The Government have a manifesto commitment to deliver the biggest increase in social and affordable house building in a generation, and to strengthen planning obligations to ensure new developments provide more affordable homes.
Section 106 agreements are, and will remain, an essential mechanism for delivering social and affordable housing. They account not only for a significant proportion of affordable home completions, but also a significant share of total new home delivery. Without them, the development pipeline as a whole is at risk of contracting sharply.
However, in recent years, the negotiation of section 106 agreements has become synonymous with inefficiency and delay. To ensure the developer contributions system secures the supply and affordability outcomes we seek in the years ahead, we need to reduce its complexity and minimise negotiation friction.
In the short term, we also need to act to deal with the detrimental consequences of a declining market for section 106 affordable homes. A complex range of factors has led to the sharp drop-off in demand for section 106 units over recent years, with the result that thousands of constructed or consented section 106 units are currently uncontracted. This state of affairs is delaying the build-out of development sites across England, and disrupting both affordable and wider housing supply.
To this end, today the Government are announcing a comprehensive policy package that will lay the foundations for a simpler, more transparent and more resilient section 106 system, and deal with the legacy problem of existing unsold and uncontracted section 106 units.
Immediate action to unlock unsold and uncontracted section 106 homes
Estimates vary, but it is not in dispute that thousands of unsold and uncontracted section 106 affordable homes have built up over recent years. They have done so as a result of the complex interplay between a range of factors. These include:
Registered providers of social housing facing mounting pressures from severely constrained financial capacity, higher costs of finance, rising building costs and commitments to remediate existing stock to meet building safety and decarbonisation requirements, all of which have led to a scaling back of section 106 acquisitions.
Concerns among RPs that some section 106 homes do not meet the quality and other standards required. Examples include section 106 homes not meeting described space standards or not being in conformity with the, now updated, decent homes standard and minimum energy efficiency standard, as well as anticipated higher new standards (e.g. changes to building regulations, future homes standard).
Negotiations on section 106 agreements can create delays in the planning process and increase costs for local authorities and developers, which can disproportionately impact small and medium-sized enterprise developers. A lack of capacity and capability at the local authority level in terms of legal resource, in comparison to larger developers, often means that local authorities are at a disadvantage when negotiating contributions at the planning application stage.
On 2 July 2025 we published a five-step plan to kickstart a decade of social and affordable housing renewal and set out this plan to the House in a written ministerial statement—HCWS771.
Today I am providing a progress update on the implementation of the plan, as well as confirming next steps in respect of grant funding, regulation, rebuilding sector capacity, and the reinvigoration of council house building, so that registered providers have the clarity and certainty they need ahead of bidding opening for our new social and affordable homes programme—SAHP—next month.
The biggest boost to grant funding in a generation
In July we confirmed headline parameters for our new 10-year £39 billion SAHP. Prospectuses for London and the rest of England were published by the Greater London Authority and Homes England respectively in November 2025. Bidding for the programme will open next month.
Rebuilding the sector’s capacity to borrow and invest in new and existing homes
We remain committed to providing a stable rent policy for social and affordable housing that supports investment in new and existing homes, with the right protections for existing and future rent payers and for public spending.
The 10-year settlement of CPI + 1% announced at the spending review gives the sector the long-term certainty it needs. We also confirmed at the spending review that we would implement a convergence mechanism as part of the new long-term settlement, not least because we believe that doing so is right in principle to address the disparity between actual social rents and formula rents.
RPs deciding to prioritise other routes to development, mainly land-led grant funded development, where they can have greater influence over specification and design and avoid management challenges stemming from their more limited control as an intermediate leaseholder of small numbers of homes in blocks managed by an external managing agent or freeholder (e.g. service charges for tenants can pose barriers to managing these homes as social housing); and
RPs and developers being unable to agree on section 106 unit pricing.
The Government have already taken a number of steps to support demand for section 106 units, not least spending review measures designed to rebuild the capacity of RPs. As a result, we are seeing tentative signs of an improvement in appetite for acquiring section 106 homes. However, despite this positive shift in sentiment post spending review, we know that there are still housing schemes where developers remain unable to secure an RP buyer for the affordable homes set out in the original section 106 agreement, and where local planning authorities and developers have not discussed or reached agreement on variations to planning obligations, with the result that many of these sites are stalling.
For this reason, as of today, we expect all LPAs to take advantage of existing planning flexibilities to renegotiate section 106 agreements, and to allow the tenure of homes to be varied in order to secure a buyer where affordable homes secured in section 106 agreements remain uncontracted or unsold. This can be effected by a deed of variation—making amendments/revisions to existing section 106 agreements—either by agreement of the parties to the section 106 or by formal application under section 106A of the Town and Country Planning Act 1990.
