Introduction
Over the past few years, many home builders have struggled to secure bids from Registered Providers (RPs) for their Section 106 Affordable Homes.
- To assess the potential scale of the issue, in October 2024, HBF carried out a survey of 31 of its members (containing a mix of large, medium and small home builders) which found: At least 17,432 Section 106 Affordable Housing units within S106 agreements signed by these 31 companies and which have detailed planning permission remain uncontracted.
- Across the country, 139 home building sites on which these 31 companies have agreed S106 obligations are currently delayed due to uncontracted Section 106 units.
Almost a year on from the survey, and with anecdotal reports from members that the issue shows little sign of abating, HBF has undertaken a Freedom of Information (FOI) exercise with Local Authorities to determine if any progress has been made. The results are not directly comparable to our previous exercise based on information from home builders but do broadly correlate with the results HBF shared with Government on behalf of members.
Methodology
In June 2025, HBF submitted a FOI request to Local Authorities in England and Wales which asked:
- How many completed Section 106 affordable housing units (i.e. physically built and ready for occupation) currently remain unsold due to the absence of a contract with a Registered Provider?
- How many Section 106 affordable housing units that are either under construction or due to commence construction within the next 12 months are not currently under contract with a Registered Provider?
- In total, how many residential development sites that include Section 106 affordable housing have been delayed or stalled in the past three years due to the inability to secure an RP to acquire the affordable units?
Each question was responded to by at least 85 Local Authorities. The remainder had either not responded by the time of writing or indicated that they do not record the requested information.
Results
The results of the FOI are as follows:
- Across a sample of 105 Local Authorities, there are 302 completed Section 106 Affordable Homes that currently remain unsold due to the absence of a contract with a Registered Provider.
- There are at least 2,254 Section 106 Affordable Homes across 84 Local Authorities that are either under construction or due to commence construction within the next 12 months that are not currently under contract with a Registered Provider.
- Approximately 228 sites have been delayed or stalled across 103 Local Authorities in the past three years due to the absence of a contract with a Registered Provider.
Extrapolating the data for all 317 Local Authorities across England and Wales, we can estimate that:
- There are approximately 900 completed Section 106 Affordable Housing units that remain unsold due to the absence of a contract with a Registered Provider.
- There are around 8,500 Section 106 Affordable Housing units that are either under construction or due to commence construction within the next 12 months and are not currently under contract with a Registered provider.
- More than 700 sites have been delayed or stalled in the past three years due to developers’ inability to secure an RP to acquire the Affordable units.
Analysis
The results highlight that developers continue to face significant constraints in delivering both Section 106 Affordable Homes and market-sale units.
It is important to note, however, that the FOI figure of approximately 8,500 uncontracted affordable units refers to homes expected to commence or continue construction within a single year.
By contrast, the 17,400 uncontracted units reported in our 2024-member survey span a much longer timeframe, covering expected completions across 2024, 2025, 2026, and beyond.
While this means the two datasets are not directly comparable, and definitive conclusions cannot be drawn, the FOI results nevertheless confirm that the short-term delivery outlook remains highly concerning.
The potential ramifications of these findings are wide-ranging and increasingly alarming. They include:
- Intensifying financial pressure on SME developers, who are disproportionately affected by the inability to dispose of completed Section 106 Affordable Homes. These units represent tied-up capital, often funded through debt, which can jeopardise cash flow and hinder investment in future projects. Prolonged vacancy also raises the risk of physical deterioration, vandalism, and depreciation in asset value.
- Growing uncertainty across the housing delivery pipeline, not only for Affordable Homes but also for private market units. Where RP contracts are not secured, sites may be delayed, phased differently, or rendered unviable altogether, disrupting delivery timelines and investor confidence.
- Undermining national housing targets, including the Government’s ambition to deliver 1.5 million new homes over the course of the Parliament.
- Reduced availability of housing of all tenures, prolonging the housing crisis and deepening housing inequality.
- Increased strain on local authority planning functions, as delays or renegotiations of S106 agreements create additional workload and uncertainty, potentially leading to planning delays or appeals.
Other considerations
While the full extent of the impact remains difficult to quantify, emerging evidence suggests that the issue is already influencing the behaviour of developers, particularly SMEs, in ways that may have long-term consequences for housing supply.
Anecdotal feedback from members indicates that, in response to ongoing challenges in securing RP contracts, some SME developers are taking deliberate steps to mitigate risk.
These include:
- Avoiding sites where an RP contract is not already in place, due to the uncertainty and financial exposure associated with holding unsold Section 106 Affordable Homes. This risk aversion reduces competition for certain sites and may ultimately lead to lower delivery rates.
- Prioritising land opportunities that do not carry Affordable Housing obligations, thereby limiting their exposure to Section 106 requirements altogether. While understandable from a viability standpoint, this trend risks reducing the overall supply of Affordable Housing and undermines the policy objectives of mixed and inclusive communities.
- Focusing on smaller sites (typically fewer than 10 units) that fall below the threshold for Affordable Housing contributions. Developers report doing so even where they would otherwise have the capacity and appetite to deliver larger schemes. This shift in strategy reduces delivery volumes and may lead to underutilisation of development potential in areas with high housing need.
As these measures are neither conducive to sustained housing delivery nor to the growth and resilience of SME developers, it is imperative that a solution to this issue is identified and implemented without further delay.