How Planning Policy Shapes Affordable New Build Housing

Why Planning Policy Matters for New Build Buyers

Every new build home in the UK exists because the planning system permitted it. The planning framework determines where homes are built, how many, what type, and at what price. For anyone interested in affordable new build housing — whether through shared ownership, First Homes, or discounted market sale — understanding planning policy is essential because it directly controls the supply of these homes.

The UK’s planning system is often cited as a key reason why housing is expensive. Restrictive land allocation, slow decision-making, and complex regulations all contribute to constraining supply. At the same time, the planning system is the primary mechanism through which affordable homes are secured from developers, typically as a condition of granting planning permission on new developments.

This guide explains how the system works, what the key policies are, and what recent reforms mean for the availability and affordability of new build homes in 2026 and beyond.

24%

Of new build homes delivered as affordable housing (England avg)

63,000

Affordable homes delivered annually via planning obligations

10–40%

Typical affordable housing requirement set by local plans

The National Planning Policy Framework (NPPF)

The National Planning Policy Framework (NPPF) is the overarching document that sets out the government’s planning policies for England. It guides local authorities in preparing their local plans, making planning decisions, and negotiating affordable housing from developers.

Key NPPF Provisions for Affordable Housing

The NPPF has been revised multiple times, most recently in December 2024, with further updates expected in 2026. The key provisions affecting affordable new build housing include:

Presumption in favour of sustainable development: Where local plans are out of date, there is a presumption that planning permission should be granted for housing developments, which can increase the overall supply of both market and affordable homes.
Affordable housing on major sites: The NPPF expects local plans to require affordable housing on developments of 10 or more homes (or sites of 0.5 hectares or more). This is the primary mechanism for securing affordable new builds.
First Homes requirement: At least 25% of all affordable homes secured through planning obligations must be First Homes — new build homes sold at a minimum 30% discount to first-time buyers, with the discount retained on future sales.
Entry-level exception sites: The NPPF allows small sites adjacent to existing settlements to be developed specifically for affordable housing, even where they would not normally receive planning permission.
Rural exception sites: In rural areas, small affordable housing developments can be permitted on sites that would not usually be allocated for housing, specifically to meet local affordable housing needs.

NPPF Affordable Housing Policies

Threshold

10+ homes or 0.5+ hectare sites

First Homes Minimum

25% of all affordable homes must be First Homes

Vacant Building Credit

Brownfield sites with vacant buildings get credit against affordable requirement

Rural Exception Sites

Small 100% affordable developments in rural areas on unallocated land

What This Means for Buyers

More Affordable Homes

Every major new development must include affordable units

First Homes Availability

Guaranteed pipeline of discounted new builds for first-time buyers

Rural Options

Exception sites create opportunities in villages and small towns

Planning Certainty

National policy creates a baseline that every local authority must follow

Local Plan Policies and Affordable Housing Requirements

While the NPPF sets the national framework, it is the local plan that determines the specific affordable housing requirement in each area. Every local authority in England is required to prepare a local plan that sets out how much housing is needed, where it will go, and what proportion should be affordable.

Typical Affordable Housing Percentages

Affordable housing requirements vary significantly by local authority, reflecting differences in local housing need, land values, and development viability. Here is a breakdown of typical requirements across different types of area:

Affordable Housing Requirements by Area Type

Inner London Boroughs35–50%

Outer London Boroughs30–40%

Major Cities (excl. London)15–30%

Market Towns and Suburbs20–35%

Rural Areas25–40%

Low-Value Urban Areas (e.g., parts of North)10–20%

Percentages are indicative ranges based on local plan analysis. Actual requirements depend on the specific local plan policy, site characteristics, and viability assessments.

To find the affordable housing requirement for a specific area, search for the local authority’s adopted local plan on their website. The affordable housing policy is typically found in the housing chapter and will state the percentage requirement, the tenure mix, and any thresholds or exemptions.

Tenure Mix Requirements

Local plans don’t just set the percentage of affordable housing — they also specify the tenure mix. This determines what types of affordable homes are delivered. Since the introduction of First Homes in 2021, the typical tenure mix on a new development looks like this:

25% First Homes: This is the national minimum set by the NPPF. Some local authorities seek more.
Social rent: Typically 40–60% of the remaining affordable homes. The cheapest form of affordable housing, with rents set at around 50–60% of market rent.
Shared ownership: Typically 20–40% of the remaining affordable homes. Allows buyers to purchase a 25%–75% share. See our shared ownership guide.
Affordable rent: Rents capped at 80% of local market rent. May form 10–30% of the affordable mix.

Viability Assessments: When Developers Push Back

One of the most contentious aspects of affordable housing delivery is the viability assessment. This is a financial appraisal submitted by a developer arguing that the full affordable housing requirement set by the local plan would make the development unviable — that is, it would not generate a sufficient return to justify the investment.