To ensure we target sites that are genuinely stalled, the following section sets out the conditions that LPAs should ensure are met, and the approach to negotiation they should take, where it is necessary to agree a deed of variation with developers holding uncontracted section 106 units that have not found any suitable RP buyer.
This measure is intended to support LPAs in exercising their ability to renegotiate planning obligations. It will be strictly time-limited, in order to target those section 106 homes already built or very close to completion but unable to find an RP buyer. This policy is also laid out in the section 106 road map published on gov.uk.
Conditions for accessing this time-limited process
LPAs are expected to consider renegotiating section 106 agreements when the following conditions are met:
Developers should have exhausted all reasonable endeavours to find an RP buyer based on the affordable housing marketing, and any other relevant requirements set out in the original section 106 agreement.
Developers should have uploaded any uncontracted section 106 homes onto the Homes England clearing service by 1 June 2026 to give a final opportunity for RPs to bid to purchase these homes. Any homes not uploaded onto the clearing service by this point will be outside of this process.
Homes should be live on the clearing service for a period of six weeks from the date of the unit being uploaded.
The section 106 homes should be due for completion on or before 1 December 2027, to be eligible for this time-limited approach; completion defined as when a home is ready for occupation or when a completion certificate is issued. Expected completion dates should be registered on the clearing service to guide LPAs on whether all above conditions are met.
LPAs should seek to avoid tenure renegotiations for uncontracted section 106 homes that have received reasonable offers from willing and suitable RP buyers, as is current practice, to avoid the loss of social and affordable housing to private sale.
As is currently expected, developers should inform LPAs of any, and all, bids they receive from RPs seeking to buy uncontracted section 106 units. LPAs are actively encouraged to request that these details are provided.
Assessing the reasonableness of bids is ultimately a matter for individual LPAs but, where available, they are encouraged to consider the following evidential sources: site level viability evidence; published commuted sums policies; grant rates; surveyor data; and recent section 106 purchases in the locality.
Given the clearing service will have provided an opportunity for RPs to identify and bid for unsold and uncontracted section 106 homes, LPAs are encouraged for this temporary period to take a pragmatic, time-limited, and light-touch approach to assessing bids, and any further information requests, for example evidence of marketing efforts or details of contact with prospective buyers in the locality. In instances where there is a dispute between the LPA and developer over whether bids received are reasonable, they may also wish to seek a third-party view to support a resolution, as per an existing alternative dispute resolution procedure.
Guidance for LPAs on proceeding with a deed of variation
LPAs should confirm their decision on proceeding to renegotiate the section 106 agreement as quickly as possible—with a guideline of no more than twelve weeks from the end of the six week period on the clearing service, and consider the following in negotiating to alter the tenure of eligible homes:
LPAs are encouraged to take the following approach:
(i) seek alternative affordable housing or discounted market tenures in the first instance where possible;
(ii) if there is no buyer for such tenures, proceed through to private market rent or sale—with an equivalent form of affordable housing provided on an alternative site within the LPA s area or, where this is not feasible, a financial payment made in lieu of onsite affordable housing.
LPAs should include stipulations that make clear that if homes are not completed on time and by the deadline of 1 December 2027, schemes will revert to the tenure mix set out in the original section 106 agreement. Renegotiated section 106 agreements should provide for this without the need for a further deed of variation to be made.
When considering phased development, LPAs and developers should agree a tailored approach with regard to the circumstances of the specific phases i.e. if the first phase will be completed by 1 December 2027, then a deed of variation should be considered in line with the policy set out in this statement. However, where phases contain units that are not expected to complete by this point, the terms set out in the original section 106 should continue to be expected to apply.
In line with planning practice guidance on viability, site-specific viability assessment should not be used on schemes subject to the golden rules for the purpose of reducing developer contributions, including affordable housing. The Government are currently consulting on a revised national planning policy framework, https://www.gov.uk/government/consultations/national-planning-policy-framework-proposed-reforms-and-other-changes-to-the-planning-system which seeks views on the limited instances in which site-specific viability assessment may be justified.
Laying the foundations for a more effective section 106 system
While this immediate action is necessary to overcome current challenges facing the section 106 market in order to reduce disruption to house building and sustain supply, we are clear that this is a time limited, emergency intervention. The Government’s primary focus remains on long-term reform to reset the section 106 market and support effective section 106 delivery of social and affordable homes, and thereby honour our manifesto commitments.
We intend to work closely with LPAs, RPs and developers to deliver a series of measures that will provide for a simpler, more transparent and more resilient section 106 system, including:
Supporting LPAs to negotiate section 106 agreements. We want to simplify and strengthen the process for agreeing developer contributions through section 106 agreements at the application stage of new developments. It is our intention to publish a template section 106 agreement to speed up the process of drafting and concluding new section 106 agreements.
