The government has announced a time limited intervention to unblock stalled s106 Affordable Housing Units (AHUs), alongside longer‑term reforms aimed at simplifying and standardising the s106 process. While the direction of travel is welcomed, the measures raise a number of practical, legal and delivery‑focused considerations for developers and local planning authorities (LPAs).

The Ministry of Housing, Communities & Local Government (MHCLG) issued a written ministerial statement on 28 January 2026, recognising what many in the sector are already experiencing, the lengthy s106 negotiations and a drop in demand from Registered Providers (RPs) for completed AHUs, delaying delivery of housing and leaving homes unsold. The proposed response combines short‑term flexibility with structural reform, however its success will depend heavily on how consistently and pragmatically it is applied at local level.

What developers and LPAs should be thinking about now

• Temporary flexibility on tenure mix
  The government policy statement sets out a few different measures (long term and short term) to aid the delivery of s106 AHUs and to ensure that AHUs have RPs and there are no unsold units. Some of these measures are already happening and the policy statement aims to ensure that they are implemented consistently across all LPAs in England.
• Increased use of Deeds of Variation (DoVs)
  Government proposals to allow negotiation of s106 Agreements for a different tenure mix will result in numerous DoVs linked to different phases of development. As a result, the monitoring and enforceability of the agreements may become complicated, resulting in difficult in determining which DoV applies and at what point the s106 Agreement reverts to the original affordable housing provisions. Therefore, drafting of the DoV will require some careful consideration.
• Compressed timescales for renegotiation
  The time period of 12 weeks to negotiate a different tenure mix, draft and agree a DoV is short. In practice negotiations with LPAs can take time with relatively straightforward s106 Agreements, given the pressure the LPAs are with limited resources. A strong focus on outcomes and agreeing milestones with the client and legal teams will be required to enable 12 weeks to be sufficient time to agree a tenure mix and agreed terms of the draft DoV.
• Pragmatism encouraged, but not guaranteed
  A majority of LPAs have Supplementary Planning Documents (SPDs) which set out the contributions expected from the development and the required levels and types of affordable housing and other infrastructure. The heads of term for a s106 Agreement can be known early on at the planning application stage. In our experience the details of the clauses in the draft agreement and the triggers, are a key point for negotiation between the developer and the LPAs and overcoming delays in negotiations of the draft agreement is critical to ensure timely completion of the s106 Agreement.
• Standardisation offers long‑term potential
  Early engagement on the triggers and the delivery of the planning obligations will avoid the back and forth with LPAs when negotiating the terms of the draft and can ensure that the s106 Agreement is completed in timely manner. Having a standardised s106 template that all LPAs use will be a good starting point and will help improve the process of the s106 Agreements.

What are the immediate emergency measures?

1. Conditions for LPAs to consider re-negotiation of s106 Agreements on Affordable Housing

To qualify, the developer will need to meet the following conditions:

• Exhausted all reasonable endeavors to find a RP buyer based on the affordable housing marketing, and any other relevant requirements set out in the original S106 agreement.
• Upload onto Homes England Clearing Service by 1 June 2026 any AHUs, which they haven’t been able to contract to RP, to allow a final opportunity for RPs to bid to purchase these homes. Any AHU not uploaded onto the Clearing Service by 1 June 2026, won’t benefit from this process.
• AHU should be live on the Clearing Service for a period of six weeks from the date of the unit being uploaded (“the Clearing Service period”).
• The AHU should be completed on or before 1 December 2027, to be eligible for this time-limited approach. The policy statement defines completion “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 not to renegotiate for uncontracted AHU, that have received reasonable offers from willing and suitable RP buyers, to avoid the loss of social and affordable housing to private sale, which is the current practice.
• Inform LPAs of all bids they receive from RPs seeking to buy AHUs. LPAs are actively encouraged to request that these details are provided.
• Where available, LPAs are encouraged to consider the following evidential sources, site level viability evidence, published commuted sums policies, grant rates, surveyor data, and recent AHU purchases in the locality. The reasonableness of any bid will be matter of individual LPA.

