Government should introduce standardised section 106 clauses to help negotiations: select committee

In a report on the Government's goal of building 1.5 million homes in the next five years and land value capture, the Housing, Communities and Local Government Committee also suggested the sector believes it is "unlikely" the housebuilding target will be met.

The report noted that England's housing crisis "is closely linked with the cost of land", adding that land value capture policies seek to recover some of the costs of land to fund affordable housing and public infrastructure associated with development.

But it found that the current land value capture system – which centres around Section 106 agreements and the Community Infrastructure Levy (CIL) – "fails to deliver the full potential of funding for communities because it is marked by protracted negotiations and an uncertain map of local approaches".

It called on the Government to "immediately pursue reforms to land value capture to ensure developers make fair contributions towards the infrastructure and affordable housing which communities rightly expect—particularly homes for Social Rent".

As part of this, the committee recommended the Government introduce "new template clauses for Section 106 agreements to focus negotiations on site-specific factors rather than legal wordings".

It said that template clauses would allow for greater standardisation and clarity of requirements across all local authorities, "and in turn reduce the workload of local authorities and Small and Medium-sized Enterprise developers".

It also recommended the establishment of a "statutory dispute resolution scheme to settle deadlocked negotiations between local authorities and developers fairly".

Elsewhere, the report recommended that councils be encouraged to set a minimum percentage target for affordable housing in their local plan, with a 'fast-track' planning route for developments which meet this local target.

The report also made recommendations concerning the Community Infrastructure Levy (CIL), in light of figures that show only around half of local planning authorities have charged a CIL.

It said that "stretched local planning teams are focusing their limited staffing and resources on affordable housing delivery as a priority, rather than establishing and administering a CIL".

It also noted that some local planning authorities are "not publishing a clear Infrastructure Funding Statement, despite this being a legal requirement, which is damaging public and sector confidence as to how CIL receipts are being spent".

On this point, the committee recommended that MHCLG "must demonstrate more effective leadership to improve CIL coverage and transparency", by publishing a national interactive map of CIL charging schedules and Infrastructure Funding Statements.

The report went on to voice scepticism about the Government meeting its target of building 1.5 million new homes this Parliament.

It acknowledged that many in the sector believe the Ministry's wide-ranging planning reforms and housebuilding initiatives will contribute to housebuilding, but "one year into the Parliament, housing completions are not yet increasing at a rate consistent with meeting the five-year target".

It added: "We conclude that the Government's delay in publishing its Long-Term Housing Strategy has left industry in the dark, without a clear sense of the trajectory of housing supply, and without an overarching plan as to how such an ambitious target will be achieved."

The committee also said that it had heard from leading sector representatives who believe the 1.5 million target is "unlikely to be met in July 2029".

"The Government must immediately bring forward its Strategy, which should set out an ambitious, comprehensive, and achievable vision to meet that target, or else risk jeopardising the Ministry's headline policy commitment," the report said.

"We call on the Government to include in its Strategy the Ministry's assessment of how many net additional dwellings each policy change will contribute towards annual housing supply, adding up to 1.5 million new homes over the five-year Parliament."

Florence Eshalomi MP, Chair of the Housing, Communities and Local Government (HCLG) Committee, said: "Any proposed changes to land value capture measures, such as the Community Infrastructure Levy, should be able to answer the crucial question of how it will increase the number of affordable homes available, alongside vital infrastructure.

"We are in a housing crisis, and I want to see the Government bring forward the delayed Long-Term Housing Strategy to set out the comprehensive range of policies needed to address the slow pace of housing delivery and ensure 1.5 million homes are built in this Parliament."

Adam Carey