Less than 10% of estimated unsold Section 106 homes have passed through clearing service

“Because there are, post sub-Spending Review, registered providers of social housing coming forward and saying, ‘We’re now in a position we think… to look again at uncontracted 106 and will do so but we can’t identify where they are’, and in some cases are going out to house builders and being told they aren’t available.”

The Homes England clearing service was launched in December 2024 following reports around delays to private housing due to a lack of buyers for Section 106 affordable properties.

The service allows house builders to list details of planned affordable homes with no buyer, while registered providers and councils are able to view available stock. 

More than 200 landlords signed up to the service in the first 50 days, including 140 registered providers and 70 local authorities.

During the evidence session, Mr Pennycook explained that after monitoring the data and feedback from the Homes England service, more action is needed to find out how many of these homes are unsold. 

The housing minister told MPs that his department is working on its evidence base and he has written to the HBF asking for a detailed breakdown of the ownership and location of the estimated 17,400 uncontracted homes.

But an official later told the meeting that the HBF’s number has not been verified by the department as the body has not been able to provide this detail, which is thought to be due to commercial considerations.

They added that the HBF’s figure includes both homes that are being built and those where developers are still negotiating with a registered provider. Homes England puts the stalled Section 106 figure at around 10,000.

The official stressed that they want to get all developers involved in putting any uncontracted homes on the clearing service, so the department has a “full view of the data” and can come up with a a more targeted policy solution. 

Mr Pennycook added that alongside refining the evidence base, work is happening behind the scenes on a “holistic policy package” that aims to prevent more uncontracted Section 106 homes going on the system.

He agreed that there are “creative solutions” to the issue, such as councils using local authority housing funds to take on the homes and move people out of temporary accommodation.

His remarks comes after a report from the UK’s spending watchdog warned that a lack of transparency in Section 106 agreements and concerns over the quality of homes have led to social landlords avoiding taking on properties.

During the meeting on Tuesday, Mr Pennycook also gave his views on the problem of developers manipulating viability assessments.

He stressed that while house builders should be able to use these assessments to reduce their contributions in genuinely unforeseeable circumstances, there are issues with the system in its present form and in his view it goes beyond what is needed to effectively de-risk private development.

“Current rules do make it relatively easy for developers, particularly large ones with access to expensive legal and planning consultant expertise, to negotiate down contributions without good reason,” he said. 

Some developers also use their past failure to deliver policy-compliant schemes as a reason not to do so again, he added. 

The minister said that despite reforms to viability guidance in 2018 and 2019, “bad practice has crept back in and there are clearly further opportunities to strengthen the system”.

Mr Pennycook reminded the attendees that his department would be reviewing viability planning policy guidance from last year, and stressed it wants to make sure the system works to optimise developer contributions and allow negotiation where it is genuinely necessary.