Jamie Hailstone 07 August 2017

Section 106 pricing developers out of market, research warns

Costly Section 106 agreements are pricing some developers out of the market, according to the peer-to-peer lending website Lendy.

The website claimed developers were forced to pay £2.1bn to local authorities last year via Section 106 agreements in order to grant planning applications, compared to £1.7bn five years ago.

It added developers will often be asked to make a lump-sum payment to the local authority without any clear indication on how the money will be spent and some agreements can reach up to £10m or more.

‘It’s no secret that there is a housing shortage in the UK,’ said Lendy co-founder, Liam Brooke. ‘More needs to be done to help support developers – allowing them to get spades in the ground and houses built.

‘Agreements with local authorities for planning permissions can be both complex and costly for developers.

‘You can argue that Section 106 agreements can be beneficial in ensuring the local community benefits from developments, however, the fact that smaller developers are being priced out of the market by these added costs is a real concern.

‘For smaller developers who are already struggling to find funding for their developments, these added costs can be the final nail in the coffin,’ added Mr Brooke.

‘If developers are faced with high costs from local authorities they may need to recoup some of their profits which could mean higher house prices or corners being cut during construction.’

SIGN UP
For your free daily news bulletin
Highways jobs

Payroll Administrator

Northumberland County Council
£20,444 - £22,129
Northumberland County Council operates a huge range of services across one of the largest counties in the UK. Northumberland
Recuriter: Northumberland County Council

Specialist Advisory Teacher - Developmental Language Disorder

Cumbria County Council
Teachers Pay and Conditions
An exciting opportunity has arisen for a new colleague, who is a qualified teacher, with expertise and experience of developmental language delay. Penrith, Cumbria
Recuriter: Cumbria County Council

ASYE Occupational Therapist - Long Term Intervention Team Kendal

Cumbria County Council
£28,226 – £29,174
We are looking for newly qualified Occupational Therapy professionals, who are passionate about their vocation and would like to join our team. Cumbria
Recuriter: Cumbria County Council

Social Worker - Long Term Intervention Team

Cumbria County Council
£31,895 – £32,798
Following an exciting and ambitious programme of change within Adult Social Care. Cumbria
Recuriter: Cumbria County Council

Strategic Communications Executive

Lancashire County Council
£30,095-£34,373
Do you believe in the power of communications to bring about change? Preston, Lancashire
Recuriter: Lancashire County Council

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.