Viability assessments are legitimate tools in the planning system, but they have been criticised for allowing developers to reduce their affordable housing contributions, particularly on high-value sites where the requirement is most needed.

How Viability Assessments Work

Developer Calculates Costs

Land purchase price, construction costs, finance costs, professional fees, marketing, and sales costs are all calculated. The developer also includes an assumed profit margin (typically 15–20% of gross development value).

Revenue Is Projected

The expected sales revenue from market homes and the transfer values for affordable homes (paid by housing associations) are calculated. Affordable homes generate significantly less revenue than market homes.

Residual Land Value Test

Revenue minus costs equals the residual land value. If this is below the “benchmark land value” (the minimum price a landowner would accept), the developer argues that the scheme is unviable with the full affordable housing requirement.

Negotiation and Decision

The council reviews the viability assessment (often commissioning their own independent review). A negotiated affordable housing figure is agreed, which may be lower than the policy requirement. Some councils publish viability assessments for public scrutiny.

Impact on Affordable Housing Delivery

Research by planning consultancies and housing charities has consistently shown that viability assessments result in reduced affordable housing on many developments. A study by the London Borough of Southwark found that viability assessments resulted in an average affordable housing delivery of 19% on sites where the policy required 35%. This is a significant shortfall that directly reduces the supply of affordable new builds.

Recent NPPF reforms have attempted to address this by requiring viability to be assessed at the plan-making stage (rather than at the application stage), which should reduce the scope for developers to challenge affordable housing requirements on individual sites. However, implementation has been slow, and site-specific viability assessments remain common.

Section 106 vs Community Infrastructure Levy (CIL)

There are two main mechanisms through which local authorities secure contributions from developers: Section 106 agreements and the Community Infrastructure Levy (CIL). Understanding the difference is important because they affect the delivery of affordable housing in different ways.

Section 106 Agreements

What It Is

A legal agreement between the developer and local authority attached to the planning permission

What It Funds

Affordable housing on-site, plus site-specific infrastructure (roads, schools, open space)

Negotiable?

Yes — subject to viability assessment. Can be reduced or varied.

Affordable Housing

Primary mechanism for securing affordable homes on new developments

Community Infrastructure Levy

What It Is

A fixed-rate charge per square metre of new development, set in the council’s CIL charging schedule

What It Funds

Strategic infrastructure: transport, health facilities, education, flood defences

Negotiable?

No — it is a non-negotiable charge based on the charging schedule. Some exemptions apply.

Affordable Housing

Affordable housing is exempt from CIL. CIL does not directly fund affordable homes.

The key point for affordable housing is that Section 106 remains the primary tool for securing affordable new builds. CIL funds strategic infrastructure but does not directly provide affordable homes. When the government proposed replacing Section 106 and CIL with a new Infrastructure Levy as part of the Levelling Up and Regeneration Act, there were widespread concerns that this could reduce affordable housing delivery. As of 2026, the Infrastructure Levy remains in the testing phase and Section 106 continues to be the main mechanism.

Types of Affordable Housing in Planning

The planning system recognises several distinct types of affordable housing, each with different characteristics. Understanding these categories helps you identify which type of home you may be eligible for on new build developments.

Social Rent

Rent set by the government’s formula based on property value, local earnings, and number of bedrooms. Typically 50–60% of market rent.

Managed by housing associations or councils. Allocated via housing register (waiting list). Highest need priority.

Affordable Rent

Rent capped at 80% of local market rent (inclusive of service charges). Introduced in 2011 to allow housing associations to charge higher rents and build more homes.

Managed by housing associations. Allocated via housing register or direct application to the HA.

Shared Ownership

Buy a 25%–75% share and pay subsidised rent on the remainder. Can staircase to full ownership over time. Income cap £80,000 (or £90,000 in London).

Managed by housing associations. Apply directly to the HA or via Share to Buy.

First Homes

New build homes sold at a minimum 30% discount (up to 50%). Price after discount capped at £250,000 (or £420,000 in London). First-time buyers and key workers get priority.

Sold by the developer. Discount is locked in via a Section 106 restriction on the title, applying to all future sales.

Discounted Market Sale

Homes sold at a discount (typically 20–30%) to market value, with the discount retained on future resales through a planning restriction. Similar to First Homes but without the national framework.

Sold by the developer. Eligibility criteria set by the Section 106 agreement — usually local connection and income tests.

Rent to Buy

Rent at around 80% of market rent for a fixed period (typically 5 years), with the saving helping to build a deposit. Option to purchase at the end of the rental period.

Managed by housing associations. Limited availability — mainly funded through the Affordable Homes Programme.