The policy statement states, that “LPAs are encouraged 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, given the Clearing Service will have provided an opportunity for RPs to identify and bid for unsold AHU”.

Where there is a dispute between the LPA and the developer over whether bids received are reasonable, the guidance states that the parties should seek a third-party view to support a resolution, as per an existing Alternative Dispute Resolution procedure.

2. Deed of Variation (DoV) of s106 Agreement

Once the above conditions have been satisfied, LPA to confirm their decision to re-negotiate the terms of the original s106 Agreement, as soon as possible with guidelines of no more than 12 weeks from the end of six-week period.

The written ministerial statement advises that LPAs should consider the following in negotiating a different tenure mix of affordable housing:

• LPAs are encouraged to take the following approach:
  – seek alternative affordable housing or discounted market tenures in the first instance where possible;
  – if there is no buyer for such tenures, proceed through to private market rent or sale (with equivalent form of affordable housing provided on an alternative site within the LPAs’ area or, where this is not feasible, a financial payment made in lieu of onsite affordable housing).
• Make it clear in the negotiations and any DoV will need to have a clause, to the effect 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 S106 Agreement and that a further DoV will not be required.
• When considering phased development, LPAs and developers should agree a tailored approach regarding the circumstances of the specific phases i.e. if the first phase will be completed by 1 December 2027, then a DoV should be considered in line with the policy statement. However, where phases of the development contain units that are not expected to completed by 1 of December 2027, the terms set out in the original s106 Agreement would continue to apply.

What are the long-term measures proposed?

1. Standardised S106 Agreements

Government intends to publish a standardised template for S106 Agreement to help speed up the process of drafting and agreeing new S106 Agreements and priority will be to issue a standardised S106 template for medium-sized sites below 50 units first and the template will set out foundational elements and clauses expected in standard S106 Agreements.

The government says that it will engage widely with all relevant parts of the sector to ensure standardisation is as effective as possible and will provide LPAs with a solid starting point for new agreements, speeding up the drafting process and freeing up capacity. The government intends to provide training opportunities to authorities as part of the wider package.

2. Simplify the process of developer’s contributions through locals plans and planning applications

Local Plans will be expected to set out what contributions are expected from the development and the required levels and types of affordable housing and other infrastructure. The proposed new National Planning Policy Framework (NPPF), out for consultation, places a stronger emphasis on considering development viability at the plan-making stage rather than at the application stage, to provide greater certainty on the contributions expected from the development.

At the planning application stage, the proposed new NPPF is intended to clarify the limited circumstances in which a viability assessment to inform decision-making is justified to ensure that a proposed development makes the maximum possible contribution to affordable housing and other infrastructure. This will require pre-application engagement between applicants and LPAs to identify and resolve key matters, including planning obligations for the development and will enable the heads of term for the S106 Agreement to be agreed as quickly as possible once the application has been submitted.

3. Publish new guidance on providing clarity and certainty on more effective delivery of the AHUs.

The government intends to publish guidance to unlock uncontracted and unsold AHUs and, to ensure all stakeholders are clear on their responsibilities in the market going forward and to prevent a build-up of unsold AHUs in the future. The guidance will seek to encourage early engagement and collaboration between RPs, developers and LPAs, providing clarity on the standards AHUs must meet and the role that should be afforded to RPs in ensuring AHUs meet the standards required of social housing to inform the design and build of all future AHUs.

4. Greater financial support to aid the delivery of the AHUs

The government intends to strengthen and expand the s106 market through:

• Low interest loans to be administered by National Housing Bank and Greater London Authority. Up to 10% of the £2.5 billion low-interest loan scheme for private RPs will be available to support the delivery of social and affordable homes.
• Councils use their Right to Buy receipts to purchase AHUs directly and can use funding through the Local Authority Housing Fund. The government is separately considering what more can be done to support LPAs to calculate and use commuted sums more effectively.
• Create a consortium of RPs to be able to bid and purchase AHUs.
• Additional private investment to enable the purchase of unsold AHUs, 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 AHUs.

What should you do next?

If you would like to discuss how these measures may apply to your scheme, or need support negotiating or varying a s106 Agreement, please get in touch with our planning and environment team.