Planning agreements between councils and developers that tie building firms into pumping cash into the local community may be scrapped in order get activity in the sector back on track, the Government has said
Many ‘section 106 agreements’ were signed before the credit crunch and ministers said they could make some construction projects non-viable and hold back economic growth.
Before the economy went into reverse many developers agreed to make a financial contribution to the local infrastructure in exchange for winning housebuilding and other contracts.
But now, these extra financial pressures, in a addition to a less profitable construction sector, mean that many sites with planning permission for building projects are being left dormant.
The Housing Minister, Grant Shapps, has written to all of Britain’s 430 councils asking them to consider modifying the agreements to make them more reflective of the economic conditions in order to encourage firms to begin work.
He said: ‘These agreements……were negotiated at a time of soaring house prices and are no longer economically viable.
‘In these cases, communities are suffering a double whammy - the homes they need are not being built and neither are the improvements to their local area.’
The largest ever section 106 agreement was at Stratford City in east London, when £120 million of additional work was carried out by developers.