Details of the controversial plan were leaked as the Government was finalising a raft of measures designed to stimulate house building.
Plans to introduce an affordable housing holiday on housing developments will benefit major house builders who have complained most about section 106 agreements being unrealistic in the present climate.
The move could be greeted by many in the industry as the beginning of the end for section 106, although the Government is expected to stress the suspension is a temporary emergency measure to break deadlock on stalled housing schemes.
Its is understood savings from Government departments’spending cuts will be used to inject further cash into affordable housing to help to offset further falls in social housing starts caused by the new initiative.
The Government will tomorrow also detail its plans to underwrite housing association bonds to stimulate borrowing to build more affordable homes.
It will also reveal that it is stepping up the pace of public land sales for housing and expand the NewBuy scheme for first time buyers.
Mike Leonard, director of the Modern Masonry Alliance, welcomed the plans and reiterated the need for significant direct investment in the affordable homes sector where starts have fallen sharply.
He said: "Anything that reduces cost and improves viability has to be a good thing for the private sector.
"That said we are concerned that it is missing smaller developers which will still be excluded due the lack of bank funding.
"This will also result in a further reduction in the availability of affordable homes,” he warned.
Leonard added: "We call upon the Government to fund and build an additional 25,000 public rented homes in the next 18 months.
