Affordable housing supply after lockdown ends – what can we expect after S106 is abolished?

As we anticipate the end of lockdown, the need for affordable housing has never been more acute. The Government, while not deviating significantly from its homeownership agenda, wants to change the way in which planning gain is captured for housing. It is reasonably certain that there are big changes ahead.

So, what is being proposed and how does this affect me?

The Planning White Paper issued for consultation last summer proposes the scrapping of s106 agreements and the introduction of a levy to fund local infrastructure, including affordable housing. We expect that local authorities will either use the cash generated to provide housing themselves or will negotiate onsite provision in lieu of the levy. Consequently, we may end up with a very similar framework, but without endless discussions around viability.

Life after section 106

Section 106 is amazingly inefficient and most housebuilders find the negotiations with local authorities and registered providers frustrating, to put it mildly. The Residential Development Group at Excello Law plans to work with its housebuilder clients through the transitional period to identify how best to engage with affordable-housing stakeholders. If you have a development scheme with an element of affordable housing, we will be pleased to advise you in the context of the changing landscape and will report on the legal developments as the new regime is rolled out.

How will I optimise the value of my scheme?

Now and in the future the rule is simple: by applying market research to the planning framework you will optimise a site’s potential. We can put you in touch with planning and development consultancies which work with developers and registered providers – offering not only planning advice but also a land-value optimisation service to ensure that each development delivers the most efficient mix of housing and maximises returns.

If you are selling your land, you might want to think about agreeing overage provisions with the buyer in case the value of the land increases significantly after the sale goes through. We will advise you as to the legal mechanisms that can be used to secure future uplift in value through overage agreements, e.g. legal charge; positive covenant with land registry restriction; restrictive covenant; and/or ransom strip.

Photo credit: J Davidson / Shutterstock.com
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Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.

Nigel Turner

Specialist in Real Estate & Property Development

E: [email protected]
T: +44 (0)845 257 9449