Section 106 Agreements

Our April 09 issue ran a story on 106 agreements and listed five examples. The fees differ based on the number of bedrooms (the theory being the more bedrooms, the more children into local schools) but we did some calcs based on a new four bedroom detached house. Here are some:
Waverley: £15,023
Surrey Heath: £4,729
Portsmouth City Council: £14,269
Runnymede: £7,962
Reigate: £16,035

The way it's administered - your father being a classic example - makes it feel like it's a form of ransom.

We'd be very interested to hear postings from other self-builders who are experiencing this.

In Wokingham BC, west of London, 4-bed houses cost around £20,000 in S106 tax, and 3-bed ones about £12,000. It is basically daylight robbery, because even though Circular 05/05 from the Office of the Deputy Prime Minister, which outlined the basis for how S106 should be run, says "contributions" are meant to be used in support of genuinely local improvements in infrastructure, in practice the funds all go into a big pot to be doled out as the Council sees fit. The Education element, for example, which is probably the largest part of the S106 tax, is never used to increase the capacity of schools near to where developments occur. Instead the money is used to fund pet projects all over the borough, and the local schools in areas likely to see development remain permanently over-subscribed (defined as 95% capacity), thus guaranteeing that the Council will receive its education funds whenever a development occurs.

The S106 system is also a racket because if any developer has the cheek to challenge an assessment, which planning officers read off a tariff, it takes so long for departments to fund a justification for a particular S106, the planning application runs out of time and is refused simply for not having a signed S106 agreement. This has happened to me twice now. You can't get them to evaluate and justify your S106 liability before you apply, because the planning officers refuse to look at any S106 issues until an application is actually made. Consequently you are faced by a mad dash to get S106 finalised and signed duringthe two months of an application period, and most developers just roll over and pay the tax, irrespective of whether all elements of it are justifiable or not. In any event, the Council has no mechanism for tracking funds received against funds spent (again contrary to 05/05, says my planning consultant), so it is impossible for developers to know what happens to their S106 money after it's been paid.

The final indignity of S106 for me is that Wokingham requires the co-signature of the current mortgage provider on the S106 Agreement for your building site, even if you plan to change mortgage provider after you get planning permission, using a provider of self-build or development loans. The pre-application mortgage provider is required to sign in case you go bankrupt and they are forced to re-possess the property, and then decide to do the development themselves (hence leaving no legal entity liable for the S106 if they haven't signed). My mortgage providers (Northern Rock and Chelsea Building Society) refuse point-blank to sign the S106 Agreement that goes with my planning application, so I haven't been able to get planning; lenders through Buildstore won't look at a project and sign the S106 until you have planning, so I'm stuck in a Catch 22 situation! The only way out is to pay the S106 monies up-front, when you apply for planning permission. Consequently I am currently applying to build a house, and am paying £20,000 for the privelege. I get the money back if WBC refuse the application, but if I get planning permission and then can't find a mortgage provider in the next three years, I lose the £20,000.

S106 is a money-grubbing outrage, used by councils who think housebuilders are cash cows, willing to pay anything to get their planning permissions. I doubt the Planning Gain Supplement will be any better. It seems to me that Councils would really rather not deal with self-builders or small developers at all, and are trying to drive them away by jacking up their S106 charges. They would far rather do cosy business with large developers, who will pay for roads and schools and nice big estates in return for planning permission on big sites, and will also and over 33% to 50% of their sites at build cost price to housing associations as "affordable homes" (more daylight robbery), leaving the remaining private homes to cover all the land, development and ancillary costs.

In Milton Keynes there is no fee for a single dwelling. YET.

HI, THERE PPL DOES ANYONE KNOW WHAT THE FEE IS FOR SECTION 106 AGREEMENTS IN WEST LOTHIAN, I JUST BOUGHT A PLOT OF LAND & IM LOOKIN TO BUILD 3 4 BEDROOM HOUSES ON IT IM JUST TRYIN TO GET MY FIGURES RIGHT BEFORE I START BUILDING!

ANY HELP WILL WECOME THANKS

The reason that S.106’s are different in different authorities is because there are different implications as a result of development. i.e. A London borough is likely to be higher because there are more implications as a result of intensification of highway/public transport use. Demand for S.106 in Wrexham would be lower as there is not that same intensification. The difference in the request from each authority would not be a useful tool at an appeal and would just show the appellant’s ignorance of the planning system. However, authorities do not profit from S.106 and Circular 05/05 explicitly states that planning permission can not be bought or sold. It is merely to offset the damage (seen and unseen) caused by developments and in some cases the money would go towards projects which would otherwise make the development unacceptable.

