The affordable housing system that's running into trouble
For over a decade, Section 106 agreements have been quietly doing much of the heavy lifting in Britain's attempt to solve the affordable housing shortage. These are the clauses written into planning permission that require developers to include a proportion of cheaper homes in new residential schemes. The results have been impressive: the system has delivered nearly half of all new affordable homes built across England.
Lately, though, the conversation around Section 106 has shifted. Reports suggest developers are finding it harder to locate housing associations willing to buy the homes they're building. Some schemes end up with hundreds of uncontracted units sitting in a clearing service, waiting for a buyer who doesn't appear. That's created a genuine tension in the market, one that affects not just property professionals but anyone concerned about where affordable homes actually come from.
What's the real problem?
Here's where it gets interesting. On the surface, it looks like housing associations have simply run out of appetite or money. The sector has faced genuine cost pressures in recent years, and many registered providers have had to pause acquisitions and review their capacity. With mortgage rates hovering around 6.58% for two-year fixes and the broader economic picture uncertain, nobody's spending recklessly.
But according to voices within the housing association sector, the real issue runs deeper. The homes being built under Section 106 requirements aren't always the ones housing associations actually want to own and manage long-term. A planning requirement to include affordable units doesn't automatically mean those homes are affordable to run, maintain, or purchase at a price that stacks up financially for a housing association.
Sian Webster, executive director at Yorkshire Housing, makes the distinction clear. "The future of Section 106 depends on building homes that housing associations actually want to own, not just ones that meet a planning requirement," she says. Without that alignment, a strong pipeline of Section 106 homes simply won't translate into homes on the ground where families need them.
What does this mean for homebuyers and sellers?
If you're looking to buy or sell, you might wonder what any of this has to do with your situation. The connection is real, even if it's indirect. The UK average house price sits at £272,188, and pressure on the affordable housing sector ripples outward through the entire market.
When affordable housing pipelines stall, fewer new homes get built overall. That means less supply competing for buyer attention and potentially firmer market conditions. For sellers, a supply pinch can work in your favour. For first-time buyers and families on moderate incomes, it makes getting on the property ladder harder still.
There's also a longer-term consideration. Communities with poor affordable housing provision often become less stable and less desirable. That affects local property values, school capacity, and the character of neighbourhoods. Buyers with families increasingly factor in whether a community will remain mixed-income or gradually shift upmarket.
Where does the sector go from here?
The good news is that housing associations aren't abandoning Section 106. Yorkshire Housing alone expects to acquire around 1,000 homes through Section 106 agreements over the next decade. There's still appetite. The shift is towards better partnership and communication.
For schemes to work properly, developers, local authorities, and housing associations need to align on what actually works financially and practically. That means housing associations being involved earlier in the design process, not just presented with a finished product that meets the letter of planning law but not the spirit of affordability.
The takeaway for homebuyers and sellers is this: the housing market isn't broken, but the machinery that's supposed to deliver affordable supply needs better lubrication. Pay attention to what's being built in your area and whether it's genuinely addressing local housing need. Long-term neighbourhood health matters more than short-term price fluctuations, and communities that solve their affordable housing problem tend to remain more resilient and desirable.
That's not a crisis story. It's a reminder that housing markets work best when all the parts actually talk to each other.