Homes England (HE) has now made available the Section 106 Affordable Housing Clearing Service, which is a database (or what some are calling a 'register') of affordable housing opportunities across England (excluding London, where the Greater London Authority has responsibility for affordable housing delivery).
Planning obligations
Now well-established in the housing sector, as part of the process of securing planning consent for a new residential development, local planning authorities (LPAs) will usually require new affordable housing to be provided within the new scheme. LPAs achieve this in practice through the use of formal planning obligations – these are covenants (binding promises) to deliver the new affordable housing as part of the new development, entered into under section 106 of the Town and Country Planning Act 1990 (S106). HE's new clearance database allows housebuilders' to publish details of their uncontracted and unsold S106 affordable homes.
Why now?
In furtherance of its housing delivery objectives, HE have developed the clearing system following discussions with a range of partners during the course of this year, including housebuilders, local authorities (LAs) and registered providers (RPs), alongside their representative trade bodies. These discussions and the new clearance facility arose in response to the well-documented challenges with delivery of S106 affordable housing and comprises one of a range of potential solutions that have been identified.
Housebuilders and developers are reporting challenges of finding RPs to acquire the homes. Many RPs are experiencing a reduction in their development and financial capacity, due in part to rising borrowing costs, rental income caps and fire safety and other stock remediation and maintenance expenditure. There are also ongoing challenges surrounding the expectations of parties involved on all sides of the planning and development process, including around pricing, tenure, quality and after-care. All this means that RPs are being more selective.
Whilst the clearance system is not mandatory, HE are publicising the new register to its partners and is encouraging them to register to access and use the new register. The remainder of this note explains more about the new system and why its promotion within the affordable housing sector seems like a win-win for all concerned.
What will it do?
The register is intended to bring together those parties who are building and selling the homes together with RPs and LAs who are looking to buy and/or enable their delivery of new affordable housing.
HE also expects the register to provide it with a significant source of data and insight on the S106 market, and to facilitate a successful response (from all parties) to the scale and nature of the challenges.
Who can/should register?
The following parties can register to use the Clearing Service:
- Housebuilders
- RPs
- LAs
HE and the Ministry of Housing, Communities and Local Government (MHCLG) can also access the service
Registration process
Representatives of the applicant can apply to register for the new service by completing a form online: Register to sell and buy Section 106 affordable homes
Applicants can provide details for up to 5 users who will be able to access the system to either input details or view information.
Further information and assistance with applications is available via HEs designated email address for the new facility - s106clearing@homesengland.gov.uk.
Benefits of registration
Housebuilders will be able use the service to upload details of affordable homes they have planning permission to build, alongside private homes, but have been unable to find a buyer for. Aside from recording the available S106 affordable homes, registered housebuilder organisations can include information about the homes, key delivery dates and contact details for specific sites. This information is then available for RPs and LAs to view. RPs and LAs can also record information about their preferences for S106 affordable homes.
Housebuilders are required to self-certify that they will only upload details of new opportunities to the clearance register where:
- there is outline or full planning permission in place for the new homes; and
- they have exhausted their usual routes to market and disposal of the affordable units, in line with relevant planning obligations.
Whilst much of the information about the new will already be publicly available, HE's hope is that a centralised portal will result in greater visibility of opportunities, enabling buyers and sellers to connect, build new partnerships and work together to secure the onward delivery and occupation of affordable homes. This could lead to a more pronounced steer of relationships between key stakeholders away from 'single transaction' deals, and towards operating on a portfolio/framework basis, whilst still respecting the integrity of the 'commercial' offer and acceptance process and applicable S106 requirements.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