Some people on here think they should be allowed to build a house whilst the tax payer picks up the bill for the increased demand for education, highway use, open space etc. It may only be one house to you but a combination of self-builds adds up quickly.

It is a stealth tax. It is dishonest in so far as mentioned by others that it is sold as being in compensation for the burden the development makes on the community. That is a bare faced lie. Community services are paid for by the council tax and supporting government grant. The more people in an area, the more the tax is. That the governement argue that more houses mean a greater burden to fund is pure tosh.

It is a tax and they should call it such and send out the message that housebuilding is an industry to avoid if they dare. When I started investing in housing land 10 years ago this nonesense didn't hardly exist (am in the North). I will not go near a housing plot once my stock is sold. The risk of further taxes and of losing all my hard work is too great.

Bury for example charges 1% of the developed house values just for public art (say £1500/house!). It charges the nominal value of the industrial land as compensation for the damage done to the local industrial land stock if you develop a factory site, but fails to consider the fact that there is too much industrial land and there are large numbers of vacant properties. It charges 7.5% of the house value in affordable housing contributions. What! Since when did the liability for providing replacement council / social housing fall as a development cost. There is no logic, just false arguments and lies and I hate it. Oh and there is the public open space contribution to compensate for the demand the new houses will make on POS. Comes to about £3,500 per house in Oldham. Utter nonesense. Council taxes pay for this sort of thing.

This is bad politics - it is to charge a soft target that can't run away with what you can get away with and then find an argument no matter how spurious to justify what you are doing. It is not a lot different from the definition of blackmail.

Hi All

I am in the process of purchasing an individual plot (i.e unserviced infill plot not part of a development). The plot benefits from current Outline Planning Permission, within which there is no mention of any Section-106 obligations.

My question is, when I apply for completion of Reserved Matters, am I likely to be liable for a S-106 charge or should I now avoid this as the OPP is already granted?

Also, if I was to disregard the current OPP and put a new application in for straight Detailed PP, could this leave me susceptible to a S-106 payment?

Any advice would be most appreciated.

Currently got a planning application in to replace a 3 bed bungalow with a 4 bed house. I was really intrigued to see that the planning department (when they finally got round to dealing with actually just registering the application, took 3 weeks!) after about another week, decided to consult the 'Landscaping Officer'. Have spent quite a lot of time looking through various planning applcations over about 18 months, whilst looking for land and had never seen this before.

The landscaping officer has now replied with a recommendation that we pay £2600 as a financial contribution to 'open space provision' which cannot be provided on site. I have never seen this before on any application. There has recently been a development nearby of 14 residential units, with no mention of any section 106 agreement for them. The memo refers to us a 'developer', even though we are just a family trying to give ourselves a bit more space. Is this really right? We avoided going down the route of a completely new self build, as the LA demand a whopping £26K per new dwelling towards the social housing fund.

Seems they have now managed to create a policy to get cash out of anyone and everyone who is extending their property, whilst the big developers seem to be getting away without paying anything.

Hi Jason, We are just in the prosess of obtaining planning permission for a replacement dwelling for our former derilict farmhouse on our 25 acre small holding,

We have just been given a 106 agreement that is a massive £13550.00 and thats for a basic 3 bed, on the outskirts of Swindon, Wiltshire,

The most shocking thing is that someone else obtained planning this time last year and since then it has gone up a massive 26%,

This is just a stealth tax and i feel that it is why the UK has the lowest self build rate in europe.

I have contacted Grant Shapps but as yet i have had no reply,

Re: the This is Money article. It's all very well this "source close to the Communities Secretary" saying applicants should challenge their S106 tax demand, but how and on what basis? All one meets with obfuscation and delaying tactics, in the hope that smaller self-builders and developers will just give up and go away. The local authority decides the fee level based on supposed local need, using national figures, decides where to spend the money, and usually keeps no records about where it collected the money from and where it spent it. It is consequently near-on impossible to challenge a council: if they decide a new play park is needed, funded by S106, they just go ahead and charge you. With highways, I've had a charge justified because the money was going to be used to subsidise seats on a local bus service; when I challenged this, saying the legislation requires S106 money to be spent on capital improvements, suddenly the money was going to be used to upgrade a bus shelter. Three years later, there's no sign of any bus shelter being improved near the build. When I challenged this, I was told the money had been used on a bus shelter on the other side of the borough, but this still counted as an improvement to the facilities for local people because the bus service using that stop was open for them to use. The same applies to so-called local parks and open space: it is impossible to get a council to demonstrate where it spent the money, or they will always find some capital expenditure somewhere to allocate it against, and the notion of "local" is wide open to interpretation: for country parks, it could mean 30 miles away as long as it's inside the borough.

