As the housebuilding sector in Northern Ireland braces itself for a big increase in Section 76 agreements, Drew Nesbitt of law firm Wilson Nesbitt and Chris Bryson of planning consultancy Gravis Planning explain the key changes developers will need to start preparing for
This year is the 30th anniversary of Section 106 in England and Wales. It’s now a firm part of most development and planning assessments, and it’s hard to remember a process that hasn’t included Section 106 discussions. It’s far younger equivalent in Northern Ireland, Section 76, has been more sporadically used, but this is all set to change in 2023.
Following the preparation of new Local Development Plans across all of its 11 boroughs, next year Northern Ireland will experience a substantial increase in the use of Section 76 agreements.
The considerable change, which coincides with the maturing of its rapidly developing market, means that the majority of housing development schemes of a certain size will need a planning agreement that adheres to affordable housing.
Whilst it poses a positive for first-time buyers, key workers, and lower-income families, who will be able to benefit from the affordable housing opportunities, the housing market in Northern Ireland could experience a significant impact, potentially even up to a 20% increase on existing schemes and costs. This will leave developers to decide who takes the hit: them or other homebuyers.
How does Section 76 work?
When it comes into action next year, a number of councils will have their own requirements and thresholds; but it’s most likely that they will operate closely with Belfast council, which is following the HOU5 policy.
Under HOU5, Belfast council requires that any development with over five units will need a planning agreement where 20% of those houses offer affordable/social housing options. It also states that affordable housing will be secured by a way of a Section 76 agreement, which needs to be in place in advance of planning permission being granted.
In addition to this, it highlights that affordable housing has to be provided as an integral part of mixed tenure development, integrated with general needs and not readily distinguished in terms of its external design, materials and fishes.
Although, if developers can demonstrate that it’s not suitable or viable for development to meet the policy in full, the council will consider suitable alternatives on a case-to-case basis.
The updated policy provides developers and housebuilders with additional costs to consider. Some larger housebuilders are used to similar conditions to some extent; however, small and medium-sized developers may really feel the squeeze, especially if they haven’t previously had to factor in affordable housing costs.
When does the change kick in?
Although the change won’t officially come into full effect until next year, it’s important that developers and housebuilders are aware of them. Even those who are in the process of either planning or submitting from are likely to be assessed against new affordable housing policies and the need for Section 76 agreements.
In fact, in Belfast, some developers are already experiencing pushback from the local council, which is operating Section 76 as a draft policy. We’ve witnessed some cases where house developers have been forced to reconsider their plans to be in line with the new affordable housing policies and meet Section 76 requirements, despite having well-advanced planning applications. As a result, developers have been hit with up to a six-figure cost increase, and others have decided to abandon their plans altogether due to the heightened costs.
“It’s not all doom and gloom for housebuilders and developers if they are able to weather the storm and prepare”
This is why it’s vital for housebuilders and developers to be aware of the change, as they will likely need to revisit their plans to be in line with Section 76. If they can factor in the costs and additional requirements, they will be able to make the most of the flourishing opportunities Northern Ireland has to offer.
Is there a silver lining for housebuilders and developers?
It’s not all doom and gloom for housebuilders and developers. If they are able to weather the storm and prepare, they can take advantage of the once-in-a-generational opportunity that awaits them in Northern Ireland.
Following the pandemic younger, highly-educated graduates have stayed put and began their careers in Northern Ireland, planting their roots, whilst enjoying being close to family and the benefits of the work-life balance that it boasts, instead of moving overseas as they have done in previous generations.
There are also now more than ever more job opportunities available, particularly in Belfast, which has been named the number one cybersecurity destination in Europe, with international companies including Black Duck Software, WhiteHat Security, Rapid 7, Proofpoint and Alert Logic establishing operations around the city. In addition, Belfast is home to other top global firms, and has welcomed the expansion of international firm PwC.
The city’s two major universities have also pledged to revitalise Belfast with student accommodation, further increasing Northern Ireland’s appeal to younger, educated people.
The combination of these significant changes provides a golden goose for housebuilders and developers in Northern Ireland. The people are there, the jobs are there, and so the houses must be there too.
Are you a social housing professional? Sign up for a FREE MEMBERSHIP to upload news stories, post job vacancies, and connect with colleagues on our secure social feed.