Number of Section 106 homes in clearing service well below reported figures while mergers impact demand, says Homes England

The Home Builders Federation (HBF) estimated last year that there are around 8,500 uncontracted affordable homes expected to commence within 12 months, while a member survey had suggested a total of 17,400, covering completions in future years.

When asked about these estimations and whether the clearing service figures are “in the hundreds, not the thousands”, Ms Jones said the figures are “not quite hundreds” but “significantly lower” than the HBF’s reported numbers.

The government’s ‘emergency plan’ for Section 106, announced in January to help tackle the issue of unsold homes, stipulated that developers must list uncontracted properties on the Homes England clearing service by 1 June this year in order to be eligible for the time-limited measures.

Ms Jones also said: “One of the things that we do hear is that the lack of response from [registered providers] is because they are using their financial capacity to deliver their grant-funded programme – but what we hear from partners is that they are all in the market to take Section 106s, and why wouldn’t they be, in terms of the right home, the right quality, in the right place? Because it’s low-risk growth for them.

“But what I would say is that they are all much more discerning buyers than they might have been in the past, and they will only take the homes that meet their requirements [and] are in the right place in terms of their operating area.

“It needs to be the right product, but I would say that all of them, to a tee, say they are definitely still in the market to take Section 106 homes.”

Ms Jones agreed with concerns raised by the HBF around lower appetite from housing associations to acquire affordable homes on smaller sites, and the impact on SME developers.

“I agree, I think it’s those smaller sites, those sites that have got one, two, three affordable homes. Often it is the SMEs trying to match those homes up with a [registered provider],” she said.

An audience member, Rose Sandell, communities director at house builder Taylor Wimpey, also raised an issue around mergers between social landlords.

She said: “The pool of housing associations has got a lot smaller, so there’s a lot of consolidation in the sector, which I think goes unrecognised quite a lot of the time. So we’ve got a lot of small [providers] that we would work with, just around the M25.

“We’ve lost probably a third, half of them, a lot of people that we may have done 30, 40 units with in a year.”

In response, Ms Jones said: “I think it goes back to the point about smaller sites – with all the mergers of those more local, smaller [providers] that would take the small number of units on sites, it impacts those more individual sites.”

The panel session also covered issues around additionality, with developers raising concerns that Homes England or Greater London Authority grant funding can only cover homes delivered over and above affordable thresholds in a Section 106 agreement.

Jamie Ratcliff, chair of The Housing Forum and co-founder of Place Base, asked Ms Jones a question around “the process that needs to be gone through to prove that additionality, [which] is reducing the level of affordable down sometimes to zero, and just what does that mean in terms of trust with communities, the complexity of it?”

He added: “My plea... is that there could be a different process, that looked at the actual viability, set aside what is in Section 106 and came up with it that way, without having to go back through planning, without planning authorities losing control or having problems.”

In response, Ms Jones said the rules around grant funding for homes that are secured in Section 106 are “really, really clear”.

She continued: “I think the problem comes where [local planning authorities]... put affordable homes in Section 106 which are in effect an aspiration, because viability has already demonstrated that there are no developer contributions, but because they’re in Section 106 and they are obliged to them, they’re under the [terms and conditions] of the legal Section 106 planning agreement, it means that they are not eligible for our funding because they’re outside the parameters.

“So some of this is an education piece... with the planners, because... I completely understand why local members want to try and lock down a percentage of affordable housing, but there needs to be a different mechanism than through that legal agreement in terms of Section 106.”

Ms Jones suggested the use of ‘best endeavours’ clauses, or developing an “affordable housing delivery strategy that sets out a partnership approach to securing the local aspiration”.

“It’s something we are acutely aware of, and we are looking at it and it does take a lot of our time in terms of discussions with developers and local authorities,” she added.

Ms Jones urged local authorities to engage with Homes England before making a planning decision, if there are schemes where affordable housing is non-viable but securing a certain level is “politically important”.