Context

Fernham Homes were granted planning for a residential scheme at an LPR allocated site at Haven Farm, Sutton Valence. This was subject to a S106 legal agreement. This S106 contained a quotient of First Homes, and the applicant is seeking to substitute these for Discounted Market Sales (DMS) (First Homes is no longer mandatory) under a variation to the legal agreement.

However, First Homes was exempt from CIL, whereas DMS is not, and CIL payments need to be made. Therefore, Fernham Homes has requested that we consider providing discretionary relief from CIL for DMS affordable housing.

Definition of affordable homes

The National Planning Policy Framework (NPPF) defines both First Homes and DMS as ‘affordable housing’. Moreover, the Maidstone LPR explanatory text to policy SP10(B) in paragraph 7.18 states that: ‘First Homes are a new and specific kind of discounted market sale product.’

First Homes are dwellings where the first and subsequent sales are for no more than 70% of their market value. DMS is where the first and subsequent sales are for no more than 80% of their market value. Therefore, there is no numerical loss of either affordable units or DMS in the Haven Farm case. Therefore, the only consideration is the payment of CIL.

Legal flexibility and requirements

The legislation (reference) specifically allows for local authorities to introduce discretionary relief for certain areas identified in the CIL Regulations 2010 (as amended). One such discretionary relief relates to affordable housing that does not qualify for mandatory relief under the CIL Regulations. This includes DMS, subject to specific criteria set out in regulation 49A(2).

A charging authority may offer separate discretionary relief for dwellings sold for no more than 80% of their market value, subject to specific criteria set out in regulation 49A(2) of the CIL Regulations. We have not previously considered this.

Justification and viability

The previous Government’s introduction of the ‘First Homes’ affordable housing tenure extended mandatory social housing relief to properties that are sold at no more than 70% of their market value, as the Government considers that the 30% discount makes them ‘affordable’. Such homes (i.e., discount market sale) are considered an ‘intermediate’ affordable housing tenure (shared ownership being another example of intermediate tenure, but where only part of the property is purchased, and the rest rented from the developer).

There may, however, be instances where DMS properties offered at no more than 80% of market value are considered to make a positive contribution to the affordable housing stock within Maidstone. Whilst a lower level of discount (20%) compared to First Homes, they still fall within the definition of affordable housing in the NPPF, but are not eligible for mandatory social housing relief.

The applicant has put the following points forward in support of the proposal:

• The priority given to First Homes has been removed from the National Planning Policy Framework (NPPF), which was published in December 2024. The rationale for this is that the requirements are too prescriptive and that there should not be priority given to this tenure.
• First Homes delivery is difficult. The number of mortgage providers who are willing to provide finance on First Homes is significantly reducing.
• The Homes England standard wording and onward sales clauses (which are required to be included in S.106 agreements) for First Homes are very unattractive to buyers as it is extremely onerous.
• DMS homes are particularly suited to helping local people get onto the housing ladder. The purchaser of a discounted home for sale owns 100% of the property but is bound by a covenant.
• Upon any resale, apply the same percentage level of discount to the next buyer. Unlike shared ownership, there is no rent on the discounted portion of the property.
• Whilst there is an inclusion of local connection criteria for most DMS, there are no further onerous requirements, which means that the number of mortgage providers that will lend on these products is higher than First Homes.

These appear to be cogent points in favour and it is well known that the delivery of affordable homes at present is challenging so providing CIL relief for an additional affordable tenure and providing flexibility is considered to be appropriate.

Specifically, the Haven Farm scheme is at an advanced stage in that homes are under construction. However, there would have been no calculation of CIL payments on account of DMS. This Council, as the local planning authority, puts much onus on viability and delivery of residential schemes, and as the scheme is so far advanced, requesting CIL payments would put the scheme, to a degree, in jeopardy.

Policy statement

Appendix 1 includes the ‘Policy Statement of Availability on Discretionary Social Housing Relief under Regulations 49A and 49B’ of the CIL Regulations 2010 (as amended).

The statement allows us, at our discretion, to offer CIL relief for DMS. This refers to housing units being sold at 80% or less of their market value. To be able to offer the relief, a charging authority needs to publish a statement about how DMS housing will be ‘allocated’ in its area, to the extent that the authority is responsible for ‘allocating’ that housing type in accordance with Regulation 49B(1). The meaning of ‘allocation’ in this context is not entirely clear in the CIL Regulations. It is considered that it should be interpreted as meaning that the charging authority should set out its high-level approach to how DMS units should be brought forward for sale (for example, to people who meet certain criteria).

