Section 106 obligations in Telford Shropshire?

by Readers Question

13:04 PM, 17th September 2013
About 5 years ago

Section 106 obligations in Telford Shropshire?

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Section 106 obligations in Telford Shropshire?

Does anyone know how many units would attract a 106 obligation in Telford, Shropshire?

I’m trying to buy a building subject to planning which could be split into 2 or 3 blocks.

Would the section 106 still apply if planning was obtained as a whole before purchase?

Also do you know if we can get rates removed whilst the work is carried out from a commercial building to apartments?

Any advice will be welcomed.

Regards Section 106 obligations in Telford Shropshire

Helen



Comments

Mark Alexander

13:12 PM, 17th September 2013
About 5 years ago

My advice would be talk to an architect and a solicitor. They will also be able to advise you on protecting your interests with an option agreement.

Also see our page on Development Finance >>> http://www.property118.com/property-development-finance-recent-examples/

Freda Blogs

17:19 PM, 17th September 2013
About 5 years ago

I suggest you go on the relevant Council' s website where usually they will give details of the scale of development which will give rise to a S106 payment.

If you are still negotiating the purchase you should be aware of the likely development you can get planning consent for and allow for a price formula that can flex if you do not achieve as much as you are aiming for. The S106 will still apply even if planning is obtained before purchase, and you will need to understand when the liability for payment arises and agree with the vendor who has to pay it. An option agreement (conditional contract) is one way to cater for these issues.

An architect can help you determine the amount of development achievable on the site, a solicitor can help you document the agreement, and I also recommed you appoint a surveyor who can help you determine the price payable and pull together comprehensive heads of terms and help negotiate/ interface between the parties.

Finally, yes you should be able to get rates relief whilst you are developing and ensure you are familiar with the specific authority's policy so you can maximise the relief you obtain. I would suggest you will also need to have the property revalued as you will be changing from business rates for commercial use to council tax for residential occupiers.

John Egan

4:24 AM, 19th September 2013
About 5 years ago

I thought that 106 agreements have been scrapped by the government?

Tony Atkins

7:28 AM, 19th September 2013
About 5 years ago

Reply to the comment left by " " at "19/09/2013 - 04:24":

No, S106 has not been scrapped: it still runs alongside the Community Infrastruucture Levy and it is up to local councils to decide how much money they want to take from developers. See for example http://www.londoncouncils.gov.uk/policylobbying/planning/developer/developer.htm, though I'm surprised only 7% of London projects pay S106.

In my area (Wokingham), all small projects have to pay S106 on a tariff if you increase the number of residential units by as few as 1 unit. There is no escape from the tax unless you can demonstrate the project thereby becomes financially unviable - a difficult prospect because the council knows a small developer won't have the resources or expertise to challenge them, and because all the council has to do is say "the project is viable - just accept a lower profit margin or reduce the quality of your fitting-out costs". Their argument will never fail because there are no nationally agreed rates of minimum profitability - everything is decided locally. Also, S106 is supposedly a voluntary "contribution", agreed by negotiation between the council and developer, when actually for small projects most council run a tariff of standard charges which you cannot contest. Both national and local government simply gloss over the fact that a small developer adding 1 house or 2/3 flats is completely powerless and has no negotiating position at all except the threat of abandoning the project - which the council couldn't care less about for such a small development whereas the developer cares a great deal.

As regards S106 in Telford, Helen must check with the council on whether the conversion of a commercial building to residential attracts S106 and at what level. Planning permission for such conversions has become much, much easier recently and as a member of the planning committee on a parish council, I've been astonished how developers can now run a coach-and-horses through the local authority's design regulations. If you build flats or houses from scratch, the design requirements are incredibly onerous; if you convert an office building, there are no rules about minimum space standards or minimum garden space and parking spaces at all. Unless a neighbour complains, the project can be got through as permitted development - and as PD it may not attract S106 either.

I doubt very much that Helen can escape S106 by obtaining planning before purchase: S106 so-called contributions are inheritable, so if the project is sold with planning, the new developer(s) must pay the tax and take that into account in their price negotiations when they purchase.

Martin S

20:13 PM, 24th September 2013
About 5 years ago

Reply to the comment left by "Tony Atkins" at "19/09/2013 - 07:28":

This is the first time that I have put comment on your interesting & informative web-site! I couldn't resist, because having read this blog, and having been a BTL Landlord in Telford, for well over 20 years now, with experience of their Planning Dept going back to the early 80's, I can say from experience, that if they can 'screw you to the deck', then they will do so. You will rarely ever get any concessions from this Council, especially with regard to Council Tax, so please do get anything in writing before acting. Let's just say, that their attitude is not a user friendly one.

This attitude stems back to the time when Telford, a new town in the early 70's. particulalry through powers given to the Telford Development Corporation (a quango) had the power to do just about anything they wanted to impose the new Telford on this quiet part of Shropshire.


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