Next year will see a renewed focus of Section 76 across all of Northern Ireland’s 11 boroughs.

This considerable shift in focus comes as a result of local councils producing their own Local Development Plans for the first time and Northern Ireland’s maturing housing development market.

Emerging policies in the new Local Development Plans will mean that all housing development schemes of a certain size will need a planning agreement that adheres to affordable housing policy requirements.

Whilst housebuilders in the UK are used to paying taxes to this effect, thanks to the very similar Section 106 which turned 30 years old last week, the changes to section 76 which was created in 2015 and has only been lightly used is likely to bring teething problems to the Northern Irish housing market.

It also acts as a double-edged sword for homebuyers, with those seeking affordable housing reaping the benefits of lower-cost accommodation and other buyers absorbing the predicted house price increase. As the new regulations will cause a significant material impact, potentially even to the tune of up to 20% on existing schemes and costs. Leaving many developers to take some of the hit and increasing purchase costs so that homebuyers take the rest.

How will Section 76 work in practice?

The new focus means that all residential development schemes of a certain size will need to deliver some social/affordable housing also. In the Belfast City Council area, the threshold is over five units and a planning agreement is required to deliver affordable housing giving more opportunities to first-time buyers, key workers and lower-income families. The other 10 councils across Northern Ireland will follow suit, however, there may be different requirements and thresholds from borough to borough.

Whilst the deadline may seem in the distance, those in the housing industry need to be prepared. We’re already witnessing significant changes and pushback from the new rule, particularly in Belfast where the local council are using it as a draft policy, with some developers even having to abandon their plans as a result of this.

We’ve spoken with house developers who originally had their planning permission approaching approval to go on to receive a last-minute call from the local council and planning office who have reconsidered their application and now want to apply a Section 76 agreement. The backlash of this means extra costs for the developer, in some cases up to a six-figure increase, with the worst-case scenario meaning the plans are completely dropped.

Larger housebuilders and developers may have already experienced last minute, large additional costs or even affordable housing requests from the council, so they may be prepared financially. But there will be added pressure applied to small and medium-sized developers who haven’t previously had to consider these implications.

What can developers and housebuilders do to prepare?

The key for developers and housebuilders is to plan for Section 76, it’s important to bear in mind that any residential development scheme, even those just in the process of either the planning process now or is to be submitted from here on in, are likely to be assessed against emerging policies and section 76 requirements.

By preparing they will be able to take advantage of the current blossoming opportunities that await them in Northern Ireland. Unlike the previous two decades, the aftermath of the pandemic has meant that there is now, more than ever, an abundance of young, qualified people who have settled into jobs, are close to their families and taking advantage of Northern Ireland’s work-life balance.

Since 2020, Northern Ireland, particularly Belfast, has also become a hub for business opportunities thanks to the expansion of companies such as PwC and tech organisations. It’s even now the number one cyber security destination in Europe, with international companies such as Black Duck Software, WhiteHat Security, Rapid 7, Proofpoint and Alert Logic establishing operations around the city.

Plus, following the news that both of Belfast’s major universities are revitalising the city with their student accommodation, the appeal to younger generations isn’t slowing down, and this will further push supply and demand for the housing market. This means that there’s a golden goose opportunity for Northern Ireland, businesses in Northern Ireland and housebuilders.

Chris Bryson is director of planning at Gravis Planning and Drew Nesbitt is a partner at Wilson Nesbitt