Up to 8,500 affordable homes in 700 developments are at risk due to social housing providers pulling back from taking on new Section 106 contracts, according to research from the Home Builders Federation (HBF).
Around 900 completed homes are already standing empty, with thousands more at risk due to a lack of commitment from registered providers. The potential ramifications of the findings are ‘wide-ranging and increasingly alarming’, HBF said, and will lead to growing uncertainty across the whole housing delivery pipeline.
‘Under Section 106 agreements, local authorities mandate the number of affordable homes developers must deliver on new sites’, HBF explained. ‘These homes are purchased by registered providers (RPs) at a reduced price.’
“Under this delivery model, home builders are responsible for around 45% of all new affordable homes each year. Yet, the approach relies on RPs’ ability to take on new homes, and a ‘perfect storm’ of economic and policy challenges facing the affordable housing sector has seen a gradual decline in bids for S106 Affordable Homes in recent years.
“Without contracts in place for these homes, housing delivery grounds to a halt as developments are stalled, phased differently or even rendered unviable altogether. Meanwhile, in some instances, affordable homes are left standing empty.”
The impact also intensifies pressure on small and medium home builders, HBF added.
“With capital tied up in uncontracted units, often funded by loans, SMEs’ cash flow is jeopardised, subsequently hindering investment in future phases or projects.”
The organisation is calling on the government to intervene by encouraging a greater acceptance of the use of the mechansims in S106 agreements to ensure homes can be built even if a registered provider cannot be secured.
‘Against rising affordability pressures and increasing numbers of families living in temporary accommodation, it cannot be that affordable homes are left standing empty’, said Neil Jefferson, HBF chief executive.
“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.”
The analysis is based on a Freedom of Information request sent to local authorities in England and Wales, which asked how many completed S106 homes remain unsold due to the absence of a contract, how many units under construction are not under contract, and how many residential developments have been delayed or stalled due to a lack of provider. Each question was answered by at least 85 local authorities, which HBF extrapolated to reach its conclusions.
