Around 8,500 Affordable Homes due to be built in the next year are now at risk, as social housing providers increasingly withdraw from new Section 106 agreements—causing delays, stalling developments, and threatening national housing targets, according to new analysis from the Home Builders Federation (HBF).
The research also estimates that approximately 900 completed affordable homes are currently standing empty because Registered Providers (RPs) have not committed to taking them on, with thousands more at risk of the same outcome.
Section 106 agreements require developers to deliver a proportion of Affordable Homes on new sites, which are then purchased by RPs at discounted rates. This model delivers about 45% of all new Affordable Housing each year. However, it relies heavily on RPs’ ability and willingness to enter contracts—an area now under strain.
A “perfect storm” of economic pressures and policy uncertainty has led to a marked drop in bids from social housing providers for Section 106 homes. Without these contracts in place, developments are being stalled, rephased, or deemed financially unviable—leaving some completed homes sitting empty.
Over the past three years, at least 700 housing developments have faced delays due to the lack of RP engagement. The HBF says these hold-ups are not only reducing the availability of Affordable Homes but are also constraining delivery across all tenures, exacerbating the housing crisis and deepening inequality.
Small and medium-sized housebuilders are particularly exposed, with capital tied up in unsold affordable housing units – often funded by loans. The resulting cash flow issues can severely limit their ability to invest in future phases or new projects.
Amid growing concern, more than 90 HBF member companies wrote to housing minister Matthew Pennycook earlier this summer, calling for urgent government action.
The letter urged ministers to promote greater flexibility in how local authorities implement Section 106 agreements—specifically encouraging the use of “cascade mechanisms” that allow for renegotiation if an RP cannot be secured. This would enable homes to be reclassified to another tenure, or, as a last resort, converted to a financial contribution to the local planning authority in lieu of the homes.
The trade body believes that without such flexibility, the widening gap between actual housing delivery and the government’s long-term targets is set to grow further.
The HBF is also calling on the government to temporarily allow Homes England grant funding to be used on Section 106 schemes, to prevent the short-term loss of desperately needed affordable homes.
Neil Jefferson, chief executive at the HBF, 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.”
