November 15, 2019

SME house builders boosted by Section 106 ruling, says FMB

The Appeal Court’s decision to uphold a Government initiative to waive affordable housing requirements for small developments is a boost for SMEs and house building, the Federation of Master Builders (FMB) has said.

Brian Berry, Chief Executive of the FMB, praised the ruling, commented: “We welcome the Appeal Court’s decision to confirm the Government’s right to waive Section 106 affordable housing contributions for sites of ten units or fewer. It’s widely recognised that if we are tackle the long-term undersupply of new homes in this country, then we will need to see renewed growth in output from SME house builders. Today’s verdict will go a long way in backing these firms. It will make the economics of small scale development that much easier and should increase the use of small sites in sustainable locations for the delivery of new homes.”

Mr Berry continued: “Nearly one-in-two SME house builders know of sites they would otherwise be interested in developing, but which they believe would be unviable because of the likely combination of Section 106 and the Community Infrastructure Levy charges. These contributions are prohibitive for many smaller developers, killing off thousands of otherwise viable schemes, and acting as a serious barrier to expansion. The threshold’s reinstatement will protect the very smallest developments from being lumbered with unaffordable requirements, allowing them to bring forward small-scale, sustainable developments, which will ultimately be of huge benefit to everyone, local councils included.”

For his part, Housing and Planning Minister, Brandon Lewis, hailed a judgment that paves the way for more housebuilding on smaller sites and that will get homes built more easily.

The Court of Appeal decision restores a government policy which means affordable homes contributions will fall to those bigger developers building the largest sites – while those smaller builders developing sites of 10 homes or fewer will be able to get work started on their sites, without facing charges that could leave them unable to build any homes at all.

Ministers criticised the moves by West Berkshire District Council and Reading Borough Council who challenged the policy and brought legal action as “a total waste of taxpayers’ money”.

Smaller housebuilders make an important contribution to helping meeting the government’s key ambition of delivering one million new homes.

Brandon Lewis said: “We’re committed to building more homes, including record numbers of affordable homes – key to this is removing unnecessary red tape and bureaucracy that prevents builders getting on sites in the first place.

“Today’s judgment by the Court of Appeal restores common sense to the system, and ensures that those builders developing smaller sites – including self-builders – don’t face costs that could stop them from building any homes at all.

“This will now mean that builders developing sites of fewer than ten homes will no longer have to make an affordable homes contribution that should instead fall to those building much larger developments.

He added: “This case was a total waste of taxpayers’ money and the uncertainty the case created amongst housebuilders stalled new development from coming through.

“I hope councils focus their time and money on delivering the front line service that their residents rely on and helping support new housebuilding in their areas that is very much needed.”

The Court of Appeal’s judgment allowed on all grounds the government’s appeal to a High Court ruling.