The ‘Planning for the Future’ White Paper published by the Conservative Government in 2020 and the Levelling-Up and Regeneration Act 2023, sought to introduce a National Infrastructure Levy to replace developer contributions and the Community Infrastructure Levy. This was subsequently dropped by the Labour Government in favour of reinforcing the section 106 system, which is why it is so critical to ensure that section 106 agreements are drafted with greater flexibility to address challenges to delivery.

Enough of the doom and gloom, a practical solution to introducing more flexibility could be the use of cascade mechanisms.

Whilst in recent years Local Planning Authorities (LPAs) have been reluctant to accept “cascade mechanisms” in favour of review mechanisms, when faced with an overwhelming number of applications that are seeking to renegotiate their S.106 affordable housing provisions, they are now being viewed as a practical, albeit underutilised, solution in section 106 agreements. Also, the form of current review mechanisms only allow upward movement and do not recognise the risks in an unstable housing market. Resurrecting cascade mechanisms could help to unlock stalled developments, reduce the risk of third-party viability and improve investor confidence in the housing market.

A cascade mechanism is a flexible provision within section 106 agreements that allows developers to work through a predetermined sequence of affordable housing delivery options without requiring a deed of variation or a new planning application. Think of it as a contingency plan built into the original agreement.

The structure of the obligation typically follows a logical progression:

• Stage 1: Delivery of an agreed affordable housing quantity and mix – either at policy levels or having been viability tested;
• Stage 2: Alternative level, mix and tenure of unit types if: no RP shows interest after a defined marketing period (typically 6 months) or specifically requests a different product; if there is a change in viability or grant availability; and
• Stage 3: Financial contribution in lieu of on-site provision as a last resort if no interest from an RP.

It is crucial that each stage is drafted with clear submission requirements and timescales, ensuring that developers cannot simply circumvent their obligations. The obligation should provide practical alternatives when market conditions make delivery impossible balanced against the LPAs objectives to provide the maximum amount of affordable housing possible. The onus will be on the developer to demonstrate that they have exhausted each option to the LPA’s satisfaction. The mechanism will also likely seek to place the developer in a financially ‘neutral’ – the aim is to prevent schemes from stalling, not to boost developer profits. According to Rosie Shields, a Senior Associate at Hogan Lovells,

“when drafted correctly, cascade mechanisms, in their variety of forms, can work well for both developers and LPAs. Indeed, they can allow developments to progress according to timeframes which have been agreed by both parties, with the intention of achieving what can practically be delivered by way of affordable housing while helping to ensure that units do not remain empty unnecessarily by responding to demand in the area”.

1. They boost and maintain housing delivery. To avoid developments stalling and permissions being shelved, cascade mechanisms ensure flexibility in the delivery via alternative affordable housing products or via a payment in lieu (particularly helpful for smaller sites!)

2. Less reliance on third party involvement. Cascade mechanisms can switch to affordable tenures which a developer can either sell to end users themselves (Discounted Market Sale) or retain / sell to a different pool of investors (Discounted Market Rent). This might, however, lead to a weakened delivery of certain types of affordable products, such as Social Rent.

3. Future proofing. Reduce time and cost for both developers and LPAs by pre-agreeing alternative delivery routes and avoiding the need for deed of variations or new planning applications.

4. Greater certainty of delivery. Provide all parties with a clear and standardised approach reducing risk and delays, which is particularly critical for SME developers.

5. Cash flow protection. Enabling developers to progress with market sales and comfort that these can be occupied whilst in parallel determining the most appropriate affordable housing product. This ensures project viability and delivery, particularly for SMEs.

6. Reduces uncertainty around the availability of grant funding. Facilitates the delivery of alternative dwelling types and tenures influenced by the availability of grant funding at a certain point in time. This is particularly helpful for large scale developments where the future availability of grant funding and level of RP activity is usually uncertain. Financial Viability Appraisals can set out scenarios where the level and mix of affordable housing provision is different depending on the level of grant funding available.

[1] London Assembly (July 2025) ‘Affordable Housing Monitor 2025 London Assembly Research Unit for the London Assembly Housing Committee’

[2]Home Builder Federation (November 2024) ‘An examination of the crisis in s106 Affordable Housing’ Bid farewell

To discuss any of the matters discussed above or any other planning matter, please contact the team.