Historically, affordable housing’s position in the development process has been that of one important component among many. But that appears to be changing: on a growing number of schemes, affordable housing has become one of the factors determining whether a site proceeds, slows or stops.
That is not because affordable housing has become less necessary, quite the reverse. Need is indisputable: waiting lists in London borough have reached 336,366 households (London Councils figures), while across England housing registers stand at 1.34 million (MHCLG: Social housing lettings in England, tenants: April 2024 to March 2025). And yet according to the London Assembly’s Affordable Housing Monitor 2025, London added just 7,674 affordable homes in 2023 - 24 against an estimated annual need of 42,841.
Section 106 has become a wider development problem
Section 106 affordable housing is usually built into the funding and delivery structure of a scheme. If the affordable homes are not taken on by a Registered Provider, cashflow is affected, phasing changes, debt exposure increases and the wider scheme can slow dramatically or stop altogether. The HBF’s State of Play 2025/26 report states that around 8,500 Section 106 units due within twelve months were not under contract with a Registered Provider, about 900 completed homes were unsold for the same reason, and more than 700 sites had been delayed or stalled in the previous three years because no buyer could be secured for the affordable homes.
Registered Providers have become more cautious for understandable reasons. Their balance sheets are under strain, not least because of heavier spending on existing stock, fire remediation, energy efficiency and compliance. They are also being more selective about the homes they will accept. Service charges, management complexity, design, defects risk, unit mix and tenure mix each become increasingly scrutinised when margins are tighter. This especially applies to smaller flatted schemes, pepper-potted affordable units and projects with awkward estate arrangements. In London, where affordable housing expectations are high and apartment-led development is common, the problem has been especially visible. Outside of London too, smaller and medium-sized sites, especially those promoted by SME developers, can be badly impacted because they need certainty on the affordable element before they can move with confidence.
Rising expectations, weaker delivery machinery
The sector is trying to solve two problems at once. Policymakers are asking development to deliver more affordable housing, or to deliver it in forms that are more genuinely affordable. At the same time, the machinery that has to make that happen has become more fragile. Registered Providers are under financial pressure, construction costs remain high, borrowing is more expensive, regulation has grown and values in many locations do not leave much room for error.
There is a policy issue too: the planning system is loading higher affordable housing expectations onto some of the very sites ministers most want to see come forward. Grey Belt development can now carry an affordable housing ask 50% under the Golden Rules. Proposed new towns are being shaped around a 40% expectation, with at least half of that intended to be social rent. London's standard threshold approach still requires 35% on private land and 50% on public and industrial land, even though the Homes for London package has introduced a temporary route at lower thresholds to get stalled schemes moving again.
A more practical settlement
The solution must lie in looking at whether affordable housing requirements are structured in a way that results in homes being built. A high quota attached to a site that never starts is not a success. Equally, a race to the bottom would serve neither communities nor the long-term health of the market.
This requires policy makers to have greater understanding about viability at site level. While some schemes can still support ambitious affordable housing levels, clearly others cannot - at least not immediately and in the form first envisaged. Pretending otherwise merely lengthens negotiations and increases the risk that land, consent and capital sit idle. Early engagement with Registered Providers should become far more routine, not an afterthought once a scheme is designed. Greater willingness to review tenure mix, phasing and timing would also help. On some sites, grant support or joint ventures may be needed to bridge the gap. On others, alternative delivery models, including Build to Rent (BTR), may provide part of the answer where they can create a more dependable route to delivery.
London has already offered a blunt lesson. The Homes for London package is, in effect, an acknowledgement by both government and City Hall that rigid policy settings can leave too many schemes stuck. In this case, policy has had to confront the fact that some delivery is better than no delivery and that planning must respond when circumstances change.
So the crisis in affordable housing must be resolved to get new sites moving, not because affordable housing is the problem, but because the present model for securing and funding it is under such strain that it is increasingly holding back the wider system. To enable more sites to move forwards, we need an affordable housing framework that is ambitious, fundable and realistic about the market it is operating in.
