On 25 August 2026, the Ministry of Housing, Communities and Local Government (MHCLG) published the initial funding allocations for the Social and Affordable Homes Programme 2026-2036 (‘SAHP’), along with guidance on the delivery of section 106 delivery process. Taken together, this package aims to increase the social and affordable housing in England which, particularly over recent years, there has been a renewed emphasis on.
What is the SAHP
Announced in November 2025, the SAHP is a £39 billion government initiative to be implemented over a 10-year period commencing this year until 2036. Practically this operates by the Government offering grants to Housing Associations, Local Councils and other housing providers to contribute toward the cost of acquiring land and constructing new homes. It is anticipated that at least 60% of the homes through the programme will be for Social Rent.
Why has it been introduced
The SAHP is aimed at creating more affordable housing for those who are unable to obtain housing at normal market prices. The Government has considered there to be a shortage of affordable housing particularly regarding social housing, and there is a concern that the planning system by itself cannot deliver the required affordable housing to resolve the shortage. By offering funding that can be used toward development costs, this initiative should encourage Housing Associations and Local Councils to build more affordable homes.
Current Progress
Further to MHCLG publishing the first major funding allocations, we now have more insight into how the SAHP will progress as summarised below:
- £9.58 billion to 33 partners outside of London, including Cambridge City Council, Eastleigh Borough Council, and Newcastle City Council, all of whom will receive a grant to deliver homes in accordance with this initiative;
- Estimated £2.45 billion has been set aside for six mayor-led regions outside London, enabling local mayors to help shape where and what types of affordable homes are built to meet local housing needs;
- London to receive 30% of the funding in the early years of the SAHP, and across the entire duration of the SAHP to receive £11.7 billion;
- A sum of £46 million for the ‘Capacity to Build’ programme to be developed over 3 years; and
- More than £16 billion outside of London and £5 billion in London remains to be allocated.
Whilst the SAHP itself will hopefully assist in addressing the shortage, the Government also seeks to make the existing affordable housing contributions under section 106 agreements more effective.
What is a Section 106 Agreement
This is a legally binding agreement, pursuant to section 106 of the Town and Country Planning Act 1990, made between a landowner and the local planning authority. This is entered into when the landowner proposes development of their land and the local planning authority require certain obligations to be fulfilled, including making provisions for affordable housing.
Why do Section 106 Agreements need improving
From the outset developers and local planning authorities may take time to negotiate the details of the section 106 agreement which can cause delays in applying for planning permission, starting the development and ultimately providing the affordable housing. Even where an agreement has been reached, other issues can arise. One of the primary problems is not having sufficient Housing Associations or other providers to acquire the units, often due to financial constraints. The consequence is that many completed affordable homes remain unsold. Overall, the process of entering and executing a section 106 agreement regarding affordable housing has proved that it can be time-consuming and costly.
How do the Government propose to improve the system
Due to the issues with the current section 106 agreement process, as part of the recently announced package, the Government has published national guidance, for voluntary use, encouraging developers, local authorities and registered providers to collaborate from the earliest stages of development throughout the process. In doing so, this should reduce delays and enable the resolution of any disputes earlier on.
A further proposal has been a ‘cascade mechanism’ to address situations where the developer may not have a provider to acquire the affordable housing. Under this proposal, if the developer shows that they have made reasonable marketing efforts over a period of at least 6 months, the local planning authority may permit them to pay an affordable housing contribution and sell the homes on the open market.
The Government also launched a consultation on standard section 106 templates for developments between 10 and 49 homes to cover sections such as financial contributions, affordable housing obligations, and planning permissions. This will assist in addressing the lengthy negotiations, lowering costs and creating more consistency between different local authorities.
Increased funding and a stronger emphasis on the effective delivery of Section 106 agreements demonstrate the Government’s initial commitment to expanding affordable housing provision. The practical impact of these measures remains to be seen, with further progress and policy development likely to be critical in achieving meaningful and sustained outcomes.
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