Contracting affordable housing delivery? Residential property development, section 106 agreements and other contractual arrangements

Recent town planning and legal scholarship has considered controversies surrounding the provision of ‘affordable housing’ for people who would otherwise be unable to access homes of an acceptable standard via the private housing market. The current practice in England is to seek to secure the construction of affordable housing through ‘planning obligations’ made by agreement between property developers and local planning authorities pursuant to section 106 of the Town and Country Planning Act 1990. However, there has been relatively little attention afforded to either the key contract terms in these section 106 agreements or the way these contracts work in practice. This chapter addresses this by examining the interlinked section 106 agreements created for affordable housing delivery for three residential development projects. These projects are unremarkable developments that happen all the time, everywhere in England. However, the section 106 agreements made for these developments are highly formal and highly technical contractual documents. This chapter draws upon Ian Macneil’s relational contract theory to consider why local planning authorities and property developers create such formal and detailed contractual arrangements. The chapter thus provides an empirical analysis of key contract terms and underlying contractual behaviour and shows how well-connected developers can use these contractual arrangements to create a type of ‘one-sided flexibility’ that enables them to choose when, where and how they fulfil their obligations to deliver affordable housing. Consequently, the chapter offers new perspectives on the nature of opportunism and the pursuit of control in the contracts used for town planning processes.