MHCLG Publishes “Road-Map” for s.106 Affordable Housing Delivery in England

Wednesday was a big day for Affordable Housing Reform!

In just one day, MHCLG issued two written ministerial statements, the outcome of a 2024 consultation on how to implement rent convergence, and a brand new policy paper on s.106 Affordable Housing.

This blog is primarily focused on the s.106 policy paper. Before we get to that point, however, some sign-posting:

• The Social and Affordable Housing Renewal Written Ministerial Statement can be found here.
• The outcome of the consultation on rent convergence can be found here.
• The Written Ministerial Statement on Resetting the s.106 System can be found here; and
• The “Roadmap for Section 106 Delivery in England” policy statement can be found here.

The policy statement sets out a new framework within which local planning authorities are expected to consider and agree deeds of variations for sites which have stalled due to a lack of interest in the s.106 secured affordable housing stock.

There is now a policy expectation that councils should be open to renegotiating affordable housing provisions in existing s.106 Agreements, if the following conditions have been met:

• All reasonable endeavours have been made to find an Registered Provider to purchase the units – based on the marketing and other requirements set out in the original S106 agreement.
• The uncontracted S106 homes have been uploaded onto the Homes England Clearing Service by 1 June 2026.
• The uncontracted s.106 homes have been live on the Clearing Service for a period of six weeks from the date of the unit being uploaded (“the Clearing Service period”) without attracted any reasonable offers.
• The uncontracted s.106 homes are due for completion on or before 1 December 2027, with completion defined as being when a home is ready for occupation or when a completion certificate is issued.

Where these conditions are met, Councils are encouraged to negotiate any deeds of variation quickly – within twelve weeks of the end of the Clearing Service period.

They are also encouraged to:

• seek alternative affordable housing or discounted market tenures first; and
• only proceed to market sale or rent if there is no buyer interest in an alternative tenure mix. In that scenario, an equivalent amount of affordable housing should be provided on an alternate site or, where that is not possible, a financial payment in lieu should be secured.

Such deeds of variation should also include a requirement that if the affordable housing units are not completed by the 1 December 2027, the units will automatically revert to the original tenure mix set out in the original S106 agreement.

In respect of Phased Developments, the “roadmap” advocates a staged approach, with the tenure mix for those phases which contain units that are likely to complete by 1 December 2027 being eligible for amendment, and later phases (which will miss the deadline), remaining under the original tenure mix.

The guidance stresses that the bar on using site-specific viability assessment to reduce developer contributions, including affordable housing, on sites that are subject to the Golden Rules (namely Grey Belt and Green Belt sites). With exceptions to this position not being proposed until after the current NPPF consultation closes.

MHCLG expressly acknowledges that this proposal is not going to assist ALL stalled sites experiencing issues with finding a purchaser for s.106 Affordable Housing stock. It is only designed for sites where those units have already been built, or are due to be completed in the very near future – which comprises a relatively small proportion of impacted developments. The greater number of sites which have simply not commenced at all will not be assisted by these changes.

For those developments, the answers lie in the rest of the policy paper, which proposes:

• A more robust approach to viability assessments at plan making stage, with the NPPF consultation placing “a stronger emphasis on considering development viability at the plan-making stage rather than at the application stage, to provide greater certainty on the contributions expected from development.”
• A scaling back of site specific viability assessments at application stage, with greater clarity on the “limited circumstances in which a viability assessment to inform decision-making is justified”.
• A greater focus on addressing planning obligation requirements during pre-app.
• A commitment to publishing standardised s.106 Template Agreements – with priority being given to a template for “medium” sites of up to 50 units- and providing “sector-wide training opportunities” to local planning authorities, presumably to help upskill their legal departments.

Changes are also being proposed to the standards expected from s.106 Affordable Housing stock and also help RPs get to the point where they are able to purchase it.

Standards and Sector Expectations

The roadmap promises new guidance for RPs, developers and local planning authorities which:

• Clarifies the required design and construction standards for S106 affordable housing stock
• Sets an agreed framework for how the sector will work together to deliver S106 stock – including earlier and better engagement and collaboration with registered providers on the design and build quality of S106 units during the planning application process.
• Standardises pricing negotiations across the market to provide more certainty for RPs and developers on what they can expect to pay for S106 – including the prospect of trialling publishing transfer rates more widely.
• Working with small housing providers to make the S106 process more accessible and increase their capacity to deliver.

This guidance is intended to be published “before the time-limited emergency measures end” which, depending on how you interpret the timescales, could either be June 2026 or December 2027.

Ensuring RPs can afford to purchase s.106 Affordable Housing Stock

The Roadmap also promises the following demand-side interventions to re-build the financial capacity of RPs and ensure that there is actually a market into which s.106 Affordable Housing Stock can be sold:

• Providing low-interest loans to Private Registered Providers of social housing. These loans will be administered by the National Housing Bank, and the Greater London Authority in London. Up to 10% of the £2.5 billion low-interest loan scheme is ear-marked to support the delivery of S106 Affordable Housing Stock.
• Requiring RPs to share data on the number and type of homes that are being delivered through Section 106 as part of the bid process for the new Social and Affordable Housing Programme.
• Considering whether and how to allow RPs to form consortia for bidding and purchasing S106 affordable housing stock.
• Potentially adding military affordable housing to the definition of affordable housing in the NPPF (this is part of the current consultation) to allow military housing to be delivered as part of affordable housing requirements – including ensuring MoD have access to S106 homes.

It will be interesting to see how this works out in practise. Whilst many of the measures are pragmatic and to be welcomed, others are likely to be tricky to get right.

In particular, the reserving viability assessments to plan-making has been a policy aim for a number of years; and is very difficult to do effectively – given the sheer scale of variables that will impact the viability of a particular site and how quickly market factors can change.

Nonetheless any process that takes a good hard look at the cumulative impact of various legislative and policy requirements are having on development viability should be encouraged – particularly given the fact that two new levies are due to arrive over the coming year (the Building Safety Levy and the Nature Restoration Levy) in addition to the financial obligations that already exist. Neither of which will have been factored into the viability assessments for local plans that are currently in place…..