared plant risk. A single affordable flat on each of eight floors, which is unmanageable. A block with a lift serving only part of the affordable stock. Amenity space accessed through a market-tenure door. Fix those before the provider says no, because a provider's refusal after submission forces a late switch to a commuted sum and a renegotiation of the whole obligation.

Clustering and tenure blindness

There is a genuine tension here and it is better acknowledged than smoothed over. Planning policy generally wants affordable homes distributed through the scheme and externally indistinguishable from market homes, with no separate entrances or inferior materials. Registered providers want manageable groups, ideally served by their own core, because scattered units across multiple cores multiply management cost.

Most authorities will accept clustering by core or by block, provided the external treatment, the materials, the landscape setting and the access to shared amenity are consistent across tenures. What they will not accept is a separate rear entrance, a different standard of brick, or affordable units excluded from the podium garden.

Put the tenure plan in the submission as a coloured drawing. It is the single document that resolves most of this discussion.

Securing delivery in the obligation

The section 106 agreement is where schemes quietly fail years later, so the drafting matters.

1. Define each tenure precisely, with the rent basis or the equity share stated, rather than cross-referring to a policy that may be superseded.
2. Identify the units on a plan annexed to the agreement, by plot or apartment number.
3. Include a cascade: what happens if no registered provider acquires the units within a stated period, whether an alternative tenure or a commuted sum applies, and how the sum is calculated.
4. Deal with mortgagee protection and nomination rights, which the provider's lender will require.
5. Tie occupation of a stated proportion of market units to transfer or practical completion of the affordable units.
6. Address any viability review mechanism, including the inputs, the timing and what happens to additional value.

Obligations interact with the levy and with other contributions, and the interaction changes with scheme size, as our note on obligations and the levy at different scheme sizes explains. Referable schemes in London carry a further layer, covered in our note on Greater London Authority referable thresholds.

Where the requirement is contested

A scheme that complies with an up-to-date plan should not need a viability assessment, because viability was tested when the plan was examined. The burden sits with whoever argues for a departure.

Where you do argue it, a Viability Assessment prepared to the recognised professional methodology is the instrument, working from a benchmark land value based on existing use value plus a premium rather than on the price paid, and a developer return the guidance treats as a reasonable percentage of gross development value. Councils expect a suitably qualified author for this work and professional review is strongly advised. Note that viability assessments submitted with applications are expected to be published, so write them to be read by objectors.

Start the provider conversation and the tenure plan at the same time as the layout. Both cost far less to change on a drawing than in an agreement.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. Enter your postcode on PlanScope to see which reports your scheme is likely to need.

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