Affordable Housing, Section 106 query.

ImACarer

Houses that are built under the section 106 of Affordable Housing are managed by a local Housing Association when the homes are completed. These can be used for rented or shared ownership. Question is, are these homes GIVEN to the respective housing association under the 106 scheme or do the housing association have to buy them, maybe at a cheap price?

purch

Section 106 are restrictions placed on a Planning Application.

It can cover many things, even providing funding for a Bus service to serve a development given planning permission with a 106 restriction.

In a development where there is also an Affordable Housing element the developer could be required to build some properties for a social landlord, and these properties would be bought by the social landlord.

There may be restrictions under 106 that cover who can buy the properties, based on income, local ties, many things. Sometimes homes are sold at a discount to those who qualify.

The exact details of the restrictions under section 106 for any particular development will be found in the Planning Application and decision which the local authority will provide to you.

There could be a requirement under the planning application for the builder to give the houses to a social landlord, but I cannot imagine any developer continuing with the development if that was one of the restrictions placed on them.

ImACarer

Hi Purch. So you are saying that SOME are GIVEN (free) from the Developers to a social housing association and sometimes the social housing association has to BUY them. I ask because I know that every 3rd house that a developer builds is free as the profit on the first 2 make the cost of the 3rd one and with government intervention now through 106, I though is might be black or white.

ImACarer

oh also, land costs if a developer does not accept to any affordable housing, then the land cost goes through the roof for them.

CLAPTON

ImACarer wrote: »

Hi Purch. So you are saying that SOME are GIVEN (free) from the Developers to a social housing association and sometimes the social housing association has to BUY them. I ask because I know that every 3rd house that a developer builds is free as the profit on the first 2 make the cost of the 3rd one and with government intervention now through 106, I though is might be black or white.

I don't believe that this is the case


the requirement, as my imperfect understanding goes, is that developers are required to build 30% of the building as 'affordable housing'.
'Affordable housing' is not free to the Housings Trust but has to meet certain cost criteria which is practice, means they are heavily subsidised.

purch

ImACarer wrote: »

Hi Purch. So you are saying that SOME are GIVEN (free) from the Developers to a social housing association and sometimes the social housing association has to BUY them. I ask because I know that every 3rd house that a developer builds is free as the profit on the first 2 make the cost of the 3rd one and with government intervention now through 106, I though is might be black or white.

No I am saying it is very very unlikely.

The planning authority can attach whatever Section 106 requirements they see fit before granting an application, but there is no way a developer would agree to giving away houses, if that was one of the restrictions.

Section 106 is not a new measure and has been around for many years, and can be used for many purposes, usually for providing funding for things, like Buses, play areas, shopping centres that are required when a large new development of houses is built.

It is not in any way a Government intervention, it is a way for local authorities to ensure that new developments of properties meet the needs of everyone not just the developer.

ImACarer

Thank you. I understand now.

daveyjp

Generally sold at a percentage below open market value. Affordable houses are also more expensive to build as standards are higher and minimum floorspace is often dictated.

princeofpounds

It is not in any way a Government intervention, it is a way for local authorities to ensure that new developments of properties meet the needs of everyone not just the developer.

Actually, it is basically just a taxation of development. And a pretty arbitrary one at that.

But hey, it's not like we have a housing shortage or anything...

In economic terms, it is classic rent-seeking behaviour, where the state (or local government in this case) benefits from its monopoly position over the supply of developable land.

http://en.wikipedia.org/wiki/Rent-seeking

Don't forget that developers are already taxed on their profits (amongst other tax charges) like any other business, plus given it is a universal cost it largely gets passed onto consumers, so it ends up being a tax on new home buyers.

I'm not against taxation. But I don't like it being done in indirect and ad hoc ways, particularly when it is taxing an economic activity that is desperately needed (as indicated by the escalating prices).

purch

princeofpounds wrote: »

Actually, it is basically just a taxation of development. And a pretty arbitrary one at that.

Maybe Extortion is a better word for it.

"I'm gonna make him an offer he can't refuse" :eek:

Bantex_2

princeofpounds wrote: »

Actually, it is basically just a taxation of development. And a pretty arbitrary one at that.

But hey, it's not like we have a housing shortage or anything...

In economic terms, it is classic rent-seeking behaviour, where the state (or local government in this case) benefits from its monopoly position over the supply of developable land.

http://en.wikipedia.org/wiki/Rent-seeking

Don't forget that developers are already taxed on their profits (amongst other tax charges) like any other business, plus given it is a universal cost it largely gets passed onto consumers, so it ends up being a tax on new home buyers.

I'm not against taxation. But I don't like it being done in indirect and ad hoc ways, particularly when it is taxing an economic activity that is desperately needed (as indicated by the escalating prices).

But all that they give away will be immediately deducted from profits, thereby saving them tax.