In relation to this requirement to set out the approach to how DMS units should be brought forward for sale, the Policy Statement in Appendix 1 indicates that, for the purposes of regulation 49B(1)(a)(iii), intending claimants for this relief should note that:

• where a proposed development includes housing of the type for which discretionary social housing relief is claimed, we will require the entry into a planning obligation in the form of a section 106 agreement in terms that are acceptable to us.

DMS aims to provide an affordable home ownership option primarily to applicants who live or work in the borough of Maidstone by providing a discount of 20% of the market value on qualifying homes. Therefore, section 106 terms will generally
require that applicants for DMS homes must meet all the following eligibility criteria to be considered:

• Local connection to be determined at the time of application. For example, applicants or immediate family living within the borough of Maidstone and having done so for a certain period, or similar, for working within the borough of Maidstone for a certain period.
• Income cap to be determined at the time of application. For example, not to exceed a certain percentage of the DMS price of the property or a set level.
• Restriction on home ownership. For example, applicants must live in the DMS property as their main residence and have no other property.

Requiring the developer to enter into a section 106 agreement will secure the ‘benefits’ of the proposed affordable housing that justify the discretionary relief being given. Without such binding commitments secured through a section 106 agreement, the scheme would not be eligible for discretionary social housing relief.

For a DMS scheme qualifying for Discretionary Social Housing Relief, the calculation of relief will follow the same methodology as mandatory Social Housing Relief (that is, the relief which can be claimed by developers providing rented or shared ownership social housing), i.e., relief will be 100% of CIL liability.

Conclusion

For the above reasons, it is considered that providing CIL relief for the delivery of general Discount Market Sales homes, as opposed to a specific DMS product in the form of First Homes, and providing such relief for any DMS home is acceptable and provides flexibility to aid in delivering affordable homes.

Appendix one

Policy statement regarding the availability of discretionary social housing relief

In accordance with Regulations 49A and 49B of the Community Infrastructure Levy (CIL) Regulations 2010, Maidstone Council hereby gives notice that Discretionary Social Housing Relief is available in Maidstone Borough. This statement is effective from 30th September 2025.

Discretionary Social Housing Relief relates to a chargeable development that includes one or more ‘qualifying dwellings’ under Regulation 49A. In order for a dwelling to be a ‘qualifying’ dwelling for these purposes, a number of conditions (specified in the CIL Regulations) must be satisfied. These include the requirement that the dwelling must be sold for no more than 80% of its open market value at the time of sale.

There may be instances where the development ceases to be eligible for discretionary social housing relief.

For further information on this relief and how to apply for it, please see Regulations 49 to 54 of the CIL Regulations 2010.

For the purposes of regulation 49B(1)(a)(iii) of the CIL Regulations 2010, intending claimants for this relief should note the following. Where a proposed development includes housing of the type for which discretionary social housing relief is claimed, we will require the entry into a planning obligation in the form of a section 106 agreement in terms that are acceptable to us.

The aim of DMS is to provide an affordable home ownership option to applicants who live or work in the borough of Maidstone by providing a discount of 20% of the market value on qualifying homes so those section 106 terms will generally require that applicants for DMS homes must meet all the following eligibility criteria to be considered:

• Local connection to be determined at the time of application. For example, applicants or immediate family living within the borough of Maidstone and having done so for a certain period; or similar for working within the borough of Maidstone for a certain period.
• Income cap to be determined at the time of application. For example, not to exceed a certain percentage of the DMS price of the property or a set level.
• Restriction on home ownership. For example, applicants must live in the DMS property as their main residence and have no other property.

We will not be responsible for compiling a waiting list or assessing the financial eligibility of potential individual purchasers of dwellings that are eligible for this relief. We will, however, work with developers and others to verify that prospective purchasers meet the household local connection criteria contained in any s106 agreement.

Should the developer be unable to sell all the units to households in accordance with our policy and the section 106 agreement provisions for the sale of dwellings eligible for CIL Discretionary Social Housing Relief, then CIL will be liable on the relevant dwellings and on the relevant proportion of the “qualifying” communal development.