Registered providers want Section 106 homes built ‘well beyond’ regulations, HBF says

This follows reports over the past couple of years that housing associations are not buying up Section 106 homes, with estimates of uncontracted units ranging from 8,500 to 17,000.

Last year, the HBF claimed that 100,000 private units had been held up as a result of the lack of take-up and urged the government to intervene.

But Kate Henderson, chief executive of the National Housing Federation (NHF), pointed out that some Section 106 homes have been built to the wrong specification, design or standards and urged developers to sign up to a government clearing service.

Yesterday, Mr O’Leary told members of the HCLG Committee that the “long-standing” issue of providers not taking on Section 106 homes has “probably stabilised” but is not improving.

He added that the HBF believes there is a “reasonably simple” solution to the problem, which is “to direct, in the short term, local authorities and RPs to be a bit more flexible”.

Lee Dillon, Liberal Democrat MP for Newbury, claimed in response: “Basically you’re saying registered providers should be more flexible and take a product that they’re not happy to take.

“The retrofit cost and the EPC [Energy Performance Certificate] ratings and the gas boilers, you know, are part of why the [Section 106 homes] are sat on the shelves for RPs.”

Mr O’Leary responded: “In that instance we’re all victims really of the sort of inaction that we’ve seen in terms of government policy.

“Because if we put in place the Future Homes Standard, then everyone would be working to the same standards.”

Mr O’Leary also claimed there is another, more fundamental issue relating to Section 106 homes, that central government has been “chipping away” at affordable housing in the overall envelope of developer contributions.

He told the committee: “So if you assume that each development has a certain amount of viability and developer contributions can provide whatever the community wants or needs, central government is increasingly taking a much bigger part of that cake than it used to. 

“So things like BNG [biodiversity net gain] and building safety levy will come in this year now, that’s an extra £3,000 that central government will take for every new build home that could be provided for affordable housing, will be going straight to central government. Landfill tax, the same.

“And... the first thing that gets squeezed is affordable housing.”

Andrew Lewin, Labour MP for Welwyn Hatfield and former Clarion head of communications, pointed out the government has committed £39bn for affordable homes, a subsidy he claimed is 60% more generous than the previous administration’s offer.

“That will and should be making a very material difference over the next five years on all products,” he said.

But while Paul Rickard, chief executive of London affordable housing developer Pocket Living, agreed the announcements are “fantastic” and singled out the National Housing Bank as the most exciting part of the package, he claimed the grant does not encourage innovation as it can only be used for a limited range of core products and lacks flexibility.