Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
Diagnose the extent of the Section 106 affordable housing problem and improve Clearing Service effectiveness.
Recommendation
Given the shortage of social housing, it is unacceptable that unsold homes funded through Section 106 agreements are sitting empty. There is a growing problem of registered providers of social housing (RPs) not buying affordable homes funded by Section 106 agreements. In response, in December 2024, Homes England began the Section 106 Affordable Housing Clearing Service that allows developers to upload details of new homes for which they have been unable to find a buyer, and encourages buyers and sellers to connect. The Department reports that, at the time we took evidence, over 100 local authorities, over 100 developers and nearly 200 RPs had registered for the Clearing Service. The Department also reports that around 800 unsold homes have been listed on the Clearing Service, which is far below the figure of at least 17,000 that exist across the country according to a survey by the Home Builders Federation. The Department accepts that it is unclear why there is such a significant difference in the numbers of unsold affordable homes, and explains that it is engaging with the Home Builders Federation to try to understand better what is going on. recommendation In its Treasury Minute response, the Department should set out how it will diagnose the extent of the Section 106 affordable housing problem more confidently, and how it will ensure the Section 106 Affordable Housing Clearing Service is working much more effectively.
Government Response Summary
The government agrees and acknowledges the scale of the unsold Section 106 homes problem and the limited uptake of the Homes England Clearing Service. It is "progressing work at pace on a holistic policy package, to be confirmed shortly," to address both existing and recurring issues, aiming for a clearer understanding of underlying problems within the next few months.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. diagnose the scale and causes of the build-up of unsold and uncontracted Section 106 (S106) units. Estimates vary, but it is not in dispute that thousands of unsold S106 homes have built up over recent years. This is as a result of the complex interplay between a range of factors 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. In December 2024, the government launched the Homes England Clearing Service to connect buyers and sellers of S106 homes and gather data on delivery challenges. However, participation has been optional, and uptake limited. 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. The government is progressing work at pace on a holistic policy package, to be confirmed shortly, that will deal with the legacy problem of existing uncontracted S106 units and also, prevent the problem recurring. Through these measures, the department will deepen its understanding of the underlying issues in the S106 market, with an intention to have a clearer picture in the next few months, as the Committee recommends and lay the foundations for a simpler, more transparent, and more resilient system whilst protecting social and affordable housing delivery.