G15 and NHF stress complexity of section 106 issue following ‘not good enough’ comment from MHCLG

Housing sector bodies have responded to government comments about the lack of takeup for section 106 properties by pointing out that it is not always feasible or desirable for registered providers to buy the homes.

Analysis from the Home Builders Federation found 8,500 affordable homes due to be delivered in the next 12 months are at risk of standing empty or not being built because of a lack of a contract with a registered provider of social housing. The body also said more than 700 housing developments have been stalled in the past three years as registered providers (RPs) have stepped back from buying affordable housing units required by local authorities.

This prompted the Ministry of Housing, Communities and Local Government (MHCLG) to issue a statement yesterday stating, “this is not good enough” and saying the government has “given housing providers financial stability to help them buy section 106 homes so they are not stood empty” through the 10-year social rent settlement.

Responding to the comments, a spokesperson for the G15 group of large associations in London said: ““It cannot be right to expect not-for-profit providers to buy homes that we don’t own or manage and that tie us into complex management arrangements and service charges.

“We know this isn’t good for the residents who move in so our appetite to buy will remain limited in those circumstances. In addition, we can’t oblige freeholders to give us essential information required by the regulator which is unacceptable.”

He added however that the G15 wants the section 106 system to work well. The G15 published a guide for housebuilders seeking section 106 deals in April.

Kate Henderson, chief executive of the National Housing Federation said: “There remain significant issues with some section 106 [homes] which have been built to the wrong specification, design, or standards. We’re committed to working with the government and developers to address these issues.”

Henderson added that the NHF welcomes the government’s intervention in introducing a Homes Engand ‘clearing service’ to match housebuilders wishing to sell homes with registered providers.

MHCLG issued a fresh statement this morning from housing minister Matthew Pennycook acknowledging the issue was “complex”.

He said: “While there are positive signs of an increasing appetite among affordable housing providers to take on uncontracted and unsold S106 homes post-spending review, there remains a serious problem that must be dealt with.

 “This is an extremely complex issue with multiple causes ranging from affordable housing providers’ constrained financial capacity to concerns, both perceived and real, about the quality, standard, and price of available Section 106 homes.

“Alongside efforts to refine our evidence base, ongoing work is taking place on a holistic policy package that will deal with the legacy problem of existing uncontracted section 106 units and also prevent the problem recurring.”