No registered provider? No problem. We can help.
For quite some time it has been apparent that it is increasingly difficult to dispose of S106 affordable housing to registered providers, particularly on smaller sites.
RPs’ balance sheets are under multiple pressures, meaning there are broadly fewer in the market for new dwellings, with focus elsewhere.
This creates significant challenges when combined within flexibility in the drafting of s106 agreements. Many sites are stalling as they hit trigger points on s106 agreements requiring s106 units to be offloaded prior to disposal of open market units. This in turn is significantly affecting viability and deliverability.
S106M have been advocating strongly for more flexibility in delivery from councils, assisting many applicants with renegotiations of terms, and delivering ‘cascade mechanisms’ in deeds of variation that allow sites to keep coming forward while also delivering social benefits through alternative methods. There are many strategies to resolve these roadblocks – whether by deed of variation, viability review, change of tenure or alternative provision, but all require extensive negotiation with councils. We also benefit from an extensive network of RPs and can often assist with disposals.
The HBF’s recent report Bid Farewell, here, has brought this issue into the mainstream discussion, lobbying for similarly pragmatic solutions to the current short term crisis.
However, there is a broader problem which is the lack of flexibility or understanding in LPAs towards smaller sites. Beyond the immediate crisis, as affordable housing thresholds have gone lower and lower more smaller numbers of affordable units have been consented and required; however, these are generally less attractive to providers due to the lack of cost efficiencies.
Our article on ‘cascade mechanisms’ can be seen here. We are advocating for such mechanisms to become a ‘stock’ part of all s106 agreements for smaller sites to avoid the need to multiple deeds of variation and long unnecessary delays. More broadly, we consider the government should support SME developers by exempting smaller sites from affordable housing requirements in the forthcoming National Development Management Policies (as they technically are in current national guidance, but making this a legal restriction on councils).
If you require assistance on a site with stalled S106 affordable housing units, or difficulty obtaining RP interest, please give us a call today.
