The London market

As the pressure to build more affordable homes grows, so does the focus on how they are delivered. Under the spotlight is the Section 106 agreement, in which local authorities negotiate with developers to agree a financial commitment, often a social housing contribution, if planning permission is obtained.

The latest research from KnightFrank shows that the provision of affordable homes through S106 agreements has been on the increase since 2001 throughout the country. In London, with its chronic social housing shortage, this mechanism is seen as particularly crucial if supply is to grow. “The overall increase in S106 provision to 53% of overall affordable supply in London in 2005/6 shows the extent to which we now rely on the market and the planning system for new supply,” says Sue Cocking, a partner at KnightFrank specialising in affordable housing. “Compared to 25% in 2001/02, this is a big boost.”

Yet despite this success, questions are being raised over whether local authorities are making the most of the S106 opportunity. Do they have the knowledge and bargaining skills to get the best affordable housing solution for their communities?

The map illustrates a significant difference between London boroughs. Camden [1], Kensington & Chelsea [2] and Greenwich [3] all get 75-100% of their affordable housing delivered through S106 agreements, whereas Brent [4], Haringey [5] and Enfield [6] deliver only up to 10%.

As a result of these inconsistencies, the London Assembly has recently undertaken a detailed study into the subject and will produce a report, entitled Section 106 agreements – are they delivering what they promised?, in November. “There appears to be an elite of boroughs able to get good deals from developers,” explained Gareth Potts, director of research and policy at BURA at a recent scrutiny session at the London Assembly. “Some local authorities seem too stressed out to check whether the S106 agreed with the developer is actually being delivered.”

Regenerate understands that the London Assembly report will include a recommendation that each council sets out formal guidance on what it expects from developers concerning S106s, in order to be in a position to strike better deals. Michael Dunton, town planning manager for London at Tesco, agrees that this is a good method. “There is indeed a league table of boroughs’ effectiveness rating,” he says. “The best ones are where there is a supplementary planning document for S106 in place.”