Plans to tackle inefficiencies in the Section 106 system that cause delays to affordable and social housing delivery have been unveiled in a new policy paper from the government.
“Policy statement: a roadmap for Section 106 delivery in England”, published by the Ministry of Housing, Communities and Local Government, seeks to address the challenges to housebuilding, alleviating the strains on the system and ensure it works better.
Lorraine Neve, Senior Associate in Thrings’ Planning and Environment team, takes a look at the reforms being proposed in the policy paper, and what this could mean for landowners and developers.
Key features
A new “emergency route” for unsold S106 units
The headline measure is a time-limited emergency route aimed at tackling existing unsold and uncontracted affordable units.
Under this approach:
If those steps are followed and units remain unsold, local planning authorities (LPAs) are expected to consider renegotiating the S106 agreement. The government’s guidance will support them in taking a flexible approach which could include agreeing alternative tenures or tailored arrangements for phased schemes.
Importantly, the route is time-limited and focused on units that are already built or close to completion. If units are not completed by 1 December 2027, schemes revert to the original tenure mix in the S106 agreement.
Stronger support and clearer expectations for LPAs
The government has also signalled stronger support for LPAs in negotiating S106 agreements, including reinforcing planning contributions at the plan-making stage through changes to the NPPF as well as clarifying when viability assessments should be used and committing to a standardised template S106 agreement – aiming to reduce delay and improve consistency and certainty at the outset of projects.
Sector standards, pricing transparency and finance
The paper also looks at longer-term reform with such measures as setting clearer standards for S106 affordable homes and encouraging greater standardisation in pricing negotiations to improve certainty for both developers and RPs – as well as exploring RP consortia to enable joint bidding and purchasing of S106 homes.
The policy paper also outlines the government’s intention to work with smaller housing providers to make the process more accessible as well as making low-interest loans available to Private Registered Providers, administered by the National Housing Bank (and the Greater London Authority).
Alongside this, £2.5 billion of funding support has been referenced to help unlock stalled developments.
Why this matters
For developers, the backlog of uncontracted S106 units has been a very real drag on schemes. Where RPs have withdrawn or reduced appetite for S106 affordable units, sites can grind to a halt. This roadmap shows the government is willing to allow practical solutions to unblock delivery, but only for genuinely stalled units and within tight deadlines.
Standardised clauses and earlier clarity on contributions should make the negotiation of new S106 agreements quicker and more predictable. That can help reduce risk at planning approval stage and smooth programme delivery.
The emergency route could provide a practical solution for SME developers in particular when it comes to stalled sites, with a small number of affordable units that have proved difficult to place, tying up cashflow which quickly undermines viability.
For landowners and promoters, understanding how and when variation might occur (and the evidence needed to justify it) is crucial when structuring agreements and assessing land value.
Practical steps to consider now
Lorraine Neve, Senior Associate in Thrings’ Planning and Environment team, said: “This policy paper is a welcome and pragmatic response to the very real and growing market issue of unsold S106 affordable units.
“For many developers, particularly SMEs, it offers a sensible mechanism to unlock stalled stock and improve cashflow. The real test will be how flexibly LPAs apply the guidance and how effectively the sector works together to make the emergency route function in practice.”
Thrings’ Planning and Environment lawyers have extensive experience in navigating complex local and national planning policy legislation and has successfully supported developers and local authorities through the approval and appeal processes. To find out more and for advice on your development proposals, please do get in touch.