Calls to unlock stalled housebuilding and deliver affordable home ownership

A widely overlooked form of affordable housing could unlock hundreds of stalled sites and help thousands of renting families into home ownership, without the need for additional public subsidy, according to new research.

Property expert Savills has outlined the findings in Discounted Market Sale: The Potential to Support Housebuilding and Homeownership, a report supported by the Land, Planning and Development Federation (LPDF), Barratt Redrow and Richborough.

Housing associations are the main buyers of the affordable homes secured through Section 106 planning agreements, but constrained finances have left many reducing or withdrawing their demand.

Research by the Home Builders Federation (HBF) has found that 8,500 consented affordable homes were sitting without a housing association buyer as of October 2025, either under construction or due to start within 12 months, and that more than 700 sites had been delayed or stalled over the previous three years because developers could not sell the Section 106 element.

The pressure falls hardest on SME housebuilders, who are more reliant on project-specific finance and often cannot secure funding, progress on site or complete a land purchase without a buyer for the affordable housing in place.

Discounted market sale (DMS) homes, including first homes, are sold at a discount of at least 20 per cent below open market value, with the discount retained in perpetuity for future buyers.

Because they do not need a housing association to purchase them, they can keep affordable housing flowing while demand from registered providers remains subdued.

The research argues that allowing developers to convert stalled Section 106 packages to DMS, by default through cascade mechanisms, would unlock sites quickly and without additional public spending.

DMS has been a niche product, averaging just 1,760 homes a year over the last decade, under four per cent of all affordable delivery.

Yet the research finds substantial unmet demand. 530,000 families in the private rented sector, 34 per cent of families with children, could afford a new three-bedroom home through DMS at a 30 per cent discount with a 5 per cent deposit.

Even at a 20 per cent discount, 350,000 families could afford to buy.

To purchase a £300,000 home on the open market, a family would need an income of around £63,000, but with a 30 per cent DMS discount, the same home is within reach on an income of £44,000.

The report also finds that income caps on affordable home ownership, which have not risen in line with house prices or incomes, now shut families out in the least affordable areas.

In 20 local authorities, mostly in London and the South East, the caps prevent any renting family from buying an affordable ownership home in their area. Removing them would allow a further 55,000 families to afford a new three-bedroom home through DMS.

Chris Buckle, director of residential research at Savills, says: “Our analysis shows that embedding discounted market sale, including first homes, within Section 106 could quickly unlock stalled housebuilding, particularly for SMEs, while delivering much-needed affordable home ownership.

“DMS does not require a registered provider and can help sustain delivery while housing association demand remains subdued.

“With discounts retained in perpetuity, it offers lasting affordability for local communities.”