G15 boss says ‘for-profits won’t deliver same volume as HAs’ as fears grow over lack of buyers for section 106 homes

The boss of the G15 group of housing associations has raised doubts about the ability of for-profits to deliver at the same volume as traditional providers as the latter step back from section 106 acquisitions.

More than 40% of affordable housing delivery in recent years has been through section 106 agreements, which require developers to ensure a minimum percentage of affordable homes in schemes as a condition of planning. A housebuilder will typically forward sell the affordable units to a housing association, who will manage them.

However, cash-strapped housing associations are increasingly shifting from section 106 deals towards their own ‘land-led’ schemes in order to have more control over design, construction, service charges and costs.

Syreeta Robinson-Gayle, head of affordable housing at Barratt London, told the London Assembly earlier this week “developers will be building out affordable homes and there will be no one to take them.”

She warned smaller developers would be unlikely to go ahead with schemes unless they knew in advance they had a buyer for the affordable units.

Fiona Fletcher-Smith, chair of G15 and chief executive of L&Q, said: “G15 members have significantly reduced our purchases of section 106 homes due to soaring costs, economic pressures, and the critical focus we are putting on building safety and investment in existing homes and services.

“Quality, design and high service charges are also concerns, especially when housing associations are involved late in the section S106 design process.

“The impact of this reduction is severe: G15 data reveals a dramatic drop in affordable homes being started this year at 1,769, down from 7,363 last year.”

>>See also: Section 106 delivers numbers- but to ensure good services, HAs need more control

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Earlier this week Stephen Teagle, chief executive of Vistry Partnerships, told Housing Today for-profit registered providers would form a growing part of its customer base for its partnerships-led model going forward as they have fewer financial burdens than some traditional housing associations and are more easily able to enter section 106 and other partnership deals.

However, Fletcher-Smith said: “Although the for-profit sector may be able to step in, it won’t be at the same volume that the housing association sector has been doing over the last 30 years.

“However, we are unwavering in our commitment to delivering affordable housing and are proactively seeking solutions with developers and the new government to tackle this challenge head-on.”