Contributors
A central policy of this Labour government is the ambitious commitment to deliver 1.5 million new homes in England by the end of this Parliament (circa August 2029). Reaching this target requires 300,000 net new additions to housing supply every year of the parliament – a level never before attained. Further, the chancellor aims to deliver the “biggest boost in social and affordable housing in a generation” (22 September 2024).
The proportion of housing for affordable or social rent in England has declined from around 20% in 2000 to 16% in 2023. Around 63,600 units of new affordable housing were supplied in 2022/23, circa 15% of new affordable homes were for social rent, 49% were other forms of low-cost rent, and 36% were affordable home ownership [2].
A shortage of affordable housing is often reflected in the number of households in temporary accommodation and on local authority housing waiting lists. Rising costs of buying a home, the long-term impact of the 'Right to Buy' scheme introduced in 1980, and high sector private rent are cited as key drivers behind the so-called 'affordability crisis'.
A report commissioned by the NHF and published by Savills (9 June 2025), suggests that the government has so far overestimated its housebuilding figures for England.
Providers cite a range of barriers to increasing housing delivery including funding constraints, increased operational costs, and challenges within the planning system.
Successive governments have undertaken reforms of the planning system. Most recently, the current government reformed the National Planning Policy Framework (NPPF) in December 2024. These reforms included creating a new methodology for assessing housing need, the introduction of mandatory housing targets and the establishment of new ‘Golden Rules’ for developing housing on land within or released from the Green Belt. As a result, most areas have seen their housing targets change. Some targets have increased significantly, which has made local plans outdated and triggering a significant additional infrastructure requirement.
The NPPF reforms reflect a shift in governmental and political approaches to land use and affordable housing.
The December 2024 NPPF: a strategic overhaul
The revision of the NPPF was a pivotal moment in UK planning policy. To achieve the government target, local authorities were mandated to meet housing targets of 370,000 homes per year, with a focus on areas exhibiting the highest levels of housing unaffordability and potential for growth.
The standard method for determining local housing need in individual authorities was revised to deliver a nominal housing target of 370,000 new homes across England annually, and meeting the target made mandatory in most cases. The algorithm was tweaked to take more account of affordability, with the result that more of the 370,000 new homes are required in London and the South-east.
Local authorities must demonstrate a five-year land supply, even when they have up to date plans. Councils will have to demonstrate an extra 20% on top of the five-year supply from July 2026 if they have a local plan based on the old numbers, where the housing target is less than 80% of the new assessment of need.
Local authorities will be required to undertake Green Belt reviews where they do not have enough land to meet housing need, prioritising previously developed and then 'Grey Belt' sites.
Importantly, the NPPF reforms did not abandoned the core values of the Green Belt policy, which is to prevent urban sprawl and keep land permanently open (NPPF 143(a)-(e)). Rather, the reforms enable, under certain circumstances, greater levels of development to take place within Green Belt land [3]. Instrumental in this policy shift is the introduction of a definition of 'Grey Belt' land and the so-called 'Golden Rules'.
'Grey Belt' land
The NPPF introduces a new concept of Grey Belt sites. These are sites within the Green Belt that have not been previously developed, but are assessed as making only limited contribution to three of the Green Belt purposes (excluding the prevention of countryside encroachment). Under very specific conditions, development on such sites is no longer deemed as "inappropriate development", meaning that it does not require the demonstration of exceptional circumstances.
Where local authorities are failing to meet their housing need, additional areas of the Green Belt may be considered for development, as long as the purposes of its designation are not 'fundamentally undermined'. The introduction of the 'Grey Belt' concept under the revised NPPF permits this by allowing development on previously protected areas that does not significantly contribute to the Green Belt's core purposes as set out in NPPF 143(a), (b) and (c).
In terms of planning applications for grey belt release, while the traditional “very special circumstances” (VSC) test still exists, the new NPPF states that "Grey Belt" release is "not inappropriate development" where:
- The development would utilise Grey Belt land and wouldn't fundamentally undermine the purposes (taken together) of the remaining Green Belt across the area of the plan
- There is a demonstrable unmet need for the type of development proposed (e.g. lack of a five year supply of deliverable housing sites, including the relevant buffer where applicable, or where the Housing Delivery Tests was below 75% of the housing requirement over the previous three years)
- The development would be in a sustainable location
- Where applicable, the development proposed meets the "Golden Rules" requirements.
The idea is that land which is underutilised and of less strategic and environmental value forms a pragmatic solution to the housing shortage.
The 'Golden Rules'
In conjunction with the introduction of the Grey Belt concept, the revised NPPF also introduced the Golden Rules. These are designed to balance the demand for increased housing with the preservation of community amenities and environmental considerations. In summary, on sites in the Green Belt subject to a planning application, the following contributions (Golden Rules) should be made:
- Affordable housing: developments must deliver a substantial proportion of affordable housing to meet local demand; 15 percentage points above local plan requirements – up to a 50% cap.
- Infrastructure improvements: developers must demonstrate that their projects will contribute to necessary upgrades in local or national infrastructure, such as transportation networks, schools and healthcare.
- Green space enhancements: proposals should include the creation or improvement of publicly accessible green spaces, aligning with local and national standards for accessibility and biodiversity.
