Overlooked housing scheme could unlock hundreds of stalled developments

A little-used affordable housing scheme could help unlock stalled developments and widen access to homeownership, according to new research from Savills.

The estate agency says greater use of Discounted Market Sale (DMS) homes could provide an alternative where developers struggle to find housing associations to buy Section 106 properties.

The findings appear in a Savills report supported by the Land, Planning & Development Federation, Barratt Redrow and Richborough.

Housing associations traditionally buy much of the affordable housing that developers provide through Section 106 agreements. However, financial pressures have led some providers to reduce their purchasing activity.

Home Builders Federation research found 8,500 consented affordable homes without a housing association buyer as of October 2025. These homes were either under construction or due to start within 12 months.

The HBF also identified more than 700 sites that had faced delays or stalled during the previous three years. It attributed this to developers struggling to sell the affordable housing element.

Savills said the problem can have a particularly significant impact on SME housebuilders. Smaller developers often rely on project-specific finance and may need an affordable housing buyer before progressing a scheme.

Alternative route for affordable homes

DMS properties, including first homes, sell at least 20% below their open-market value. The discount remains attached to the property for future buyers.

Unlike some other forms of affordable housing, DMS does not require a housing association to buy the property.

Savills argues that developers should have greater flexibility to convert stalled Section 106 packages to DMS. It says this could help schemes progress without additional public subsidy.

DMS currently accounts for a relatively small proportion of affordable housing delivery. An average of 1,760 homes have completed through the model annually over the past decade. This represents less than 4% of affordable housing delivery.

Savills identifies potential buyer demand

Savills estimates that 530,000 families renting privately could afford a new three-bedroom DMS property with a 30% discount and 5% deposit. This represents 34% of private renting families with children.

At a 20% discount, the figure falls to 350,000 families.

The research illustrates the difference using a £300,000 open-market property. Savills estimates a household would need an annual income of around £63,000 to buy it.

A 30% DMS discount would reduce the purchase price to £210,000. Savills estimates this would bring the required income down to around £44,000.

The report also calls for changes to income caps governing affordable homeownership.

Savills said the existing caps have failed to keep pace with house prices and incomes. It identified 20 local authorities where the limits prevent renting families from buying an affordable ownership property locally.

Most of these areas are in London and the South East.

Savills estimates that removing the caps could enable another 55,000 families to afford a new three-bedroom DMS home.

Chris Buckle, director of residential research at Savills, said: “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.”