What role does the planning system play in creating affordable homes?
How the planning system defines, targets, requires and secures affordable housing under the August 2026 NPPF — from local plan targets to Green Belt Golden Rules, viability and section 106.
PLANNING APPLICATIONS
Andrew Ransome
9/24/20265 min read
Affordable housing is delivered through the planning system by setting clear requirements at different stages of the planning process.
Local plans can set affordable housing targets, planning permissions can require affordable homes as part of a development, and legal agreements can secure their delivery.
The system therefore links local housing needs with the development of new homes, ensuring that affordable housing forms part of the planning considerations for suitable development proposals.
This article explains how the planning system creates affordable housing, from setting policies in the local plan through to securing affordable homes through planning conditions and legal agreements.
What counts as "affordable housing"?
The NPPF glossary sets the definition, and it matters because a scheme only counts toward a policy requirement, or toward local housing need figures, if it meets one of these categories:
Social Rent — rent set under government rent policy, let by a registered provider, with provisions to keep it affordable for future eligible households;
Other affordable housing for rent — rent set under the Affordable Rent policy, or at least 20% below local market rent, again let by a registered provider (or, for Build to Rent schemes, not necessarily a registered provider);
Discounted market sales housing — sold at a discount of at least 20% below local market value, with provisions to keep it discounted for future eligible households;
Other affordable routes to home ownership — shared ownership, relevant equity loans, other low-cost homes for sale at 20% or more below market value, and rent-to-buy; and
Military affordable housing — sub-market rent set by the Ministry of Defence, for service personnel, veterans and their dependants.
A note on First Homes. First Homes — the discounted market sale product introduced by the May 2021 Written Ministerial Statement, with its 30% minimum discount and £250,000/£420,000 price caps — is not named anywhere in the current NPPF text. However, a First Home, could still meet the "discounted market sales housing" definition above and should still count as affordable housing on that basis.
Local plan targets: where the need for affordable housing is set
Affordable housing policy starts at the plan-making stage.
Policy HO1 of the NPPF requires the housing need assessment behind every spatial development strategy and local plan to specifically include those who require affordable housing, including Social Rent, as one of the groups the plan must provide for.
That assessed need then feeds into Policy HO2, which requires the plan to set an overall housing requirement figure.
Policy HO5 translates that requirement into actual policy: the type and mix of affordable housing required, including a minimum proportion of Social Rent specifically, and the accessibility standards that go with it.
The affordable housing requirement a scheme ultimately faces should trace back to that evidenced local plan process, rather than being pulled from a generic national benchmark.
Policy PM12 requires affordable housing requirements in a plan to be expressed as a single figure rather than a range, specifically so developers can account for the cost accurately in the price paid for land.
A development plan policy that is still expressed as a range is therefore potentially inconsistent with current national policy.
Green Belt and Grey Belt Sites
Where major housing development comes forward on land released from, or already within, the Green Belt, policy GB8's "Golden Rules" set a specific affordable housing contribution as one of three mandatory elements (alongside infrastructure and green space provision).
That contribution should follow the development plan's own policy for Green Belt/released land under HO5(1)(a)(ii) where one exists.
Where it doesn't, the default is a contribution 15 percentage points above whatever the highest affordable housing requirement would otherwise apply, capped at 50% — or 50% outright where there's no pre-existing requirement to measure against.
That 50% cap doesn't apply to rural exception sites, community-led development exception sites, or where the local plan already has a policy requiring more.
Substantial weight is given to the importance of complying with the Golden Rules when such an application is being considered.
A viability assessment can only be relied on to depart from them in three specific circumstances — previously developed land with unforeseen costs, a strategic site, or a development of a wholly different type to that assumed in the plan's own viability evidence.
Rural Exception Sites
Outside the Green Belt, policy HO10 allows affordable housing to come forward on land not otherwise allocated, provided it's a genuine rural exception site. This must be evidenced by a local housing needs survey no more than five years old — or a community-led development.
These sites should generally adjoin or be physically well-related to a settlement. It also shouldn't exceed one hectare or 5% of the size of the existing settlement (whichever is greater), unless the development plan specifically allows more.
A proportion of market housing can be included where it's essential to make delivery viable without grant funding. But that's a narrow exception, not a route to a conventional mixed scheme dressed up as an exception site.
Viability: when the requirement can be reduced
Policy DM5 sets the starting presumption plainly. Where a proposal complies with up-to-date development plan policies and national decision-making policies, it should be assumed to be viable.
That assumption can be displaced, but only in specific circumstances —
where the proposed development is materially different to what the plan's own viability evidence assumed,
where site characteristics are materially different,
where the site carries costs the plan's viability evidence didn't account for, or
where site or economic circumstances have changed significantly (a recession or similarly significant change) since that evidence was prepared.
Where a viability assessment is submitted on that basis, it needs to be built on, and explicitly reconciled with, the viability evidence that underpinned the relevant plan policies — not a freestanding assessment starting from scratch.
Neither the price paid for land, nor an option agreement price, is ever a justification on its own for failing to meet policy-compliant contributions.
Ultimately, how much weight to give a viability assessment is a matter of planning judgement for the decision-maker, informed by the circumstances in which it's been submitted.
Planning Obligations and Planning Conditions: how delivery is actually secured
A section 106 planning obligation — either a bilateral agreement or a unilateral undertaking — remains the standard mechanism to secure affordable housing. It can bind the transfer to a registered provider, define occupancy criteria, and keep the homes affordable for successive occupiers in a way a condition alone struggles to achieve.
A planning decision-maker will normally expect a completed planning obligation to be in place by the time a decision is made.
Where a condition is used instead of an obligation, the position is narrow.
Government guidance treats a positively-worded condition requiring an applicant to enter into an obligation as generally unenforceable. A negatively-worded condition preventing development until an obligation is entered into is generally considered inappropriate.
Even a condition that doesn't explicitly demand a legal agreement can still be read as requiring one.
Only in exceptional circumstances, where the heads of terms have already been agreed before permission is granted and delivery would otherwise be at serious risk, might a planning condition be considered.
R (on the application of Skelmersdale Ltd Partnership) v West Lancashire BC [2016] EWCA Civ 1260 confirmed that a condition is interpreted as a reasonable reader would understand it in context — so a condition that simply requires a scheme to "ensure" homes remain affordable is likely to be read as needing a legal agreement behind it regardless of how it's worded, engaging the same exceptional-circumstances tests as if it said so directly.
Get advice on your scheme's housing requirement
If you're considering a housing development site and need to understand its planning requirements, including housing mix, affordable housing, viability or the mechanisms needed to secure delivery, it's worth having the position reviewed early. Get in touch with me to talk through your site and its development potential.
Andrew Ransome MRTPI - Email: andrew@andrewransome.co.uk
About me
Andrew Ransome is a Planning Director and a Chartered Member of the Royal Town Planning Institute (RTPI), with more than two decades of experience in town planning.
He specialises in delivering strategic planning solutions for complex developments across both rural and urban environments, helping clients navigate planning challenges and unlock development opportunities. Connect with Andrew on Linkedin.
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