section 106 Agreements

Along with most local planning authorities across the UK, Powys County Council has adopted a new procedure for reviewing section 106 Agreements during the economic downturn as a way of encouraging developers to continue building new houses. It is perfectly reasonable that developers should bear the costs of providing community benefit and meeting infrastructure costs, otherwise this would fall on the Council tax payer. But Powys CC has recognised that house prices have fallen by over 10% in the year ending June 2009 which has brought into question whether housing schemes with the benefit of planning permission remain viable in the current climate. The report which can be viewed at http://www.powys.gov.uk/rep_2010-01-19b1_23a_en.pdf?id=47&L=0 suggests that developers can discuss problems with the Council planners and seek a reduction in the scale of section 106 contributions either by deferring the making of such contributions or demonstrating that the scheme is just not viable. It is important that Powys planners are not hoodwinked by developers who can mask profit levels through accounting practices. Powys should also seek to require regular reviews of the section 106 Agreement so that when the market recovers, the Council can require contributions to continue. One way of recovering future excess "developer profits" is to require section 106 Agreements to be reviewed every one or 2 years and if the scheme is then held to be profitable, the Council can claw-back some of the profits. A real problem in all this of course is that the first thing that developers will want to delete from a section 106 Agreement is affordable housing - given the pressing need, Powys must guard against reducing affordable housing requirements.