Commentary
The revised NPPF represents a shift in the balance between protecting Green Belt land and addressing the housing crisis. The softening of certain Green Belt protections, the government aims to help address the shortage of housing and increase the stock of affordable housing which is currently 'overstretched' [4] and inadequate.
Proponents of the reforms argue that this shift represents a progressive and necessary approach to planning policy which allows for responsible development by facilitating the building of new homes while also ensuring that developers make a meaningful contribution to local communities and the environment [5].
However, the National Audit Office report published on 6 June 2025 [6], identified some difficult market issues which too will need to be addressed and overcome if affordable housing numbers are going to increase in practice.
The NAO Report notes that developer contributions via Section 106 agreements have become an important way to deliver affordable homes in England. In 2023-24, 44% of affordable homes were provided this way, compared with 27% in 2013-14, and 4% in 2000-01 when the first affordable homes via a S106 agreement were recorded. In each financial year since 2016-17, over 40% of affordable homes have been delivered through Section 106 agreements. Of those delivered in 2023-24, most were for affordable rent (37%), followed by shared ownership (33%) and social rent (14%).
The NAO Report goes on to find that developers rely on bids from registered providers of social housing (RPs) to buy the affordable homes generated through a S106 agreement. However, in recent times developers have been struggling to sell the housing to RPs. MHCLG have commented that this issue is widespread and poses a significant challenge [7]. Research from the sector also highlights the prevalence of this issue. A Home Builders Federation (HBF) survey of 31 housebuilders found that, in October 2024, around 17,400 Section 106 affordable homes with detailed planning consent did not have a buyer [8]. Further, in July 2024, Savills reported that 53% of the housing associations it surveyed said they were either no longer intending to buy homes generated from a S106 agreement or had reduced their requirements for them.
This issue represents a risk to the delivery of affordable and social rental homes, and to the government’s aim of increasing overall housing supply. The HBF’s survey found that 139 building sites in England were delayed due to uncontracted Section 106 affordable homes.
In December 2024, the government announced the Section 106 Affordable Housing Clearing Service, operated by Homes England. It aims to facilitate the sale of uncontracted and unsold affordable homes across England (excluding London, where the GLA has responsibility for affordable housing delivery). By the end of February 2025, some 110 developers, 183 registered providers and 110 local authorities had signed up. However, only around 600 uncontracted homes had been listed, far below the figure of around 17,400 homes figure given by the HBF.
While MHCLG has updated the NPPF and targets for housebuilding, it is yet to update financial viability guidance.
To increase housing delivery, several systemic challenges must be addressed, including the imbalance in skills and resources between LPAs and large-scale developers, the complexity and opacity of financial viability assessments and the lack of coordinated support from central government.
The revised NPPF is also likely to generate more appeals and legal challenges, particularly around the interpretation of whether green belt purposes are being 'fundamentally undermined'. This could lead to further delays in a planning system under fire for holding back investment, rather than speeding up the delivery of the 1.5 million homes that the Labour government has bound its fortunes to in its election mandate.
As part of the recent Spending Review, the Chancellor promised the biggest investment in social and affordable housing in a generation to hit 1.5m target. A new £39 billion Affordable Housing Programme (AHP) over 10 years signals a serious commitment to address the structural undersupply of truly affordable homes and rebalancing the housing system [9].
Looking ahead, it will be interesting to see whether housebuilders are increasingly able to secure partnerships with registered providers (RPs), in a way which accelerates housing delivery and help meet the government's ambitious targets.
This article was also authored by Paige Angus, Paralegal at Womble Bond Dickinson.
Endnotes
Housing and planning are devolved matters in the UK. This article focuses on affordable housing in England.
[2] UK Parliament, HC Library: Affordable housing in England, 16 July 2024
[3] England had around 16,384 km2 (or 6,326 square miles) of Green Belt land at the end of March 2023, covering 12.6% of England’s land area. The Green Belt is clustered around 15 urban cores; the largest are London (5,085 km2), Merseyside and Greater Manchester (2,477 km2) and South and West Yorkshire (including Sheffield, Leeds and Bradford, 2,465 km2). From 2019-20 to 2021-22, 71.5 km2 of previously undeveloped green belt land changed to a developed use, of which 7.6 km2 turned into residential use. Green Belt - House of Commons Library, 15.12.23.
[4] Shelter England, 'The story of social housing'.
[5] Be News, 'Industry cautiously welcomes Labour's "landmark overhaul" of NPPF', 12 December 2024
[6] Improving local areas through developer funding Ministry of Housing, Communities & Local Government, session 2024-25, 6 June 2025, HC 945.
[7] MHCLG defines ‘affordable housing’ as housing for sale or rent for those whose needs are not met by the open market, including housing that provides a subsidised route to home ownership, and/or is for essential local workers. It must comply with one or more of the following definitions: social rent; other affordable housing for rent; discounted market sales housing; and other affordable routes to home ownership.
[8] Home Builders Federation, Bid farewell: An examination of the crisis in S106 Affordable Housing, November 2024.
[9] Further details of the AHP were set out by the Government on 2 July 2025 here.
This article is for general information only and reflects the position at the date of publication. It does not constitute legal advice.
