Intensified Demands for Abolishing Section 106 Amid Affordable Housing Dilemma
The time has come for industry insiders and self-builders to demand the elimination of Section 106 payments, as they're causing healthcare-sized obstructions for countless affordable homes popping up across England and Wales. A whopping 17,000 homes lay in limbo because housing associations can't shell out the funds to snag these properties from developers.
Just when you thought things couldn't get any worse, the government rolled out a traffic jam cleansing service to untangle these congested bottlenecks. However, experts are shouting from the rooftops that we need more substantial reforms pronto.
The Troubled Section 106 System
These Section 106 contracts force developers to pony up for local infrastructure improvements and affordable housing as part of their planning permissions. But recent reports show a staggering 17,400 affordable homes in England and Wales sit idle because housing associations can't afford to buy them.
The home-building titan, Taylor Wimpey's CEO, Jennie Daly, had this to say about the issue: "Housing associations are struggling financially, making it a real hassle for developers trying to sell the affordable homes they're required to construct under legal terms."
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Stumbling Blocks for Self-Builders, Too
Self-builders don't get a pass from Section 106 contributions, either. Back in 2014, the UK government ushered in an exception for small-scale developments, mostly self-build projects, to alleviate the financial burden. But some chin-scratching local authorities persist in imposing Section 106 charges on these projects, stirring up confusion and inconsistency.
Take the Self Build Portal, for example; although many self-builders can claim the exemption, those constructing dwellings over 1,000 square meters or in certain zones might still face Section 106 charges—resulting in major delays.
Developers' Cry for Help
Constructors from the length and breadth of England are throwing up their hands in frustration, as they wrestle to find buyers for Section 106-labeled affordable homes. Knight Frank's survey uncovered that a jaw-dropping 80% of developers fight tooth-and-nail to offload these affordable homes, with more than 40% admitting they haven't managed to find a single Registered Provider buyer.
Sean Ellis, managing gaffer at Fernham Homes, told it like it is: "This issue is rearing its ugly head on every single project we have going right now."
Due to the absence of buyers for these affordable units, developments trudge along like turtles on roller skates. Developers typically rely on the sale of these homes to housing associations to fund their construction endeavors. Without these transactions, projects slow to a crawl—impacting the overall housing supply.
David O'Leary, top exec at the Home Builders Federation, weighed in: "The dearth of buyers means that we're not breaking ground on smaller sites and the pace for larger ones is sluggish at best."
Plotting a Changes Course
In response to the tumult, the government has introduced a matchmaking service called Homes England to connect developers with their unsold affordable homes. However, industry mavens argue that more radical reforms are needed. The British Property Federation is tugging hard on the government's sleeve, urging it to scrap ideas for a fresh infrastructure tax and refocus on improving the current Community Infrastructure Levy and Section 106 systems, or ditch them altogether.
They reason that adding a new tax would draw an extra layer of intricacy and uncertainties to the planning game.
As the arguing rages on, the government's latest actions hint at a readiness to introduce planning changes to better serve the country's housing needs. The success of these initiatives will depend on a harmonious partnership between developers, housing associations, and local authorities.
- The latest education and self-development article guides readers on navigating the troubled Section 106 system, explaining its impact on the construction of affordable homes across England and Wales.
- In the sport of homebuilding, the Section 106 system presents a formidable obstacle, with developers struggling to find buyers for the affordable homes they're required to build.
- The British Property Federation, a key figure in the general news of the industry, suggests substantial reforms to the current Community Infrastructure Levy and Section 106 systems, or entirely scrapping them, to resolve the ongoing housing crisis.
- As the housing market continues to grapple with the challenges posed by Section 106 payments, self-builders must stay informed through resources such as the newsletter dedicated to homebuilding tips and insights.
