New research from the Home Builders Federation (HBF) is showing that reluctance to accept the contracts is causing severe delays to housing delivery
Section 106 contracts put a minimum number of affordable homes that housing developers must build on new sites, which are then bought by the registered providers at a discount.
Social housing providers are reluctant to accept or commit to the contracts and are pulling away, leaving 900 already-built affordable homes empty, and putting another 8,500 affordable homes planned for the next 12 years at risk of delay.
Budget challenges make the contracts unappealing
While home builders are tasked with constructing affordable homes, under Section 106 contracts, it is the registered providers ability to purchase the homes that is the cause for concern.
Due to economic and policy challenges in the sector, bids to commit to the contracts have declined substantially.
Affordable homes built without contracts can bring whole developments to a halt, and can leave some homes unowned, with no one to sell them.
The HBF’s research estimates that 700 housing developments have been delayed due to a lack of commitment for these contracts in the last three years alone, stifling availability for all tenures of housing and preventing the housing crisis from being addressed effectively.
Neil Jefferson, chief executive at the Home Builders Federation, said:
“Against rising affordability pressures and increasing numbers of families living in temporary accommodation, it cannot be that Affordable Homes are left standing empty.
“Government’s social and Affordable Housing announcements were a welcome step to giving Registered Providers confidence to plan long term, but they are doing little to ease the immediate constraints of delivering Affordable Housing through Section 106 agreements.
“Right now, an estimated 100,000 private units are stalled, which not only threatens the supply of much-needed homes but also risks the livelihoods of regional businesses and hardworking tradespeople up and down the country.
“While Government’s housing announcements have been welcome, as it stands, housing associations are unable to bid and private buyers are unable to buy, leaving the housing outlook increasingly uncertain.”
The report can be read in full here.
The need for affordable housing is great
With the nation in the grip of a housing crisis, affordable housing is meant to be a key driver of the solution.
Highlighting this earlier this month, the Chartered Institute of Housing (CIH) released a report into the need for affordable housing in Scotland, finding that nearly 79,000 affordable homes are needed.
This need is primarily in the east of the country, and means that 15,693 affordable homes would need to be built every year.
Shelter Scotland director, Alison Watson, said: “This research shows the devastating reality of Scotland’s housing emergency and the decades of underinvestment in housing that have brought us to the point. The need for social housing is increasing and yet Scotland is not building anywhere near enough to meet demand.
“The Cabinet Secretary for Housing recently announced a housing emergency action plan. While there is much to welcome, it falls short on delivering the new social homes needed to stop homelessness rising.
“Scotland needs these new homes for social rent to prevent more families being pushed into poverty, get the 10,180 children out of temporary accommodation and into permanent homes, to stop young people being locked out of secure housing and to protect communities from a broken and biased housing system. We face a simple choice: invest in the homes we need now or pay the price for generations.
“Scotland cannot afford another lost decade on housing.”
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