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Private developers cough up £5billion for affordable housing

publication date: Jun 30, 2010
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HousesResearchers from the University of Sheffield have found that private developers have agreed to fund £5 billion of England´s local capital infrastructure, including roads, schools and new affordable housing. The research, commissioned by the Department of Communities & Local Government (CLG), shows planning obligations have led to very substantial investments by developers.

The planning obligations, known as S106 agreements, are negotiated by local planning authorities when granting planning for new developments. They ensure that the necessary infrastructure to support new developments is in place and also that developers of private housing schemes create mixed communities by providing an element of affordable housing on new private estates.

The researchers, from a joint team at the University’s Department of Town and Regional Planning and the Department of Land Economy at the University of Cambridge, found that nearly two thirds of new affordable homes are now provided through S106 agreements.

In principle many of these contributions are funded by developers from the increase in land value brought about by the granting of planning permission.

Until recently little was known about the extent and value of these obligations. The study is the third in a series commissioned by CLG and shows just how substantial these contributions are. They have risen from £2bn in 2003- 04 to £4bn in 2005-06 and to £5bn in 2007-08, of which half in each year was for new affordable housing.

Professor Tony Crook, from the University’s Department of Town and Regional Planning, who led the research team, said, “The last decade of this century has seen a very substantial increase in these contributions by developers facilitated by the significant increase in land values. The size of the country’s future requirement for new homes will require a substantial investment in infrastructure to support it, whilst the Government’s target for new homes includes increased targets for affordable homes.

“The changes to S106 policy, including the new Community Infrastructure Levy which came into operation in April, will bring more sites into the frame for contributing to infrastructure because the Levy will apply to all but householder applications and the smallest sites and therefore these.”

http://www.communities. gov.uk/publications/ planningandbuilding/ planningobligationsreport