Proposed Relaxation of Section 106 Affordable-Housing Requirements Threatens Rural Supply

Ministers are reviewing legislation that would end Section 106 affordable-housing quotas for new private developments of 10 to 49 houses in England’s rural areas. Under the proposal, developers could make cash payments to local authorities instead of delivering on-site affordable units. A final decision is expected within weeks.

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Section 106 agreements obligate developers to provide a proportion of affordable homes or fund equivalent provision elsewhere. In 2024-25, such agreements accounted for 36 % of all affordable homes delivered nationwide. In rural England, more than half of affordable units are built on medium-sized sites, making Section 106 a primary delivery mechanism.

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• National Housing Federation (NHF) – umbrella body for housing associations; chief executive Kate Henderson leads its response.

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• Ministry of Housing, Communities and Local Government – responsible for planning policy and the proposed regulatory change.

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• Mayor Sadiq Khan – involved in similar reductions to affordable-housing requirements for fast-track planning in London.

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• Andy Burnham – Labour MP for Makerfield, widely expected to become the next prime minister; his office declined comment on the proposals.

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• Over 50 % of affordable homes in rural England are built on developments of 10-49 houses.

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• NHF analysis estimates the removal of Section 106 for these sites could reduce the national affordable-housing pipeline by 32 000 units over the next decade.

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• Section 106 contributed 36 % of affordable homes delivered in the 2024-25 financial year.

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If the quota is removed, NHF warns of longer waiting lists for affordable homes, a rise in rural homelessness, and staffing shortages in local schools and businesses that rely on a stable resident workforce.

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A Ministry spokesperson said no decision has been taken on the future of Section 106 agreements but affirmed a commitment to simplify the process and increase transparency to accelerate the construction of homes and related infrastructure.

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The NHF argues that the Section 106 requirement for medium-sized sites is a crucial tool for delivering affordable housing in sparsely populated areas. It contends that eliminating the rule would exacerbate the existing rural housing crisis.

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The government has not provided quantitative estimates of the policy’s impact, while the NHF projects a loss of 32 000 affordable homes. No definitive timeline for a final decision has been published, and the extent to which cash payments would be earmarked for rural housing remains unclear.

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• “Kate Henderson, the 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.” — Kate Henderson, Chief Executive, National Housing Federation

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• “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.” — Kate Henderson, Chief Executive, National Housing Federation

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• “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.” — Kate Henderson, Chief Executive, National Housing Federation

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• “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.” — Ministry of Housing, Communities and Local Government spokesperson

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Ministers are expected to announce their decision in the coming weeks, though senior officials have been advised to defer major policy moves until after the next prime minister takes office. The outcome will determine whether cash contributions replace on-site affordable units for rural medium-sized developments.

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