The delivery of at least 17,432 affordable housing units with detailed planning permission has ground to a halt as the lack of Registered Providers (RPs) participating in the market threatens supply, new research reveals.
A study published by the Home Builders Federation (HBF) shows that at least 139 home building sites are currently delayed due to uncontracted Section 106 (S106) units.
When private house builders are given planning permission, Local Authorities require a % of the homes on the site to be affordable. These homes are then purchased at a reduced price by a Registered Provider. This affordable housing delivery model now accounts for around 44% of all new Affordable Homes that are being delivered. Yet, recent years have seen a gradual reduction in the number of RPs actively bidding for S106 Affordable Homes as a result of the ‘perfect storm’ of economic and policy challenges facing the affordable housing sector.
The Bid Farewell report finds 136 sites across the country are currently delayed, forcing developers to re-evaluate the pace and direction of their building programmes. This poses a serious threat to the future of their businesses and overall housing output.
Without a contracted 106 deal, small builders are often unable to secure the development finance to start a development, while larger sites can be stalled because the planning permission requires the affordable element of the site to be delivered by a certain trigger point. As a result, both private and affordable housing delivery is being slowed or stalled.
Many factors lead to uncontracted affordable homes, but, if left unaddressed, this issue will lead to further delays, therefore jeopardising the housing pipeline and undermining the government’s target of delivering 1.5 million homes during this Parliament.
The Home Builders Federation is calling for housing associations to be put on a firm financial footing to enable them to confidently take on the affordable housing delivered by home builders. It also calls for greater flexibility to be built into the process behind the delivery of Affordable Homes.
Neil Jefferson, Chief Executive at the Home Builders Federation, said: “The lack of Registered Providers in the market to take on the affordable housing delivered by the private sector is a major and growing problem, increasingly threatening affordable and overall housing supply.
“Small sites are being prevented from starting, and larger sites are being halted due to the inability of developers to meet the affordable housing delivery requirements of the planning permission.
“Following very positive government statements about its ambitious targets and welcome changes to planning rules, home builders are eager to invest and increase output. However, the inability to discharge affordable housing obligations, coupled with a lack of affordable mortgages suppressing private sales, is holding back housing supply increases.”
Find the research in full at hbf.co.uk/research-insight/bid-farewell