How Policies Vary by Region

Planning policy varies significantly across the UK, both between the devolved nations and between local authorities within England. Understanding your region’s approach is crucial.

London

The London Plan (the spatial development strategy for Greater London) sets a strategic target of 50% affordable housing on all new developments. The “threshold approach” offers a “fast-track” route through planning for developments that provide 35% affordable housing (or 50% on public land) without a viability assessment. Developments below this threshold must submit a viability assessment and face greater scrutiny.

Northern England

In parts of the North, lower land values and house prices mean that affordable housing requirements are typically 10–20%. Some areas, such as parts of County Durham and Teesside, have very low or zero affordable housing requirements because market prices are already close to affordable levels. This means fewer dedicated affordable homes are built through Section 106, but market homes may already be accessible to buyers on lower incomes.

South East and South West

High demand and limited supply in the South East and South West drive affordable housing requirements of 30–40%. However, high land values and strong developer demand also create the most tension around viability, with frequent negotiations to reduce affordable housing contributions.

Devolved Nations

Scotland: Planning policy is set through the National Planning Framework 4 (NPF4). Affordable housing requirements are set by local development plans, typically 15–25%.
Wales: Technical Advice Note 2 (TAN 2) guides affordable housing policy. Local development plans set requirements, typically 10–30% depending on the area.
Northern Ireland: The Planning Policy Statement does not set mandatory affordable housing percentages. Developer contributions for affordable housing are less formalised than in England.

Recent Planning Reforms and Their Impact

The planning system has undergone significant reform in recent years, with further changes expected. Here are the key reforms affecting affordable new build housing.

Levelling Up and Regeneration Act 2023

This Act introduced several changes to the planning system:

Infrastructure Levy: A proposed replacement for Section 106 and CIL. Still being tested and not yet nationally implemented. Concerns remain about its impact on affordable housing delivery, as it is calculated as a percentage of development value rather than negotiated on a site-by-site basis.
National Development Management Policies: New national policies that will sit alongside the NPPF and take precedence over local plans on specified topics. Could standardise some affordable housing requirements.
Compulsory design codes: Local authorities must prepare design codes for their areas, influencing the quality and character of new developments.

NPPF December 2024 Revisions

The most recent NPPF revisions included:

Revised standard method for housing need: New formula for calculating how many homes each local authority needs to plan for. Higher numbers in many areas, which should increase overall housing supply.
Grey Belt development: A new designation allowing development on previously developed land in the Green Belt, potentially unlocking new sites for affordable housing in constrained areas.
Golden rules for Green Belt release: Where Green Belt land is released for development, at least 50% of homes must be affordable. This is a significant increase that could dramatically boost affordable new build supply in areas around major cities.

50%

Affordable homes required on Green Belt release sites (“golden rule”)

370k

Annual housing target proposed in revised standard method

1.5m

Government target: new homes over the 2024–2029 parliament

Community Consultation

Planning policy is shaped in part by community consultation. When a local authority prepares or updates its local plan, there are formal consultation periods during which residents, developers, and other stakeholders can comment. Neighbourhood plans, prepared by parish or town councils, can also influence affordable housing policies at a hyper-local level.

If you want to influence planning policy in your area — for example, to advocate for more affordable housing on new developments — engaging in local plan consultations and neighbourhood planning is the most effective route. Many housing associations also participate in consultations to push for adequate affordable housing provision.

Impact on New Build Supply and Prices

Planning policy has a direct and measurable impact on both the supply of new build homes and their prices. Understanding this relationship helps buyers make informed decisions about when and where to buy.

Supply Effects

Areas with restrictive planning policies tend to have fewer new build homes and higher prices. Research by the Centre for Cities found that local authorities in the most constrained areas (such as parts of the Green Belt around London) built 50–60% fewer homes per capita than those with more permissive approaches. The recent planning reforms aim to address this by increasing housing targets and releasing some Green Belt land, but the effects will take several years to materialise.

Price Effects

Affordable housing requirements have a complex effect on prices. On the one hand, they reduce the land value that developers are willing to pay (since affordable homes generate less revenue). On the other, they do not typically increase market home prices, because prices are set by what buyers are willing and able to pay, not by the developer’s costs. In other words, higher affordable housing requirements tend to reduce land prices rather than increase house prices.

For buyers of affordable new builds, the key implication is that the type and quantity of affordable homes available in any area is largely determined by the local plan’s affordable housing policy and how effectively it is enforced. Areas with strong policies and robust enforcement deliver more affordable homes; areas where viability assessments regularly erode requirements deliver fewer.

To find affordable new build homes in your area, browse our property listings or explore our guides on checking which government schemes apply, shared ownership, and first-time buyer strategies.