Mike Brogan 06 November 2015

Cameron’s 106 reform: What it means for local authorities

There was a lot of anticipation around this years’ Conservative party conference, especially about what would be said and the possible outcomes for local authorities in terms of housing.

Looking back on what was said, I have to admit that I am struggling to see how the announced plans to reform Section 106 of the National Planning Policy Framework can turn the UK’s 'generation rent' into 'generation buy'.

Previously, 106 meant that developers were required to ensure a certain amount of their housing stock was reserved for social rent. Construction companies weren’t too keen on this, as some believed that social properties devalued their other homes. To combat this, a financial incentive for local authorities to opt out of 106 was provided, which was acceptable as it was understood that the money would be used to develop social stock elsewhere.

The revision to section 106 means that developers no longer have to offer properties for social rent; instead they will be able to provide starter homes for first time buyers, who are under 40, at a discounted price.

On the face of it, this amendment to 106 is intended to assist the Government meet its campaign pledge of creating 200,000 homes by the end of this parliament, by providing new homes that people currently in social housing could buy, thereby creating vacancies in existing social housing stock.

While this may sound like a cunning plan, if these intended purchasers cannot afford the prices of the discounted homes, and I suspect that may be the case, then it may not be quite as clever as it seems.

Aside from the reform of 106, which is important, the real issue is still not being addressed by the change. That is, until enough houses have been built, and at a price that ordinary hard working people can afford, the current problems will persist and we will still have oversubscribed social housing due to a deficit of owner occupier opportunities.

The current model for building social housing isn’t working, something that has been accepted by Government. However, if developers will not develop then Government will find another way to reduce the deficit.

Mike Brogan is chief executive at Procure Plus

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