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Councils win housing fight to overturn s106 exemption

Two councils have won a legal victory against government proposals calling for the exemption of small developers from contributing towards affordable housing.

Reading Borough Council and West Berkshire Council joined forces earlier this year to block plans that allowed developments under 10 homes to be excused from Section 106 agreements, under which developers make contributions to offset impacts on infrastructure and public services.

The councils argued that the plans would harm the ability of councils to impose quotas demanding that developers to provide new affordable homes and infrastructure.

Mr Justice Holgate backed their demands, saying that the policy was “incompatible” with the statutory planning framework.

The Department for Communities and Local Government (DCLG) is now trying to overturn the decision after being left “disappointed” by the outcome.

A DCLGC spokesperson said: “We’ve got Britain building and we’re determined to maintain this momentum, including by reducing the red tape and extra costs that prevent smaller developments from getting built.

“[We will] be seeking permission to appeal against the judge’s decision. This will have a disproportionate impact on smaller builders who are important in providing homes for local communities.”

However West Berkshire’s executive member for planning, Alan Law, said the judgment confirmed that the council’s move was “fully justified” in order to deliver “much needed affordable housing and safeguard funding for critical infrastructure such as education”.

Reading’s lead councillor for strategic environment, Tony Page, said there was an “acute and increasing need” for affordable homes in his borough as there are more than 10,000 people on the housing waiting list. He claimed that changes to the planning system imposed by the government would have made this even worse.

The court triumph will deliver around £650,000 per year to be saved for “community benefit” in Reading, including improvements to local roads, schools and playgrounds.

Both councils will now be able to continue to demand affordable housing contributions and Section 106 payments from small development units in urban areas.

In 20 July the LGA had warned that government plans to impose an exemption could put affordable homes at risk. It asked ministers to rethink the decision and instead introduce a more flexible system so that contributions could still be collected from small developers “if the needs of local communities warrant them”.

LGA housing spokesman, Peter Box, had said: “Councils are acutely aware of the importance of striking a balance between the requirement for affordable housing on new developments and the potential effect on developments across their area.

“This is best achieved through robust and transparent viability assessments that are much more sensitive to local conditions and improvements to the system that will see s106 agreements agreed with developers upfront to avoid lengthy delays in negotiations.”