The government has proposed ending affordable housing quotas on developments of 10 to 49 houses, a move that could put half of all affordable new homes in rural England at risk, according to analysis by the National Housing Federation (NHF).
Proposed changes to section 106 agreements
Ministers are considering relaxing regulations for private housing developers by ending affordable housing quotas, known as section 106 agreements, for medium-sized developments. The aim is to jumpstart sluggish housebuilding rates. A final decision is expected within weeks on whether developers should be allowed to make cash payments to local authorities instead of building affordable homes on-site.
Analysis of government figures by the NHF suggests that in the most rural areas of England, more than half of all affordable homes are built on developments of this size. The organisation warns that ending the requirement could cost the country 32,000 affordable homes over the next 10 years.
Impact on rural communities
Kate Henderson, chief executive of the NHF, said: “Rural families are already in the most acute need of affordable homes, often priced out of the communities they call home, and these proposals risk making the rural housing crisis even worse. This requirement for affordable homes on medium sites is one of the most important ways we have of ensuring affordable homes are being delivered in the most rural areas. Removing it could put half of future rural affordable housing at risk, leading to increased waiting lists, rising homelessness and staff shortages in local schools and business.”
Section 106 agreements have become a vital source of affordable housing across the country, accounting for 36% of all affordable homes delivered in 2024-25, especially in the absence of high rates of council housebuilding.
Government stance and developer pressures
A spokesperson for the Ministry of Housing, Communities and Local Government said: “No decisions have been taken on the future of section 106 agreements but we are committed to making the process simpler and more transparent, so we can get on and build the homes and infrastructure this country desperately needs.”
Ministers have become concerned that section 106 agreements hinder new building, as developers struggle with high costs of finance and material. Experts also note that cash-strapped housing associations find it difficult to buy homes built under such arrangements. In London, ministers and Mayor Sadiq Khan have already reduced affordable housing requirements for fast-track planning status after housebuilding rates plummeted to a few thousand units a year.
Cash payments alternative and political context
Under the proposals for medium-sized developments, housebuilders would be allowed to make payments to councils in lieu of including affordable homes, with the money earmarked for building affordable housing elsewhere. Ministers have been told not to work on big policy announcements before the next prime minister, expected to be Andy Burnham, but technical changes like this are still being developed. A Burnham spokesperson declined to comment on the proposals.