To the chap who said in an earlier post that S106 and "affordable" homes were a fine idea, since when did infrastructure improvements and de-facto council housing have to be paid for solely by the buyers of new private houses? Why don't local businesses, who employ the new residents, help pay for new roads and schools from their council tax? Why don't the existing residents have to contribute to housing people on benefits and key workers as well? In the past, local infrastructure and council houses were paid for out of general taxation, because these were seen as being good things for all local residents and businesses. The system foisted on the housing industry and self-builders by the New Labour government shifted the responsibility and costs onto developers and the buyers of new houses, helping to squeeze out small developers and builders who can't afford the economies of scale and the cheap land purchased decades in advance by the large housebuilders and landowners.

I would like a reply from Jason Orme on this topic since the last 10 posts on this topic,

I have contacted the following people with only a reply from one,
Garnt shapps
Eric Pickles
Dan Atkinson

I feel very dissapointed thyat all self biuld magazines stay well clear of section 106 agreements and there extremly damaging affect on self build and the small developers,

I have taken some advice from Planning Aid and i have had a meeting with my local planning officer who point blank refused to tell me what policy they were adopting, If i do not agree to this payment they will concider my planning aplication incomplete and therefore will not concider the application,

I have owned this farm for 13 yrs and demolished the disused farmhouse that was on this land for over 100 years, council/poll tax has always been piad on this site, i also pay council tax for the mobile home (temporary accomadation) & also pay business rates,

The section 106.
£7380 for education, both of my children have left school,
£443 for community safety ??. I pay for the police in my council tax.
£1309 for arts and libbraries, I use none of these and there is not one of these services in our village,
£120 for waste, I pay this in my council tax.
£147 fire and rescue, I pay this in my council tax.
£2280 central area public realm, we only have a village hall.
And so on and so on.

So in reality, if i pay the £13551.00 they are insisting on and then build the very basic three bed home that we want to build, what will i get for my money, NOTHING SWEET NOTHING.

Ref: post number 22 Fiona L.

I have also had talks with my local planning office & they also state that if no section 106 agreement is agreed to and pesent at the time we submit our planning application then the application will be deemed incomplete and they will then object to the planning application, Then it could go to appeal.

I have spoken to planning Aid and they have told me that the planning office are acting illegaly and cannot insist on the section 106 agreement to be present at the time of posting the application.

I have asked Grant Shapps for some help, all i got was a long letter that is as follows;

In relation to your specific concern about 106 obligations - government policy makes clear that obligations should not be used to collect contributions that are not necessary to allow consent to be given for a development, nor should they be purely used as a means of securing a share in the profits of development. If a developer (in this case you) does not agree with the local planning authority and the and the terms of the obligation, they can refuse the terms - which would lead to the planning application being refused. In this case there is then the right of appeal against the refusal to the Planning Inspectorate, which would be the oppertunity to discuss the terms of the planning obligation and whether it was in line with your policy or not.

The governments policy on the use of planning obligations is currently set out in circular 05/05. Local planning authorities musttake this into account in their decisions on planning applications and must have good reasons for departing from it. A copy can be found at. www.communtities.gov.uk/publications/planningandbuilding/circularplannin...

You may also wish to contact planning aid on 0330 1239244

Hope this helps you out.

We have planning permission for a 3 bed chalet bungalow granted in 2003 and commenced just before it expired.
We now wish to amend our plans to a 2 bed cottage with a south facing roof so we can have PV panels, but our Local Authority will not look at our new plans until we agree to S. 106 agreements for open space (even though the plot allows for 4 times their required amenity space), local schools and affordable housing. The total charge comes out to about £20,000.00 which makes the proposal unaffordable.
In other words, they are forcing us to continue with a non-sustainable development - can that be right?

Hi
Has anyone challenged this 106 agreements in the courts because I am thinking of having ago, this 106 agreement was meant for large scale developments not one off self build and conversions.

Terence

Ref SIMON B: I have written to Eric picles, No Reply;
In have also written to grant shapps who ont determined me as a small developer, i replied to his letter with no reply; i have also contacted tha mail on sunday who promised everything dut did sweet FA,
I Have challenged my local PA, ref; sec 106 agreement that has been proposed for a basic 3 bed at £13551, pure extorsion, bribary, mafia type tactics,

The only good thing that can come from this is for someone to win a court case against a local ourthority and win then the local Planning authorities will have to pay back every peny charged to every illegal sec 106 plus interest,

Wee need every company who stake there god money who place there money to advertize in self build mags to step up and help us self builders overcome this illegal action,

UNTILL THEN WE WILL HAVE NO MONEY TO SPEND ON YOUR GOODS

Forget 106 payments, have a look at our thieving bloody governments new tax for self builders,

this country is going to pot.