Communities are being short-changed on affordable homes and essential services, as MPs push for a radical overhaul of developer contribution rules.
Housebuilders are pocketing soaring profits while local people face a chronic shortage of affordable housing and basic infrastructure, that’s the stark message from a damning new report by the Housing, Communities and Local Government Committee.
MPs Demand Fairer Housing Contributions
The cross-party group of MPs says the current system, designed to make developers contribute financially to local areas, is failing miserably. Instead of delivering promised schools, GP surgeries, and transport links, many developments are pushing forward with little benefit to the communities they’re built in.
A Broken System Burdening Local Councils
The two main tools meant to ensure developers pay their fair share, Section 106 agreements and the Community Infrastructure Levy (CIL) are not working as they should.
According to the committee, negotiations between developers and councils are often long-winded, inconsistent, and riddled with loopholes.
Under-resourced planning departments are left struggling to hold developers accountable, and essential contributions are frequently watered down.
“We need more homes, but we need homes that are affordable. Any proposed changes to land value capture measures… should be able to answer the crucial question of how it will increase the number of affordable homes available, alongside vital infrastructure,” said Committee Chair Florence Eshalomi.
Developers Dodging Affordable Housing Promises
One of the most troubling findings is the ability of developers to renege on affordable housing commitments after building work has already begun.
Using so-called “viability assessments,” developers can argue that financial conditions have changed and get permission to reduce their obligations.
The committee is calling for tough new rules. It insists that any future changes to affordable housing levels should only be allowed “in the most exceptional circumstances.”
A New Approach Needed, Say MPs
The report goes further, suggesting that all councils in England should set minimum affordable housing targets in their local plans. It also recommends a fast-track planning process for developers who meet these targets upfront, rewarding those who play fair from the start.
But concerns go beyond individual housing developments. The committee took aim at the government’s handling of its New Towns programme, a flagship policy aimed at creating new communities from scratch.
“There is significant potential to use land value capture as part of funding the proposed new towns, especially on greenfield sites.
We call on the government to announce new funding to establish the development corporations at the Autumn Budget 2025, so they can commence land acquisition on the first New Towns sites without delay by spring 2026,” the report said.
The MPs are also urging the government to mandate that homes for social rent make up a significant share of the 40% affordable housing quota in these new towns.
Britain’s Housing Target at Risk?
The committee issued a stark warning about the government’s ambition to build 1.5 million homes.
Delays in publishing a long-term housing strategy have left the sector in limbo. Without a clear national roadmap, developers lack direction, and housing delivery suffers.
Emergency Changes in London Raise Alarm
To boost housebuilding in the capital, ministers recently announced a reduction in the required proportion of affordable housing needed to fast-track planning permission from 35% to just 20%.
The move is part of an emergency package to kick-start construction amid what officials describe as a “perfect storm” of soaring costs, high interest rates, and post-pandemic pressures.
But critics argue this change could inflate land values, further enriching developers while making homes even more unaffordable.
The Greater London Authority has warned that reducing affordable housing requirements may actually slow overall delivery by distorting market expectations and developer behaviour.
The government has pledged to review the committee’s recommendations.
A spokesperson for the Ministry of Housing, Communities and Local Government said: “We’re pulling every lever to get Britain building, including our Planning and Infrastructure Bill, £39 billion investment in social and affordable housing, and landmark New Towns programme, which will restore the dream of homeownership and create thriving communities.
We’ve already sought views on streamlining Section 106 negotiations and will continue to work closely with the sector to ensure the developer contributions system delivers the homes people need.”
But the message from MPs is clear: unless major reforms are made soon, local people will continue to lose out, and the dream of affordable, well-serviced homes will remain out of reach for millions.
