The government has abandoned plans to remove affordable housing quotas on medium-sized development sites in England, after a consultation produced an overwhelmingly hostile response from housing experts, councils, and community groups.
Of the 910 individuals and organisations that responded to the consultation, 41% were strongly opposed to the measure. Only 18% were strongly in favour. The government’s own planning reform document acknowledged ‘significant opposition across stakeholder groups.’
The original proposal would have allowed private developers building between 10 and 49 homes to make cash payments to local authorities instead of providing affordable units on-site. Ministers had hoped the flexibility would accelerate housebuilding and bring the government closer to its target of 1.5 million new homes by the end of this parliament. The Treasury, under Rachel Reeves, was understood to have backed the idea with particular enthusiasm.
Why Affordable Housing Quotas on Medium Sites Mattered
The stakes were highest in rural England. An analysis of government statistics by the National Housing Federation (NHF) found that in the most rural areas, more than half of all affordable homes are built on developments of this size. Scrap the requirement on medium sites and you do not just trim the margins; you cut the primary supply route.
The NHF estimated the policy change would have cost the country 32,000 affordable homes over the next decade, a projection grounded in a three-year baseline showing roughly 10,000 affordable homes delivered annually on medium sites through Section 106 planning obligations. For the housing associations that depend most heavily on this pipeline, the exposure is acute: NHF data shows that 12% of all Section 106 acquisitions by its members over the last three years came from medium sites, rising to 26% for small and medium housing associations specifically.
Kate Henderson, chief executive of the NHF, welcomed the reversal: ‘It’s extremely positive to see that the government has listened to the social housing sector and decided against removing onsite affordable housing requirements on medium-sized development sites. This decision will safeguard one of the most important routes for delivering social homes in rural areas, ensuring we can build genuinely affordable homes where people need them, in every postcode across the country.’
I think she is right to be relieved, but the margin of comfort is thinner than the headline suggests.
What the Planning Reform Package Still Changes
The medium-site reversal sits inside a wider planning reform document that continues to loosen obligations in other directions. According to the Local Government Association, the government will proceed with scrapping the national requirement that at least 10% of homes on major sites be affordable home ownership. The rule that 25% of Section 106 affordable units be designated as First Homes will also be removed.
Ministers are also instructing councils to adopt a ‘default yes’ approach to housing developments within reasonable walking distance of well-connected train and tram stations, a push to use transport connectivity as the primary planning lever.
Angela Rayner, the housing secretary, struck a bullish tone: ‘I’m very clear that we need these homes. We have already seen nearly 400,000 since we came into office, new homes that have completed. We’ve seen a 15% increase in start-ups for housing starts. We want to continue on that path and that’s why we’ve set out these rules to make sure that we can get planning through as quickly as possible, and we can get the infrastructure alongside the housing that we desperately need.’
The government is also backing its position with direct spending. The Social and Affordable Homes Programme, announced separately, carries a £39 billion budget and aims to deliver around 300,000 social and affordable homes over its lifetime, with at least 60% earmarked for Social Rent. That is the carrot. The medium-site decision amounts to a concession that one particular stick was the wrong shape.
The revised National Planning Policy Framework defines a medium development as 10 to 49 homes on sites up to 2.5 hectares, a threshold expanded from an earlier working paper to reflect that delivering 49 units alongside infrastructure, green space, and drainage requirements can realistically demand that much land.
My read is that the government has made the right call on affordable housing quotas, but the mechanism that saved them was political embarrassment rather than design. A consultation that returns 41% strongly opposed is not a close call; it is a warning. The question now is whether the cash-in-lieu idea resurfaces once the housebuilding numbers disappoint, as they very likely will.