Setting clear sector expectations to guide section 106 delivery. We want to provide greater clarity and certainty to facilitate the more effective delivery of section 106 homes. Through new guidance we will seek to foster early engagement and collaboration between developers and RPs; provide greater clarity on the standards section 106 homes must meet and the role that should be afforded to RPs in ensuring section 106 homes meet the standards required of social and affordable housing; and encourage standardisation across the market in respect of how pricing is negotiated so as to provide more certainty for RPs and developers on what they can expect to pay and accept for section 106 units.
Expanding financial capacity to revive the market for section 106 homes. Low-interest loans will be made available to private registered providers of social housing. They will be administered by the national housing bank outside London and the Greater London Authority in London. Up to 10% of the £2.5 billion low-interest loan scheme for private registered providers will be available to support the delivery of social and affordable homes via section 106. Further detail on low-interest loans is set out in our decade of renewal update. We will also build on the recently extended affordable homes guarantee scheme 2020, and confirmation of its use for section 106s. We will continue to explore how Government can crowd in additional private investment to enable the purchase of unsold section 106 units. This is with the aim of bringing them into use while retaining them as regulated affordable housing, for example through an affordable housing acquisition vehicle supported by debt guarantees which is able to buy section 106 homes.
We will set out further detail in due course with the intention of this full reset being in force in spring 2026. The Government’s full policy statement has also been published today.
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Following consultation, I am today confirming that registered providers will be able to increase weekly rents for social rent homes that are below formula by up to an additional £1 on weekly rents each year over and above CPI + 1% from 1 April 2027, and by up to an additional £2 on weekly rents each year over and above CPI + 1% from 1 April 2028, until formula rent is reached.
Convergence will only result in a tenant paying more where their rent is below formula rent—i.e. below the maximum that could be charged if their social rent home was re-let to a new tenant. We believe that this approach strikes a fair balance between the need for increased investment in new and existing homes, the interests of existing and potential social housing tenants, and the consequences for public spending and our fiscal rules.
To help providers build more social and affordable homes, we announced at the spending review that we would make available £2.5 billion of low-interest loans over four years—2026-2030. The loans will be made available to private registered providers of social housing and will be administered by the National Housing Bank (Homes England), and by the Greater London Authority in London.
Today I am announcing that 60% of the £2.5 billion—i.e. £1.5 billion—will be allocated to London, in the light of the acute challenges facing providers in the capital. The loans will be available at an interest rate of 0.1% and will have a duration of 25 years. They will be used to deliver the same social and affordable tenures and strategic priorities as funding under the SAHP.
They will be made available via a competitive bidding process, following confirmation of initial grant allocations made through the SAHP. We expect providers to submit ambitious grant bids for the SAHP when it opens next month, with the loans intended to secure additional homes over and above those delivered with SAHP grant funding alone. There will also be an opportunity to bid to use low-interest loans to acquire section 106 homes. Up to 10% of the £2.5 billion will be available to support the delivery of social and affordable homes via this route. We will confirm further details in the near future.
I am today also publishing a road map detailing how the Government intend to deal with the legacy problem of existing unsold and uncontracted section 106 units and how we will prevent the problem recurring by laying the foundations for a simple, more transparent and more resilient section 106 system. I will publish a separate written ministerial statement setting out further details about this policy package.
Establishing an effective and stable regulatory regime
Building new social and affordable homes must go hand in hand with ensuring that our 4 million existing social homes are safe, decent and warm for tenants. To support registered providers to invest in existing homes, we are implementing a modernised regulatory framework that puts tenant safety and experience at its heart but is proportionate for providers.
I am today confirming details of the new, modernised decent homes standard. This new DHS will apply to social and private rental tenures from 2035, allowing landlords time to plan carefully to implement the changes. It has been designed to reflect modern expectations of rented homes and improve health outcomes for tenants. It prioritises safety, decency and warmth, and it will act as a common standard for both private and social rented housing.
Following consultation, the new DHS will focus on condition as the primary factor when determining compliance of building components such as windows and roofs, rather than age. It will go further in ensuring that rented homes are provided with good-quality facilities such as kitchens and bathrooms, and it will introduce safety measures such as mandatory child-resistant window restrictors—this will help to prevent tragic falls and will give parents greater peace of mind. It will also establish a more proactive and preventive approach to addressing damp and mould.
Having carefully considered feedback to the consultation, we will not introduce enhanced home security regulations, a mandatory floor coverings requirement, or an obligation for landlords to meet repair standards within the public realm. We recognise that some landlords are already providing floor coverings, but many residents struggle to provide their own basic furnishings. As such, we intend to work with landlords and tenants to rapidly identify cost-effective ways in which landlords can better support tenants in need.
