Section 106 agreements (s106s’) are the bread-and-butter of the sector. But they can present challenges, and there are plenty of things you can do to make sure you are getting the most out of your sites.

First, what are they? Section 106 agreements allow local authorities to control the use of land, and they are the main way affordable housing is secured. Permission is granted on the basis that a percentage of dwellings will be affordable homes of specific tenures. For example, permission for 60 houses might be given on the basis 20 will be affordable, of which ten will be rented and ten shared ownership.

S106s bind land indefinitely, including as regards successors in title, which makes getting them right important! 

However, development takes time, market conditions change, and what works in year one doesn’t necessarily in year two. If interest rates rise, mortgages become less affordable. There is already a limited pool of lenders for shared ownership. If you’re a registered provider (RP) and struggle to sell these units, can you change them to a rented tenure? Or perhaps a different low-cost home ownership product? If you’re a developer, can you make a payment in lieu?

Unfortunately, if the s106 says ten units have to be shared ownership, ten units have to be shared ownership, unless you can negotiate a variation. That takes time and has a cost, potentially while units are sitting unsold. Local authority planning and legal departments are more stretched than ever. It could be a substantial delay.

The key is to build as much flexibility as possible into the agreement. The RP should get involved at as early a stage as possible. This can be difficult- developers have their own pressures, and often agree s106s before they think about finding an RP. In some cases the agreement will be in place before the developer even buys the land. However, if a small amount of time can be spent getting it right early, it can save months later.

How? A mechanism can be built into the agreement to allow changes to the tenure mix to be agreed without the need for a formal variation. Perhaps we have a cascade of options, depending on viability. 

There are many options which we will be exploring in the panel discussion I am taking part in at the Affordable Home Ownership Conference 2025 in Birmingham on 4 June. I hope to see you (and hear your views) there! If you haven't registered, you can do so here: Register | Affordable Home Ownership 2025