Small S106 deals can keep affordable housing delivery alive

Published in Housing Today on 4 October 2024

As the Government’s laser focus on affordable housing continues to make headlines which is of course very welcome, the reality in the market place seems very different with housebuilders struggling to find any RP’s willing to acquire s106 affordable housing particularly on the smaller sites.

Section 106 agreements oblige developers to build a proportion of their units as affordable. Over the last few years in particular, they have increased in importance as a significant way to both fund and deliver affordable homes. According to research published in Housing Today, figures show that, in the year to March 2023, 47% of all affordable homes completed came via s106 units representing just over 30,000 homes.

But, by all accounts, Registered Providers have dropped off the face of the earth when it comes to s106 acquisitions. We know that this is partly due to the current focus on asset management measures such as dealing with fire safety, cladding and damp and mould issues. We also know this is because RPs now prefer to buy whole sites where they can control design, quality and the delivery programme or simply that grant is not allowed on s106 units and the focus is now on delivering their Homes England/GLA programme.

So, with affordable housing targets rising, whilst one of the main mechanisms for delivering them is blighted by a lack of interest, what can be done to get things back on track?

Until Government looks at introducing grant funding to s106 agreements, most other solutions remain tall challenges.

However, if this cannot be put in place, then maximising the quality of the product is one way forward. Rapleys are currently advising a Hampshire based SME on delivering an 11 unit s106 scheme, they have struck a deal by proposing a product that meets the quality aspirations of the RP with floor areas above the national standards, air source heat pump heating, PV panels and a place making design approach. Maybe the best way to get the RP’s back to the party is to offer the level of product they would promote on their own sites.

Surely this is the perfect way to provide quality affordable housing that has long-term positive impacts on the local community.

Imagine if the 2,500 currently operational small and medium-sized housebuilders in the UK worked in partnership with like-minded providers in this way up and down the country, delivering high quality sustainable pockets of Section 106 housing spread across local authorities. 

We mustn’t get distracted by huge numbers and targets that seem insurmountable. We should focus on changing mindsets and encouraging more smaller partnerships up and down the country. Rapleys are advising clients on s106 disposals across Hampshire, Sussex and operate on a nationwide basis, we advise clients on how to achieve best value from their s106 schemes and identify the best partner.