Why aren’t housing associations bidding for Section 106?

It’s not as simple as just the financing, although that, of course, is part of the problem. In my role, I work closely with many housing associations around the UK, and they report myriad reasons for this reduced appetite for Section 106.

In recent years, there has been a sharper focus on renovation, more robust maintenance programmes and improvements to existing stock. Retrofitting housing to modern standards, both in terms of comfort and safety, has taken priority, which is both timely and costly. This is good news for tenants, and ageing stock must be maintained, but this has an impact on Section 106 purchases.

In London, in particular, necessary building safety remediations have had an impact on new delivery. With a large number of high-rise residential buildings and recent obligations under the Building Safety Act, money is quite rightly being invested heavily in meeting enhanced safety standards, rather than new housing. The G15 group of large London landlords recently reported starts have dropped by about 66% over the past two years.

“In recent years, there has been a sharper focus on renovation, more robust maintenance programmes and improvements to existing stock”

Housing association clients I work with also report a growing preference to build their own properties, rather than buy homes on developers’ mixed-tenure sites. They cite greater control of specification, finish, positioning and size when they commission new homes themselves. Others prefer a partnership-based approach, rather than being seen as an end-purchaser.

Last year, Homes England launched the Section 106 clearing service. Inside Housing reported this had revealed registered providers often decline these new homes due to concerns around tenure mix, location and delivery timing, showing social landlords want to remain in control of these elements and that the delivery partner matters to them.

Obviously, not all housing associations have their own development arms, and the commissioning of new housing from scratch can be expensive, as well as more hassle than buying off-plan from a big developer. This isn’t stopping them, however, and raises questions about whether some housing associations have felt Section 106 allocations haven’t represented value for money in the past.

A preference for using Affordable Homes Programme funding, which supports capital costs, further fuels the issue and encourages direct development by registered providers. We’ve seen two significant top-ups in the recent past, but with the current Affordable Homes Programme nearing its end in 2026, many housing associations are slowing development and purchasing plans down while we wait for the parameters and grant levels of the next one.

The emerging for-profit registered provider sector may be more open to purchasing Section 106 properties, as they might not have the requisite capacity or experience for direct housing delivery. They also don’t have the same historic building safety concerns and carbon legacy issues as housing associations. For-profits often have a higher risk appetite, too, and are willing to invest in schemes that more conservative, traditional housing associations may avoid.

“With the current Affordable Homes Programme nearing its end in 2026, many housing associations are slowing development and purchasing plans down while we wait for the parameters and grant levels of the next one”

Some house builders strongly support the cascade mechanism, which is particularly appealing to small and medium sized developers where cashflow may be tight, but this can reduce the supply of affordable housing.

There’s a certain irony, of course, that both Section 106 and the Affordable Homes Programme can, unintentionally, slow down the development of new housing.

To the public though, and particularly for those on housing waiting lists around the UK, it doesn’t matter where affordable housing comes from or how it’s funded – just that it is built, and built with quality and safety in mind.

We all have high hopes for the future and welcome the government’s focus on housing delivery in this parliament. Only time will tell whether more needs to be done to maintain a steady supply of affordable housing and whether Section 106 needs to be reformed to help secure this.

Charlie Ash, sector lead for housing associations, National House Building Council