With planning officers pushing back harder against viability arguments and schemes across the country stalling because the numbers don’t add up, perhaps it’s time to accept that some flexibility might actually deliver more homes than rigid targets that prevent anything from being built at all.
The announcement that London is consulting on slashing affordable housing requirements from 35% to 20% in some circumstances has reignited a debate that’s been simmering in the development industry for a while – how affordable housing can be provided alongside ever-increasing viability challenges. This isn’t simply about developers wanting to build fewer affordable homes; it’s about facing up to the reality that rigid percentage targets, however well-intentioned, are actively preventing homes (including affordable housing itself) from being built.
The pattern is familiar across the industry. Schemes stall when the economics become challenging. A developer presents viability evidence showing that a site struggles to support the required affordable housing percentage alongside other obligations. The process of assessment and negotiation extends. Meanwhile, sites remain undeveloped, accruing costs while market conditions and regulatory requirements continue to increase. This outcome serves neither the need for affordable housing nor broader housing delivery.
The current situation speaks for itself. According to research published by the Home Builders Federation (HBF) in December last year, more than 17,000 affordable homes with detailed planning permission were stalled because housing associations (HAs) couldn’t or wouldn’t take them on, and at least 139 building sites across England are delayed due to uncontracted Section 106 units. Some of these are completed homes standing empty because there’s no registered provider willing to purchase them.
Section 106, which has historically delivered around 44% of all affordable housing in England, is facing severe challenges. HAs face mounting pressures, such as rising costs for building safety remediation, caps on rent rises that have constrained their income and balance sheets stretched thin. They’re pulling back from Section 106 purchases and focusing instead on their own land-led development where they have greater control over design, quality and delivery timescales.
The government’s response has been to establish a clearing service through Homes England to match developers with registered providers. It’s a sensible administrative fix, but it doesn’t address the underlying problem that in the current economic climate, many HAs simply don’t have the financial capacity to take on Section 106 units, regardless of how well they’re matched with developers.
This is where the flexibility argument becomes critical. If a scheme genuinely can’t support a local authority’s affordable housing requirement and still remain viable, what’s the alternative? We either accept a lower percentage that makes the development commercially feasible, or we accept that nothing gets built. The latter option delivers zero affordable homes, zero market homes, zero infrastructure contributions and zero economic activity – and it’s hard to see how that serves anyone’s interests.
Labour’s housing ambitions are undeniably ambitious. The government has committed to delivering 1.5 million homes over this Parliament, with a substantial proportion being affordable. When they first proposed their ‘golden rules’ for grey belt development in 2024, they specified 50% affordable housing. The industry’s response was that the target would make most sites commercially unviable. The government revised its position in December 2024, and the National Planning Policy Framework (NPPF) now requires grey belt developments to deliver 15 percentage points above the local affordable housing requirement, capped at 50%, rather than a flat 50% rate.
What’s significant about this shift is that it shows even a government genuinely committed to delivering affordable housing has accepted that rigid targets backfire. That said, in practice, the impact may be limited. Most local authorities already require 30 to 35% affordable housing – and even 40% at times. Therefore, adding 15 percentage points typically brings the total to 50%.
More critically, land value varies dramatically across the country. While developments in the South East may be able to absorb these requirements, many other regions simply cannot support these levels of affordable housing provision without undermining viability. When the sums don’t add up, developers can’t move forward; when developers can’t move forward, nothing gets built; and when nothing gets built, those waiting lists for affordable housing just keep growing.
The political dimension here is also worth acknowledging. High affordable housing requirements signal a commitment to social housing and place the obligation squarely on developers rather than requiring direct public subsidy. But political logic and development economics don’t always align. When they diverge too far, the result is the situation we're seeing now, with developments stalled, thousands of homes unbuilt or standing empty and 1.3 million households on social housing waiting lists with 160,000 children in temporary accommodation.
Section 106 agreements exist precisely to negotiate these trade-offs. These agreements let councils balance affordable housing against other essentials such as schools, GP surgeries, better roads, parks and green spaces. When a scheme can’t deliver the full affordable housing quota and still cover the infrastructure it needs while remaining financially viable, Section 106 offers a way to negotiate something that actually works.
At Woodhurst Park in Berkshire, for instance, Section 106 delivered affordable housing alongside substantial green infrastructure, including a 65-acre country park. When viability works, the system can deliver mixed-tenure communities with quality amenities. The challenge is that such outcomes are becoming harder to achieve as costs rise and requirements multiply.
Problems also come when that flexibility isn’t genuinely available. When planning policy treats percentage targets as prescriptive rather than starting points for negotiation. When viability assessments are viewed with suspicion rather than as essential tools for understanding what’s actually achievable on a given site. When the instinct is always to push for more affordable housing rather than to secure the delivery of what the site can viably support.
The mood in planning departments has shifted noticeably. Viability assessments are being scrutinised more rigorously, with a greater emphasis on demonstrating that schemes genuinely cannot support policy-compliant affordable housing levels. The process of negotiation has become more complex, with sites remaining in the planning system for extended periods while assessments are conducted and refined. This has contributed to longer timescales between permission and delivery, with some schemes becoming stalled in the process.
It’s also worth understanding what’s happening on the ground. Sites remain undeveloped for various reasons. Many were acquired years ago, long before the interest rate surge of 2022, the spike in construction costs or mandatory Biodiversity Net Gain requirements arriving in 2024. When a site was purchased based on one set of economic assumptions, and conditions change significantly, the original development scheme may no longer be viable. Each new obligation erodes viability until the maths stops working. Building at a loss isn’t an option when you’ve got lenders and investors to answer to.
The London package proposed in October suggests this approach may be changing, at least temporarily. The proposals, which are currently out for consultation, would create a fast-track route for 20% affordable housing without viability assessments. The government is essentially saying they’d rather have certainty at 20% than endless negotiation about 35% that results in nothing being built. It's a pragmatic trade-off that prioritises delivery over headline percentages.
The question is whether this pragmatism will extend beyond London and the temporary March 2028 deadline. Every site is different. Land values, existing use values, remediation costs, infrastructure requirements and market conditions vary enormously. A blanket 30% affordable housing requirement might be achievable on one site and impossible on another, and the planning system needs to acknowledge this.
But that doesn’t mean abandoning affordable housing requirements entirely. It’s about recognising that 20% delivered is better than 30% that never gets built. It means conducting viability assessments early, honestly and with a genuine willingness to adjust requirements when the numbers don’t work. It also means understanding that developers aren’t asking for reduced affordable housing obligations to increase profits; they’re asking for them because the alternative is not proceeding with development at all.
Cascade mechanisms in Section 106 agreements offer one potential solution. These allow stalled affordable units to be switched to alternative tenures or converted to cash payments to local authorities if registered providers won’t purchase them. But they need to be built into agreements from the start and accepted as legitimate fallback positions, not treated as loopholes to be resisted.
The industry doesn't oppose affordable housing. In fact, many developers would prefer to deliver mixed-tenure schemes with affordable components. They create more balanced communities and can help with sales phasing. But they need planning authorities to engage genuinely with viability, to accept reductions when properly justified and to prioritise seeing homes built over holding out for percentage targets that prevent development. What the sector needs from government is enablement, not restriction.
The London approach has forced a conversation that should have happened years ago. The question now is whether the lessons will be learned beyond the capital or whether other regions will need their own situations before accepting that flexibility on affordable housing isn’t a concession to developers, but a prerequisite for delivery. Without it, we face a simple choice – accept lower percentages that deliver actual homes or maintain rigid targets that deliver nothing.
