Can access to housing be restricted to local people?

Access to social housing

In England, most local authorities include residency requirements in their housing allocation schemes. This means people applying for council or housing association homes must usually have lived in the area for a set period of time. Exceptions apply in certain cases. There’s Government guidance on Providing social housing for local people.

Scottish local authorities can take account of local connection in their allocation schemes, see Social housing allocations in Scotland: practice guide (section 7.1).

The Welsh Allocation of accommodation and homelessness: guidance for local authorities provides for local connection policies and local letting policies which might address:

• Dealing sensitively with lettings in rural areas to sustain communities by giving priority to those with a local connection to the local area.
• Sustaining Welsh-speaking communities by giving priority to those in housing need with a local connection to the area (para 3.69).

The Housing Selection Scheme in Northern Ireland doesn’t refer to local connection.

Limiting access to new-build private housing through planning measures

England

Some local planning authorities (LPAs) require developers to only sell/rent new housing to people who have a local connection or who reside in the local area. This is called a “local connection test” or “principal residence test”.

Policies requiring a “local connection” or “principal residence” may be included in local plans, neighbourhood plans or supplementary planning documents where there is a local need.

Both local and neighbourhood plans form part of the “development plan” for an area. Applications for planning permission must be determined in line with the development plan, unless material considerations indicate otherwise.

LPAs have two ways to implement “local connection” or “principal residence” policies: by attaching planning conditions to planning permissions for new developments or by entering planning obligations with developers. Whether these tools can be used depends on local circumstances and whether there is robust evidence to support their use.

1.Planning conditions

LPAs can impose planning conditions when granting planning permission for new developments. These conditions must meet tests set out in the Government’s National Planning Policy Framework (NPPF): they must be necessary, relevant to planning and to the development to be permitted, enforceable, precise and reasonable in all other respects (paragraph 56).

2.Planning obligations (section 106 agreements)

Planning obligations, also known as section 106 agreements, are legally binding agreements made under section 106 of the Town and Country Planning Act 1990. They are made between a developer and the LPA. The Library briefing on planning obligations provides more information.

Planning obligations must meet three tests set out in the Community Infrastructure Levy Regulations 2010. A planning obligation must be:

• necessary to make the development acceptable in planning terms
• directly related to the development
• fairly and reasonably related in scale and kind to the development

If a “local connection test” is imposed on a new development, the new housing can only be purchased by people who fulfil the test. Planning obligations are registered as local land charges; they are enforceable both against the person who entered the section 106 agreement initially and against any future owners of the land.

Scotland

The Scottish Government has stated that it does not support the practice of using planning conditions or obligations to restrict housing to people with a local connection, for example, in a 2011 letter to LPAs.

In Planning Circular 3/2012, the Scottish Government said the use of planning obligations – made under section 75 of the Town and Country Planning (Scotland) Act 1997 – to restrict the use of housing is “rarely appropriate” and “should generally be avoided”. Where an LPA is satisfied that a developer has made an “adequate case” for a new home, “it should not be necessary to use a planning obligation as a formal mechanism to restrict occupancy or use”.

The Scottish Government also said there “will seldom be any good reason” to use planning conditions to restrict the occupancy of homes to “those already living or working in the area” in Planning Circular 4/1998. It said imposing these conditions on new homes would result in an “an artificial and unwarranted distinction” between new homes and existing homes that were not subject to such restrictions.

Wales

The Welsh Government made changes to legislation in September 2022 to give LPAs the power to “tackle the issue of second homes and short-term lets”, following a consultation between November 2021 and February 2022. Specifically, the Welsh Government:

• amended the Use Classes Order 1987, which puts uses of land and buildings into various categories called “use classes”, to create new separate use classes for homes “used as sole or main residences”, homes “used otherwise” (for example, second homes) and short-term holiday lets; and
• allowed for permitted changes between these new use classes, unless an LPA chooses to restrict these “permitted development rights” in its area using an “article 4 direction”.

The Welsh Government also said it would make changes to Planning Policy Wales (PPW) in 2023 to require LPAs to consider how widespread second homes and short-term lets are in their local area when they draw up housing policies for their local development plan.

The PPW already requires LPAs in Wales to “develop policies to meet the challenges and particular circumstances evident in their areas”. These can include occupancy restrictions where there is “clear and robust evidence” for them (paragraph 4.2.9).

Technical Advice Note 2 (TAN 2), which supplements the PPW, sets out restrictions on the use of occupancy criteria.

Northern Ireland

The Strategic Planning Policy Statement, published by the Northern Ireland Executive, advises local councils to include policies “as appropriate” in their local development plans “to reflect the local need resulting from the demand for second homes” (paragraph 6.142).

A Practice Note also states that “it may be appropriate” to use planning agreements – which are usually used to secure contributions from developers in Northern Ireland – to restrict certain uses, including uses related to occupancy.

First Homes (England)

The Government is implementing a new First Homes scheme to help first-time buyers in England onto the property ladder by offering new-build homes at a discount of at least 30% off the market price. Local authorities will be able to prioritise these homes for local residents and key workers by using section 106 agreements.

The Library constituency casework page on First Homes for first-time buyers (England) provides more information.

Pre-existing private housing

If occupation of these dwellings is not subject to a planning condition or section 106 agreement requiring occupation by households with a local connection, or where a principal residence test applies, local authorities have no powers to restrict sales or occupation to local people.

Fiscal measures may be used to mitigate second home ownership. From April 2023, local authorities in Wales can apply a council tax premium of up to 300% on second homes. The Levelling-up and Regeneration Act 2023 contains a discretionary power which, when commenced, will enable authorities in England to apply a council tax premium of up to 100% on second homes. The Scottish Government has also announced it will legislate to allow authorities to apply a council tax premium of up to 100% on second homes. Second homes in Northern Ireland are charged the same level of domestic rates as sole or main residences.

Higher rates of Stamp Duty Land Tax may also apply to those purchasing second homes.

Further information

Commons Library debate pack, Second homes and holiday-lets in rural communities, 4 January 2022

DLUHC, English Housing Survey 2021 to 2022: second homes – fact sheet, updated 17 July 2023

About the authors: Hannah Cromarty and Felicia Rankl are researchers in the House of Commons Library, Hannah specialises in Housing and Homelessness and Felicia specialises in areas of building regulations, planning and economic inactivity.

Disclaimer

The Commons Library does not intend the information in this article to address the specific circumstances of any particular individual. We have published it to support the work of MPs. You should not rely upon it as legal or professional advice, or as a substitute for it. We do not accept any liability whatsoever for any errors, omissions or misstatements contained herein. You should consult a suitably qualified professional if you require specific advice or information. Read our briefing for information about sources of legal advice and help.