Journal

Section 106 Housing: What It Is & How to Buy

By Seymont London ·

London street scene, London

Section 106 housing is one of the most overlooked routes onto the property ladder, yet thousands of homes are delivered through this scheme every year across London and the UK. Named after Section 106 of the Town and Country Planning Act 1990, these are properties sold at below-market prices—often 20–40% cheaper—as part of planning obligations developers must meet when building new schemes. If you're a first-time buyer, key worker, or existing resident priced out of your area, this could be your way in.

How Section 106 Housing Works

When a developer wants planning permission for a large residential project, the local council typically negotiates a Section 106 agreement. This legally binding contract requires the developer to deliver community benefits—often including a percentage of homes sold at discounted rates to people with a local connection or specific income thresholds.

Unlike shared ownership, you're buying outright (or with a mortgage), and there's no rent to pay on a retained share. The catch? Most Section 106 properties come with restrictive covenants: you may only be able to sell to another eligible buyer, and resale prices are usually capped or tied to local wage inflation rather than open-market growth. These restrictions can last decades, so it's essential to read the small print and speak to a solicitor who understands affordable housing clauses.

Who Qualifies for Section 106 Housing?

Eligibility varies by borough and development, but common criteria include a minimum residency period (often three to five years in the borough), household income caps (typically £60,000–£90,000 in London, according to borough affordable housing policies), and first-time buyer or key worker status. Some schemes prioritise NHS staff, teachers, or council employees.

You'll usually need to register with your local council's housing team or a nomination agent like Homebuy Agent to be considered. Boroughs such as Greenwich—where we see strong Section 106 delivery—maintain their own waiting lists and publish new schemes on their websites. It's worth checking your borough's planning portal regularly, as opportunities can close quickly once advertised.

Where to Find Section 106 Homes

Section 106 properties are rarely listed on Rightmove or Zoopla. Instead, they're advertised through council portals, housing association websites, or specialist platforms. In Greenwich, for example, the Royal Borough publishes details of upcoming affordable sales as part of major regenerations along the Thames and around Woolwich.

If you're serious about finding section 106 housing, bookmark your borough's affordable housing page and sign up for alerts. Our /estate-agents/greenwich page includes links to local resources, and our team can point you toward current schemes when you're exploring your options. You can also check our /sold-prices tool to understand how recent Section 106 sales compare to open-market equivalents in your target postcodes.

The Buying Process and What to Watch For

Once you've been nominated for a property, the sales process mirrors a standard purchase: you'll instruct a solicitor, arrange a mortgage (lenders are familiar with Section 106, though some may apply stricter criteria), and exchange contracts. The developer or housing association will provide a sales pack detailing the restrictive covenants, which your solicitor must review carefully.

Be prepared for restrictions on subletting—most Section 106 agreements prohibit Buy to Let—and remember that future buyers must also meet eligibility tests, which can narrow your pool when you come to sell. That said, for many buyers the upfront saving and chance to live in a desirable area outweigh the long-term limitations. Always budget for the same surveys and checks you'd commission on any new-build, and don't skip the snagging inspection.

Is Section 106 Right for You?

Section 106 housing works brilliantly if you plan to stay put for several years, need an affordable entry point in an expensive borough, and meet the eligibility tests. It's less suitable if you want maximum flexibility to sell or let, or if you're banking on rapid capital growth to fund your next move.

We've seen clients in Greenwich and neighbouring boroughs secure fantastic homes—modern flats near the /property-for-sale/greenwich hotspots, close to the DLR and river—at prices that simply wouldn't be accessible otherwise. Just go in with your eyes open: read every clause, plan for the long term, and make sure the location and property genuinely suit your needs rather than rushing because the discount looks attractive.

If you'd like a frank conversation about whether section 106 housing makes sense for your circumstances—or a free valuation if you're weighing up a sale to fund your next purchase—book a phone appointment with Seymont London at /valuation and we'll talk you through your options.

Frequently asked

Can I rent out a Section 106 property?
Most Section 106 agreements prohibit subletting or Buy to Let for a fixed period, often 10–25 years. Check the covenant in your sales pack and discuss with your solicitor before purchasing if you think you may need to let in future.
Will Section 106 housing increase in value?
Yes, but resale prices are often capped by formula—linked to local earnings or indexation—rather than open-market valuations. Capital growth is typically slower and more controlled than standard properties.
Do I need to be a first-time buyer?
Not always. While many schemes prioritise first-time buyers, some accept existing homeowners with a local connection or key workers. Eligibility rules differ by borough and development, so check the specific criteria for each scheme.
How much cheaper is Section 106 housing?
Discounts typically range from 20% to 40% below market value, depending on the borough's affordable housing policy and the developer's obligations. Exact percentages are set in the planning agreement.
Where can I find Section 106 properties in London?
Check your local council's affordable housing page, register with Homebuy Agent, or contact housing associations managing new developments. Properties are rarely advertised on mainstream portals like Rightmove.

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