Section 106 Agreements

Is it time to take another look at Section 106 agreements to help deliver housing projects?

 

Local authorities and central government need to take another look at Section 106 agreements, says Colin Brown, Director of Planning at Januarys. He warns that agreements drawn up at the height of the housing boom may no longer viable and could cause projects to become stalled.

 

Section 106 agreements, or planning gain, allow councils to acquire community or infrastructure projects in return for giving the green light to housing developments.  

 

“When times were good,” said Mr Brown, “Councils could ask for pretty much anything in return for letting a developer build their homes.

 

“Some councils went for roads and schools, but many more were keen on getting large numbers of social houses built.

 

“At the time the agreements were signed, developers could afford to be quite generous with their 106 deals and still make a profit. As a result, nearly half of all the affordable homes that have been built so far have been funded through such agreements.

 

“Today, with the housing industry facing challenging times, those agreements could make many developments unviable. Planners need to adopt a more flexible approach which in turn could help to being development forward.

 

“A good example of this is on Glebe and Clay Farms, where the developer had originally agreed to make 40% of the 2500 proposed homes available for social housing.

 

“Now, with prices having dropped, the developer wants at least the first phase to contain just 16.5% affordable housing.

 

“This local example is typical of many across the country and indicates the problem with Section 106 – it’s a one size fits all approach that doesn’t always work.

 

“Whilst in principle we’re all in favour of councils being able to acquire something that’s of benefit to the whole community, we think there needs to be a rethink as to what that something might be.

 

“Possible ideas could include councils giving the developers free land, setting up housing associations with them and taking a percentage of the profits.

 

“In extreme circumstances, developers could even be allowed to apply to the Homes and Communities Agency for grants to fund the affordable housing as has already happened in London.

 

“In return, the developer could commit  to start work on the project within say six months.

 

“Cambridgeshire Horizons has also come up with some possible alternatives. A tariff to pay for transport infrastructure set according to land values is an interesting idea, for example.

 

“One thing is clear; until the property market fully recovers, everyone involved in the planning should be thinking laterally to ensure homes are built and councils still achieve planning gains for the community. And even when times are better, Section 106 agreements may never be the same again.”