Section 106 agreements have long been identified as one of the chief causes for the hundreds of stalled construction projects around the country and now Eric Pickles, Secretary of State for Communities and Local Government, has announced an action plan to bring to a close over a thousand stalled 106 negotiations.
The phrase refers to Section 106 of the Town and Country Planning Act 1990, which is effectively a delivery mechanism ensuring contractual obligations are in place to make developments acceptable in planning terms.
Essentially, this constitutes a legal agreement to ensure any adverse impacts of a development are offset via enhancements to the physical environment and/or contributions to local facilities where this is not possible through planning conditions. In some cases, this typically means creating affordable housing as a proportion of the development or contributing a substantial infrastructure or financial outlay to the local community.
Communities and Local Government Secretary Eric Pickles has said that ‘economically unrealistic’ section 106 deals are blocking the path of house building and in a time when financing is difficult and budgets are tight, extra burdens on developers have ensured that too many potentially beneficial projects stall at the first hurdle. The Government estimates that around 1,400 projects of ten homes or more are currently halted across the country, which could be providing the economy with a much needed stimulus and the population with valuable new homes.
In order to navigate these issues, the Government has created teams of intermediaries to offer free advice to councils and developers, provide technical help and act as go-betweens in disputes. The hope is that these experienced negotiators will be able to re-start projects mired in disagreement.
Mr Pickles has reportedly commented:
“Tackling problems with stalled development is essential to getting builders back on moth-balled sites and building the homes we need. There is huge potential in sites to boost local economies and we simply cannot afford to have them lying idle because of earlier agreements that are no longer viable.
“The support and advice the expert brokers will offer is one of the many measures we have introduced to get development underway and I hope councils grab this chance to make use of the support we are offering.”
Councils in Leeds, Ipswich, Corby, Swindon, Ashford, Gloucester, Kirklees, Carlisle, Northumberland and Durham are reputed to be the first councils to receive help (click on the links to find a local surveyor in these locations).
The response to these plans, however, has not been totally positive. The Local Government Association Environment Board recently released a statement from their Chairman, Cllr Mike Jones, who claims that:
“Section 106……agreements ensure developers provide vital infrastructure for local communities, from roads and street lighting to parks and community centres. In most cases, negotiating away benefits is not the answer to stalled development.
“Lack of liquidity in the finance market and limited availability of mortgages stagnating demand are the real hurdles to viability, not the cost of providing much-needed Section 106 infrastructure.”
Many have claimed that such arguments, however, are bound to lose their force as the recession and property shortage continues to drag on. Many groups are championing housing construction as the potential stimulus to kick start the British economy and it could be that Section 106 agreements, and the affordable housing that goes with them, have to make way.