Our response to MHCLG's Section 106 planning agreements

The National Housing Federation is responding to the Ministry of Housing, Communities and Local Government's (MHCLG) consultation on standard planning agreements.

Our response focuses on Affordable Housing Schedule 1 and is now available to read below.

The key points of our response highlight how the proposed templates could support effective affordable housing delivery and strengthen the cascade process in Section 106 (S106) agreements. 

Supporting effective affordable housing delivery:

1. We support changes to tenure mix being agreed in writing with the Council, without requiring a deed of variation, where this reflects demand from affordable housing providers and the minimum affordable housing requirement continues to be met or exceeded. 
2. We support the intention of provisions preventing occupation of a specified proportion of market homes until the required affordable homes have transferred, helping to ensure timely delivery of affordable housing alongside market housing. However, the reference to “or are under an unconditional contract for transfer" should be removed as affordable homes may be under an unconditional contract for transfer long before they are completed and ready for occupation. 
3. We strongly support the Mortgagee in Possession Clause, which aligns with the NHF's established model clause and supports lender confidence and affordable housing investment. 
4. We recommend that government explore the potential for greater standardisation of nominations agreements, through a working group as part of the review of the Statutory Guidance on Allocations.  
5. There should be an explicit carve-out so that affordable housing providers are only liable for obligations relating to the affordable housing homes and are not responsible for obligations relating to the wider development. 
6. There should be an explicit expectation that developers, councils and affordable housing providers engage with the S106 Affordable Housing Engagement Guidance.  

Strengthening the cascade process :

1. The six-month cascade period should not begin earlier than the grant of S106 planning permission, as the pre-application stage can vary significantly in length, may lack sufficient detail or may be renegotiated. 
2. To constitute “reasonable endeavours”, affordable housing providers should be given a minimum initial response period of four weeks, with additional time allowed where there is ongoing constructive engagement.  
3. As part of the cascade process, developers should be required to remove or absorb agent fees as these costs are ultimately reflected in the price that affordable housing providers can pay for S106 homes, reducing the likelihood of a successful acquisition.  
4. Developers should “agree with the Council” to pay in lieu of on-site provision, rather than being able to “elect” to do so unilaterally. Payment in lieu should not become an automatic right available to developers following the cascade process. Discretion should remain with the Council. 
5. There should be a 20% uplift on the calculated Affordable Housing Contribution to encourage partnerships with affordable housing providers over cash payments, balancing viability with housing delivery.  
6. Alternatively, cash contribution could be calculated based on a higher affordable housing requirement (e.g. 30% direct delivery or 36% payment). 
7. We do not support the repayment of unspent Affordable Housing Contributions to developers. Where contributions cannot be spent locally, they should be ringfenced for affordable housing and redirected to Homes England or the strategic authority to support affordable housing delivery.