Section 106 Removal

Mattpy

Hi everyone,

Hoping for a bit of advice either from experience or a legal perspective!

My Discount for Sale Section 106 property has been on the market for nearly 12 months now. I have made enquiries as to whether the Section 106 agreement can now be removed. My local council have replied that if I did, I would have to pay for their legal costs of around £1000. This would then remove the restriction on future owners if owning 100% of the property but having to sell it for 75% of the full market value to a purchaser with a need for affordable housing.

My questions are, I guess, as follows:

My property has a full market value of £100,000. I have been trying to sell it for £75,000 as per the terms of the Section 106. At this point I can sell it to anyone (after 6 months in to the sale process), but the 25% reduction still applies. If I were to have the S.106 agreement removed:
a) Am I liable to pay for the costs of this?
b) If I were to sell the property for £90,000, the council are suggesting i would still need to pay 25% back - is this right? They never had a financial share of the property in the first place?

Any help and advice is gratefully received! Thanks in advance!

da_rule

Read the transfer deed/lease where there should be a clause about ‘stair casing’, or removing the restriction.

AdrianC

Removing the s106 would broaden your potential buyers.

But are you hoping that you should get two bites at the cake? That you should benefit from the broader buyer base, and should receive the 25% of the value that you never paid for in the first place?

Mattpy

...in a word, yes! Who wouldn't in this circumstance? No one loses out.

AdrianC

Life doesn't work like that. And, yes, somebody does lose out - the local authority. They put the s106 in place to help meet the need for affordable housing locally. You want to take a property out of that? Well, why...?
Because the need isn't there, as evidenced by the greater sales base? Fine, but the community gets the benefit.
Or because you want to make a few quid for yourself...?

Mattpy

...you're right! The need isn't there.

It cost the council/community nothing to put a Section 106 in place. Only the capitalist developers. As a result, I see it as money never intended for the council, in fact, money that 'didn't exist'. I always play by the rules and usually that involves lining the pockets of rich people. As in this case there seemingly are no rules/precedent, I'm hoping to be the one who gains. For once. For a change. No one is losing anything they're owed/have previously lost.

I will, of course, happily return the 25% if that's what is written in the law, I'm not above that.

Just wondering what others' previous experience is...

da_rule

These schemes usually allow the owner to buy the Council out.

You probably won’t be able to proceed without the consent of the Council as the affordability scheme is usually secured as a charge or restriction on the property.

The ones that I have dealt with in the past have allowed the owner to buy the Council out with the value based on the open market value. Therefore, if you sell under value then you will have to make up the shortfall. The money the Council receives from these transactions goes in with other s.106 monies to enable the delivery of other community/affordable housing schemes.

Bitmum

Hello just wondered how you got on with this? I'm in the process of moving after a separation and I've found an incredible barn for conversion but I found out today it is subject to S106. This seems really weird given the size and position of the property and that it has planning consent for a 3 bedroomed house plus a 3 bedroomed holiday let. Can it be challenged? Thanks!

diggingdude

Poster hasn't logged in for over a year, you won't get a response I think