Half of future rural affordable homes under threat

An estimated 32,000 new affordable homes[i], and half of all new affordable homes in rural areas could be lost over the next decade[ii], if new proposed changes to planning rules are brought into effect, the National Housing Federation warns.

New government proposals, under the National Planning Policy Framework[iii], seek to remove the existing requirement for new medium development sites (10-49 homes) to deliver affordable housing on site.

Current planning rules require developments of 10 homes or more - classed as 'medium' and 'large' sites - to deliver a proportion of homes as affordable housing through a mechanism called Section 106. This requirement is responsible for delivering almost half of all affordable housing in England, with the rest delivered through grant funding.

If brought into effect, this change would have disproportionate consequences for rural communities, where nearly all homes are delivered on sites of fewer than 50 homes[iv]. According to government supply figures, last year Section 106 accounted for more than half (51.3%) of affordable housing delivery in the most rural areas of England[v]. This means removing this requirement could lead to the loss of half of future rural affordable homes over the next decade. 

In the last three years, 10,000 affordable homes have been delivered on medium development sites through Section 106 agreements[vi]. Based on this rate of delivery, the change could lead to the loss of 32,000 affordable homes or more over the next decade, disproportionally impacting rural communities[vii]. 

Under current proposals, the homes would be replaced by cash payments from developers to councils. However, historically financial contributions have rarely matched the true cost of affordable homes and seldom result in new delivery, with local authorities in many cases returning unspent funds to developers as they do not have the capacity or resource to bring forward delivery. According to a Home Builders Federation report, an estimated £9bn of developer contributions is currently held unspent[viii]. Even when new homes are subsequently built, it is often far away from the original development, which means local communities do not benefit. 

The shortage of affordable homes in rural areas is already much more acute than in urban areas. Only one in 10 homes (9%) are classed as affordable, half the proportion in towns and cities (17%)[ix]. In small villages the shortage is even more extreme with nearly a quarter (23%) of small villages (populations fewer than 3,000) having two or fewer affordable homes. 

Demand in rural areas is also growing at a faster rate, with waiting lists increasing by a fifth (20%) over the last three years, from 191,092 to 228,404 households, compared with a 13% increase in urban areas. During this period, only 10,878 homes for social rent were completed in rural areas – sufficient to house less than a third of the additional households on waiting lists in those areas. Rural homelessness increased by 40% between 2019 and 2023[x].

The lack of available affordable housing has a broader impact on local rural communities, as lower paid workers are no longer able to live locally, causing often catastrophic staff shortages for essential jobs and local businesses. Between 2018 and 2023, 45 schools[xi] and 535 pubs and bars in rural areas closed[xii]. According to the Federation of Small Business, 30% of rural small firms said finding appropriately skilled staff was the greatest barrier to their future growth aspirations[xiii].

The National Housing Federation is calling on the government to scrap these proposals and protect this vital pipeline of affordable homes for the local communities that rely on them.

Kate Henderson, Chief Executive of the National Housing Federation, 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 businesses.

"If the government is committed to building the homes needed across the country and supporting rural communities to thrive, it must not weaken one of the key tools we have to deliver affordable homes in the places that need them most. We urge ministers to rethink these proposals and protect the pipeline of homes that rural communities desperately need."

References

[i] Based on 10,000 affordable homes delivered on medium sites between 2022/3 and 2024/5, projected over the next 10 years.

[ii] Based on S106 delivering more than 50% of rural affordable homes last year and vast majority of rural affordable developments having fewer than 50 homes.

[iii] https://www.gov.uk/government/consultations/national-planning-policy-framework-proposed-reforms-and-other-changes-to-the-planning-system 

[iv] Based on a survey of rural housing providers. 100% of respondents said 75%-100% of their rural housing delivery was sites fewer than 50 homes.

[v] NHF analysis of MHCLG Live table 1011C

[vi] Based on a survey of NHF member delivery between 2022/23 and 2024/25

[vii] Projecting the 10,000 homes estimated above over ten years gives a theoretical delivery of 32,000 homes through this route

[viii] https://www.thinkhouse.org.uk/site/assets/files/3334/hbf0326.pdf

[ix] https://englishrural.org.uk/right-place-right-price-why-affordable-rural-housing-matters/ 

[x] https://www.cpre.org.uk/wp-content/uploads/2023/11/State-of-Rural-Affordable-Housing.pdf

[xi] https://get-information-schools.service.gov.uk/

[xii] https://www.nomisweb.co.uk/datasets/idbrent

[xiii] https://www.fsb.org.uk/resources/policy-reports/the-growth-belt-MCCDX77LDVOJGHXMHV7KD2SC5AXI