With many Registered Providers (RPs) pausing or reducing acquisitions, more schemes are stalling at the affordable housing stage. A well-drafted cascade clause in your Section 106 agreement can keep delivery on track by setting out pre-agreed fallbacks, without returning to lengthy renegotiations.

What is a cascade clause, really?

A cascade clause is a pre-agreed, step-by-step route if the primary affordable housing solution (often disposal to an RP) does not proceed. Once defined triggers are met, the clause moves the scheme through alternative options; so the project isn’t left in limbo.

Typical fallbacks might include:

  • offering the units to the local authority,
  • switching tenure (e.g., to shared ownership or discount market sale),
  • or paying a commuted sum with the affected units reverting to market.

The aim is momentum: to maintain viability, preserve the purpose of the obligation, and avoid unnecessary delay.

Why developers are using them now

Rising build and finance costs, tighter grant availability and shifting RP appetites have made “Plan A” less reliable. Without a contingency, developers can face:

  • cashflow pressure and holding costs,
  • missed delivery milestones,
  • and repeat legal/planning processes to vary the S106.

Cascade clauses provide clarity for funders, planners and delivery teams; often helping unlock finance and programme certainty.

Triggers: when the cascade engages

Clarity on triggers is vital. Common examples:

  • Marketing period: e.g., 8–12 weeks of documented marketing to RPs with no acceptable offer.
  • Qualification criteria: bids failing to meet price, specification or programme requirements.
  • Evidence standard: what proof is needed (agent reports, bid summaries, correspondence) and who decides sufficiency.

Fallback pathways you can pre-agree

Your pathway should reflect local policy and scheme specifics. Common sequences include:

  1. Offer to RPs (primary route)
  2. Offer to local authority
  3. Switch to agreed alternative tenure (e.g., shared ownership)
  4. Commuted sum in lieu, with units released to market

Tip: Set timeframes and decision points for each stage to avoid ambiguity.

Local practice: what we’re seeing

While there’s no county-wide policy mandating cascades, uptake is growing across authorities. Some councils prefer including cascades at Heads of Terms; others accept them later via Deed of Variation. Practice can vary between neighbouring districts, so early engagement matters.

Five steps to get your cascade right

  1. Raise it early – Introduce cascades at Heads of Terms, not at the eleventh hour.
  2. Define triggers precisely – Time periods, evidence, and decision-maker.
  3. Tailor to local policy – Reflect local preferences, monitoring fees and tenure mix.
  4. Document the sequence – List the fallbacks in order with timescales and responsibilities.
  5. Get specialist drafting – Ensure the clause is workable and enforceable for planners, funders and sales teams.

Common pitfalls (and how to avoid them)

  • Vague wording: leads to dispute about whether the trigger has been met.
  • No evidence standard: makes it harder to prove the marketing period was genuine.
  • Ignoring tenure economics: switching tenure without recalculating viability can create new issues.
  • Forgetting funding timetables: align cascade timing with grant windows and lender requirements.

How Ellisons can help

We advise developers on S106 strategy, drafting and negotiation, including cascade mechanisms, commuted sums and tenure switches. We also liaise with planning officers and funders to agree workable solutions that protect scheme viability.

Get in touch: Chris Harvey, Partner
Or speak to our Commercial Property and Planning teams.

Cascade FAQs

  • What is a cascade clause in a Section 106?
    A pre-agreed sequence of alternatives (with triggers) if the primary affordable housing route fails, avoiding fresh renegotiations.
  • What triggers a cascade?
    Typically, a defined RP marketing period without an acceptable offer, with specified evidence and a decision-maker.
  • Can we add a cascade to an existing S106?
    Often yes, via a Deed of Variation, subject to local authority agreement and viability.
  • Will switching to a commuted sum always be acceptable?
    Not always; acceptability varies by authority and policy context.