In Northern Ireland, its equivalent, Section 76, was only introduced seven years ago and is far less frequently used.
However, this is set to change as Section 76 is becoming more sharply focused, and next year will see an increase in its use across the majority of Northern Ireland’s 11 boroughs. The mandatory new regulations will mean that all residential developments of scale will need a planning agreement that adheres to affordable housing requirements. The considerable change will likely bring teething problems but is essential to ensure continued local economic success.
Once in place, each council will have different requirements and thresholds, but they will work in a similar way to the HOU5 policy for Belfast City Council, which states that if there are five or more houses in a scheme then 20% of those need to be affordable.
The policy also states that affordable housing will be secured by way of a section 76 agreement, which should be in place in advance of planning permission being granted.
Although it’s not coming into full effect until 2023, some developers are already experiencing the squeeze from Section 76, especially in the capital, Belfast where the council are using it as a draft policy.
It’s predicted that following the new rule there will be a significant material impact on the Northern Ireland housing market, potentially even up to a 20% increase on existing schemes and costs. Meaning that many developers will be faced with deciding who’s going to take the brunt of the costs, them or homebuyers?
Leaving a mixture of potential outcomes for those looking to buy a property in Northern Ireland, with first-time buyers, key workers and low-income families predicted to reap the benefits, and other house buyers potentially having to take the hit of higher house prices.
Whilst it’s likely that larger housebuilders and developers may have already experienced some pushback from the local council in terms of needing to offer affordable housing, the real pressure will be added to small and medium-sized developers who haven’t previously had to consider this.
For housebuilders and developers of any residential development scheme, it’s vital that they become aware of the changes so that they can factor in additional costs and plan accordingly, as even those just in the process of either planning or submitting from here on in, are likely to be assessed against new affordable housing policies and the need for Section 76 agreements.
In fact, we’re already seeing cases of house developers who have had to reconsider their plans to be in line with affordable housing policies and factor in Section 76 requirements, despite having planning applications well advanced. This has resulted in higher costs for developers, in some cases up to a six-figure increase and we’ve even seen developers pull out of their plans as a result of this.
To prepare developers and housebuilders need to plan, and revisit their plans if they are due to start developing this year and in the years to come. If they factor in the additional costs it’s likely that they will still be able to make a profit and they will also be able to take advantage of the never-before opportunities that await them in Northern Ireland as a result of the coronavirus pandemic.
The aftermath of the pandemic has left a once in a generational opportunity for Northern Ireland, businesses in Northern Ireland and housebuilders. Unlike the previous two decades, young people who finished university in Northern Ireland stayed home during the pandemic and have been encouraged to stay put as a result of the increasingly excellent job opportunities on offer, along with the benefit of being closer to families and experiencing the work-life balance that Northern Ireland offers.
There are also more opportunities in Northern Ireland, particularly Belfast which has welcomed the expansion of firms such as PwC and has quickly become the number one cybersecurity destination in Europe.
The demand won’t slow down either, as Belfast’s major universities are revitalising the city with student accommodation, making Northern Ireland even more attractive to younger, educated people. Therefore developers and planners need to be prepared for the change so that they don’t miss out on the abundant opportunities that Northern Ireland is, and will continue to, present.
