More than 700 housing developments have stalled across England amid a sharp decline in social housing providers taking on new Affordable Homes, according to new research from the Home Builders Federation (HBF).
The analysis warns that around 8,500 Affordable Homes due to be built in the next 12 months are now at risk, threatening to derail the Government’s five-year housing plan. The slowdown is being driven by a growing reluctance among Registered Providers (RPs) to enter new Section 106 contracts, causing widespread delays and undermining delivery against national housing targets. The report also estimates that around 900 completed Affordable Homes are currently standing empty due to the absence of providers willing to acquire them, with thousands more in limbo.
Section 106 under strain
Under Section 106 agreements, local authorities require developers to deliver a set proportion of Affordable Homes within new housing schemes. These homes are purchased by Registered Providers at a discounted price. The model accounts for roughly 45% of all new Affordable Housing delivered each year, but its success depends on the capacity and willingness of RPs to take on new stock.
According to the HBF, that capacity has been hit by a “perfect storm” of economic and policy challenges facing the sector, leading to a marked decline in bids for new Section 106 homes, leaving many developments delayed, phased differently, or even rendered unviable.
In the past three years alone, the HBF estimates that at least 700 developments have been delayed due to the lack of registered provider commitments, reducing the availability of homes of all tenures, exacerbating housing shortages, and deepening inequality.
Financial pressures and stalled investment
The knock-on effects are being felt most acutely by small and medium-sized developers. With capital tied up in uncontracted homes, cash flow is being squeezed, putting future phases and new projects at risk.
Earlier this summer, more than 90 HBF members wrote to Housing Minister Matthew Pennycook, calling for urgent government action to address the issue.
The letter urged ministers to encourage local authorities to adopt cascade mechanisms within Section 106 agreements, allowing flexibility when a registered provider cannot be secured. The HBF said this would ensure homes can continue to be built and, if necessary, converted to an alternative tenure or replaced with a financial contribution to the local authority.
It also called for a time-limited allowance for Homes England grant funding to be used on Section 106 Affordable Homes, helping to prevent the loss of much-needed affordable supply in the short term.
Without greater flexibility, the HBF warned, the gap between housing supply and the Government’s own delivery targets will continue to widen.
A warning from the industry
Neil Jefferson, Chief Executive at the Home Builders Federation, said:
“Against rising affordability pressures and increasing numbers of families living in temporary accommodation, it cannot be that Affordable Homes are left standing empty.
“Government’s social and Affordable Housing announcements were a welcome step to giving Registered Providers confidence to plan long term, but they are doing little to ease the immediate constraints of delivering Affordable Housing through Section 106 agreements.
“Right now, an estimated 100,000 private units are stalled, which not only threatens the supply of much-needed homes but also risks the livelihoods of regional businesses and hardworking tradespeople up and down the country.
“While Government’s housing announcements have been welcome, as it stands, housing associations are unable to bid and private buyers unable to buy, leaving the housing outlook increasingly uncertain.”
