Nearly 80% of developers across England struggle to find buyers for affordable homes
Knight Frank’s Residential Development Land Index tracks the performance of residential land values across prime central London and England each quarter.
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Last year, the government set a bold target of 1.5 million homes in five years, with proposals like mandatory housing targets and relaxed greenbelt rules welcomed by the sector. However, Knight Frank’s latest Land Index & Housebuilder Survey Q4, highlights major delivery barriers, particularly delays in affordable housing delivery, as social housing providers struggle to purchase Section 106 homes.
The survey, which includes insights from 50 volume and SME housebuilders delivering around 70,000 homes annually in England, reveals that circa 80% of developers are struggling to find buyers for Section 106 affordable homes, including more than 40% who say they are unable to find a single Registered Provider (RP) buyer. This lack of demand is seen as a critical obstacle in ramping up housing delivery.
In total, 98% of respondents do not believe the government will meet its annual target of 300,000 homes this year. Looking ahead, about 40% of housebuilders expect the sector will deliver 200,000 homes over the next 12 months, while a third predict 150,000, and 14% foresee less than 150,000 homes.
Less than 20% of private sector respondents believe delivery will exceed 200,000 homes in 2025.
In response to these challenges, more than a quarter of developers are attempting to modify S106 agreements, including changing tenure from social rent to shared ownership. Others are exploring alternatives like reducing the number of affordable units or offering cash payments to local authorities.
According to Knight Frank’s survey findings, a third of respondents agree that the lack of buyers for S106 homes, combined with the uncertain economic outlook, will be a key factor impacting the housing sector in the coming months.
Anna Ward, Associate in the Residential Development Research team at Knight Frank, commented: “Ramping up housebuilding is key to the UK’s growth plan, evidenced by Rachel Reeves’ recent promise to fast-track commuter hub housing projects. However, our latest survey highlights a significant barrier to the government’s housing goal. Housing associations once played a crucial role in supply but now struggle to deliver high volumes, causing delays for developers.
“The government's new clearing service to match uncontracted homes with buyers is a step in the right direction, but its impact will be limited unless financial constraints on housing associations are addressed.”
With many social housing providers nearing their borrowing limits and unable to raise new equity as not-for-profit entities, they are under significant financial pressure. The costs of decarbonising their existing stock and addressing fire safety remediation are further straining their capacity to build new homes. As a result, many have scaled back their development programs, focusing instead on their existing properties.
Charlie Hart, Head of Development Land at Knight Frank commented: “While the government's policy reforms show promise, particularly the brownfield passports initiative, these changes alone won’t be enough to deliver the substantial boost in housing numbers we need. Viability remains a key constraint throughout 2025, particularly for medium density urban development. Driving delivery in our cities is key to addressing the target aspirations.
Hart continued: “That said, we're seeing encouraging signs in the land market following the National Planning Policy Framework's publication. Local authorities are taking a more proactive approach to site assessments and housing allocations. However, to truly unlock development potential, we need a coordinated approach that addresses both planning efficiency and the financial constraints facing housing associations."