Some of the provisions from the new Act are already in force with remaining sections to follow. The controversy of this legislation is evident from the “ping pong” between Houses of Parliament in the final stages.

Two interesting areas of the new legislation affect affordable housing and introduce a new form of planning permission: Starter Homes and Permission in Principle.


The Act introduces a new form of affordable housing aimed at first time buyers with a minimum discount of 20% of market value. Some of the proposals from the original Bill have remained, such as the statutory duty on local authorities to promote Starter Homes, and the price caps of £250,000 on homes outside Greater London and £450,000 within the capital.

Key differences from the original Bill include a change to the definition of a first-time buyer - sales will now be restricted to buyers aged between 23 and 39. The Act has not carried through the controversial proposal that the homes could be sold at full market value after 5 years. Instead, secondary legislation may require owners selling within a specified period to repay a proportion of the discount or to sell at a discount. The alternative proposal for the repayment of the 20 per cent discount on a sliding scale if the property is sold during the first 20 years was rejected.


The Act also introduces ‘permission in principle’; a new form of planning permission which the government estimates could benefit around 7,000 sites. Permission in principle will cease to have effect after three years where granted by the local authority, or after five years where granted by a development order, although both of these time limits can be amended by the local planning authority. This is in line with the government’s technical consultation although there will be further clarification to follow.


A Court of Appeal ruling overturned the High Court decision to quash the government’s affordable housing policy which exempted small development sites from such requirements and provided vacant building credit to be off-set against affordable housing contributions. The relevant elements of the Planning Practice Guidance have since been reinstated which will be welcomed by developers:

  • Developments of 10 units or fewer or 1000 sq. m. or less (including annexes and extensions) are excluded from affordable housing levies and tariff based contributions. A lower threshold of 5 units applies in designated rural areas, Areas of Outstanding Natural Beauty and National Parks and developments of between 6 and 10 units are subject to a commuted sum payable on or after completion.
  • Where a vacant building is brought back into lawful use or demolished for redevelopment, a financial ‘credit’ equivalent to the floorspace of the vacant building will be offered against affordable housing contributions.

The possibility of a further appeal to the Supreme Court remains and we understand the Councils which appealed the policy are currently considering their options.


These developments are helpful for developers in terms of speeding up the planning process to deliver more housing and it will be interesting to see how the new Act takes effect through the year. We also watch with interest to see whether the Councils involved in the small sites exemption case pursue their right to appeal as the implications could be widespread.