The new, modernised DHS necessarily balances the cost implications of improving the quality of existing rented homes with the need to increase social and affordable housing supply, given the importance of the latter to moving people, including many vulnerable children, out of unsuitable temporary accommodation. Guidance will be published in due course to support early action and compliance. A full Government consultation response and policy statement has been published today, setting out details of the new standard.
We have also published today the final standard to provide direction to the social rented sector on a new minimum energy efficiency standard and will publish a full Government response to this consultation shortly.
Following consultation, we have decided that all new and existing social rented properties must have an energy performance certificate C, using reformed EPCs, in a choice of fabric performance, smart readiness or heating system metric, by 1 April 2030. The compliance date to meet a second metric has been extended, so that all new and existing social rented properties must meet the equivalent of EPC C in a second metric by 1 April 2039. This recognises the unique role that social landlords play in both improving the energy efficiency and decency of homes and in increasing the supply of social and affordable housing, ensuring that social landlords have the confidence to invest now towards meeting our shared objectives to reduce fuel poverty, decarbonise the sector and increase supply.
This new standard will encourage building improvements that make homes warmer and energy bills cheaper, and that lead to lower emissions. We will publish further guidance to support social landlords with the implementation of the new standard in due course.
We have received extensive feedback from registered providers over many months, making it clear that confirmation of the future homes standard is key to unlocking ambitious development plans across the sector. The FHS will include high levels of fabric efficiency, low-carbon heating and solar by default. We will publish the consultation response, full specification, alongside laying a statutory instrument in the first quarter of 2026. This will set out the policy detail and transitional arrangements.
On 27 October 2025 we brought into force phase 1 of Awaab’s law, specifying fixed timescales to address damp and mould hazards and requiring all emergency hazards to be addressed within 24 hours. We are now undertaking our “test and learn” approach before extending the requirements to other housing health and safety rating system hazards. Last year we also introduced regulations requiring social landlords to carry out checks on electrical installations, and any appliances they have provided, at least every five years. This already applies to new lets and will be phased in for existing tenancies over the course of this year.
Reinvigorating council housebuilding
Over recent years, councils have once again begun to build new affordable homes. Annual completions by councils have increased year on year for the past five years, and in 2024-25 they completed 10,480 homes—the highest number since the current reporting period began in 1991-92. We want to support councils to build upon the progress already made. We will continue to work with the sector to ensure that councils have the confidence, capacity and capability to deliver affordable homes at scale once again.
To provide councils with greater certainty and to support ambitious supply plans, I am announcing today that we will extend the “preferential” borrowing rate for council house building from the Public Works Loan Board rate for a further year until the end of March 2027. It will continue to be set at gilts + 40 basis points, and will be available for house building through the housing revenue account.
Additionally, I can confirm that the threshold for when a council must open an HRA will be increased from 200 to 1,000 homes from today. This will ensure that councils always have enough homes to make opening and operating an HRA financially sustainable. It will also provide councils without an HRA with greater flexibility to increase delivery, including through SAHP and the acquisition of resettlement homes through the local authority housing fund.
Finally, in July we launched the council house building skills and capacity programme. In its first year, CHSCP has engaged with 81 councils through the council house building support service to expand their delivery capability. As part of the expanded pathways to planning programme, CHSCP will recruit and train up to 50 graduates for placement with councils in 2026-27 to become qualified surveyors or construction project managers.
In November, CHSCP’s council house building support fund allocated £5.5 million to 29 councils to aid the development of SAHP bids. Today I am confirming that, due to strong demand, we are allocating a further £3.5 million to 15 additional councils. In total, this should enable these 44 councils to deliver up to 9,850 new homes and accelerate the delivery of a further 1,700 homes across the course of SAHP.
A renewed partnership with the sector
A decade of social and affordable housing renewal will only be delivered by Government working in close partnership with the sector. That is why in the coming weeks we will work with the National Housing Federation, the Local Government Association and other sector bodies to agree a compact. Once agreed, that compact will be overseen by a taskforce comprised of representatives from a range of sector organisations and interests. More detail about the terms of reference and membership of this group will be set out in the coming weeks.
At the heart of the compact will be ambitious social and affordable house building commitments, evidencing how the grant funding support and regulatory certainty and stability that this Government have provided has translated into ambitious delivery plans and bids into the SAHP from housing associations, councils and other registered providers. It will also be premised on strengthened joint governance and accountability mechanisms, including agreed supply, decency and other metrics that will be tracked and monitored, with oversight provided by regular reporting back to the Secretary of State.