In Focus: Rural Exception Sites – providing affordable homes for local people

Providing affordable housing for lower paid rural workers has long been a challenge. This is especially the case in and around villages that are popular with wealthy people looking to escape to the country and in areas where second homes command high prices.

But under certain conditions, the National Planning Policy Framework (NPPF) does make provision for the development of affordable housing and starter homes in areas where market housing would not be granted planning permission, to address the needs of lower paid rural workers.

This comes in the form of Rural Exception Sites which can be used by landowners, housing associations and others to bring forward schemes that meet the needs of local people.

Typically, land considered for a Rural Exception Site would be outside a village boundary brought forward to develop either a small site of between one and nine homes, or in some cases larger sites consisting of up to 20 homes or more.

A major advantage of Rural Exception Sites is that they prioritise people with a connection to a rural area – either as a current resident, or those with family or employment ties to the area – who are in need of housing.

However, local communities can be suspicious of the motives of an applicant bringing forward a Rural Exception Site. Some opposers cannot see past the fact that these sites are ‘windfall sites’ that are bypassing the conventional planning route.

A Rural Exception Site is not allocated in the local plan and will provide homes in addition to the authority’s land supply allocated for development. They see that the motivation of the applicant may be to increase the value of the site beyond that of agricultural value, and are fearful it will be passed on to the highest bidder.

It is important then that before a site can achieve Rural Exception Sites status, the local authority carries out a parish-wide survey of housing needs so the development is demonstrated to be meeting that need.

The result must demonstrate that there are people living in the parish, or those with a genuine reason to live there, who are in need of housing and are unable to compete in the general housing market due to affordability reasons, for the site to obtain planning permission.

As well as having to show a demonstrable need for affordable housing in the area, Rural Exception Sites may be subject to a number of conditions once planning has been granted to ensure the development continues to fulfil its main purpose of providing affordable homes to local people.

Firstly, the homes are likely to be the subject of strict occupancy clauses governing who can live in them. For example, this may take the form of an Agricultural Occupancy Condition which ensures that only people who work in agriculture, or who used to work in agricultural but are now retired, can live in the dwelling.

Another important condition of Rural Exception Sites is that the housing created by them must remain affordable in perpetuity. To ensure this happens, the landowner or developer has to enter into a legal agreement with the local authority prior to planning permission being granted, called a Section 106 agreement.

Although Rural Exception Sites constitute an important mechanism for delivering affordable rural homes on land that would otherwise not be considering for residential development, they do remain underutilised. A major reason for this is the upfront costs of development to cover professional fees and surveys, uncertainty in the planning system, local perceptions, and tax complications if a landowner wants to retain and manage the affordable, rented provision inhouse.

Indeed, many sites have been brought forward by charitable landowners who have been content to serve the public good and develop their land for little more than bare agricultural values.

However, the upfront costs and lower ongoing income for affordable housing on rural exception sites presents a viability issue for delivery. Grant funding for landowners looking to develop is rarely available unless delivering in partnership with a housing association.

In some cases, it might be possible to include a small number of market homes in a development to cross subsidise the delivery of the affordable homes. This can mean landowners are able to recoup some the upfront costs of applying for planning permission earlier. However, cross-subsidising with market housing isn’t always available as an option and local communities can be wary of motivations where any market housing is delivered.

Another option for landowners wanting to bring forward affordable housing is Entry Level Exception Sites. These are sites that allow the development of entry-level housing for first time buyers or the equivalent looking to rent.

As with Rural Exception Sites, there are a number of conditions that apply to Entry Level Exception Sites, which include:

• The housing must be suitable for first time buyers or equivalent renters
• The site must be on land not allocated for housing
• The site must be adjacent to an existing settlement and must be no larger than one hectare or 5% of the size of the existing settlement
• It must offer one or more types of affordable housing (starter homes, discounted market housing, etc).
• It cannot be in a National Park, AONB, or on Green Belt.

However, one feature of Entry Level Exception Sites that might make them attractive to landowners is that they offer a broader definition of what constitutes affordable housing. With an Entry Level Exception Site, affordable housing includes homes affordable for purchase or rent, starter homes, discounted market sale housing, first homes, or the provision of other forms affordable routes to home ownership.

By allowing this broader mix, landowners may be able to recoup the upfront costs of development more quickly without including market homes for cross-subsidy.

As with anything related to planning, the provision of much needed affordable rural housing is a tricky area to navigate. Bringing forward a Rural Exception Site may well be the best option for some landowners, whereas for others, an Entry Level Exception Site may offer the best course of action.

Either way, with the cost of mortgages and residential rental values increasing, there has never been a more important time to provide affordable housing for the rural workforce.

If you are considering bringing such a scheme forward and would like some guidance, members can get in touch to speak to one of our advisors.