Question to the Department for Levelling Up, Housing & Communities:

To ask the Secretary of State for Communities and Local Government, what assessment he has made of the potential effect on future supply of affordable housing in rural areas of changes introduced to section 106 requirements for sites of 10 units or less.

The Department for Communities and Local Government carried out a public consultation in March 2014 to invite views and local evidence on proposed changes to national policy on section 106 affordable housing and tariff contributions. All evidence submitted was carefully considered.

As a consequence of the consultation, we amended our proposals to introduce a lower threshold of 5 units for rural areas, as outlined in my Written Ministerial Statement of 28 November 2014, Official Report, Column 55WS. Rural exception sites are also exempted.

I can confirm that we have also undertaken an Equality Impact Assessment, which I will arrange to be placed in the Library of the House. We do not consider our reforms will have a negative impact on discrimination, fostering good relations or advancing equality of opportunity.

We estimate that the policy will save, on average, £15,000 in Section 106 housing contributions per new dwelling in England—some councils are charging up to £145,000 on single dwellings. Further savings will be made from scaling back Section 106 tariffs, which may add additional charges of more than £15,000 per dwelling, over and above any housing contributions. Taken together, these reforms will deliver six-figure savings for small-scale developers in some parts of the country.

We do not believe that our reforms will have any significant adverse effect on our affordable housing programme. We have so far delivered 217,000 new affordable homes since 2010, and are bringing in £19.5 billion of public and private in affordable housing over the current Spending Review period. In the next Parliament, we are on track to deliver a further 275,000 new affordable homes, backed up by £38 billion of public and private investment.

The Home Builders Federation has confirmed that these changes will provide a boost to small and medium builders, stating: “This exemption would offer small and medium-sized developers a shot in the arm. The time and expense of negotiating Section 106 affordable housing contributions on small sites, and the subsequent payments, can threaten the viability of small developments and act as another barrier to the entry and growth of smaller firms”

Similarly, the Federation of Master Builders has said: “The new ten unit threshold for affordable housing contributions is a sensible and proportionate approach to help alleviate the pressure on SME house builders who have been squeezed out of the housing market in recent years. This is important because without a viable SME house building sector we won’t be able to build the number of new homes that are needed to address the housing crisis”.

We also listened to representations from the hon. (Labour) Member for Bassetlaw (John Mann) who has campaigned vigorously against such levies. Indeed, I would observe that under the majority of the last Labour Government, the national threshold (as stated in PPG3) was actually 15 units.

Loading stealth taxes on new housing just makes housing less affordable and cuts house building. Unrealistic Section 106 charges result in no development, no regeneration and no community benefits: reducing them can result in more housing and more affordable housing. Our reforms will help unblock small stalled sites and provide a boost to self-builders and small house builders.