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Section 106 revision 'sunset clause' inserted into Bill

A proposed Government amendment to the Growth and Infrastructure Bill would give developers a three year window to renegotiate the affordable housing parts of section 106 agreements if they believe the requirements threaten the scheme's viability. 01 Mar 2013

The operation of the provision would cease on 30 April 2016, a date based on forecasts from the Office for Budget Responsibility which indicates that investment in housing is expected to stabilise in 2016. If the Government thinks that the clause is necessary after April 2016 it would have the power to introduce an affirmative order for it to continue.

"The clause already contains a power for the Secretary of State to switch it off by order...however, arguments have been made that the clause should reflect the current uncertainty in the property market," said Baroness Hanham, who introduced the "sunset" amendment.

David Orr, chief executive of the National Housing Federation (NHF), reacted positively to the news. "We've been lobbying hard on this change to the (Bill), and have been working with politicians from all parties to achieve this concession. This will ensure that, during a time of economic uncertainty, we can still build the homes this country desperately needs," he said.

He added that the NHF would continue to press for further assurances: "If the Government wants to extend this power for renegotiation past three years, the period must be limited and backed up by thorough, supportive evidence," he said.

Clause 6 of the Bill, which will be the subject of a report to the House of Lords on 12 March, further provides for an appeal to the Secretary of State in relation to applications made to vary any affordable housing obligations. An appeal can be made if the appropriate authority does not modify the planning obligation as requested, or fails to make a determination within a specified time, according to the explanatory notes to the draft Bill.