Local authorities and housing associations

The problems caused for lenders by imposing planning restrictions

A new briefing note has just been published by the Council of Mortgage Lenders (CML) for local authorities and housing associations to highlight the problems they can cause for lenders by imposing planning restrictions under section
106 of the Town and Country Planning Act 1990.

While the ongoing funding crisis continues to restrict mortgage lending, it is more important than ever that so-called section 106 agreements are applied as consistently and simply as possible by councils when agreeing planning permission. 

The briefing note sets out the concerns of lenders and urges more consistent use of the model section 106 agreement developed with the government’s approval in 2006. This model agreement seeks to ensure that any restrictions in planning permission for low-cost home-ownership schemes do not restrict the ability to lend on properties.

Better awareness of the model agreement by planning and housing authorities, along with discussion with lenders while negotiating and agreeing a section
106 agreement, are important to help avoid creating barriers to lending.

The CML have been working recently to raise awareness of the types of restrictions currently found in section 106 agreements that constrain mortgage lending. They are seeking the help of a range of organisations to ensure their briefing note is distributed and properly understood.  The Homes & Communities Agency, Royal Town Planners Institute, Chartered Institute of Housing and National Housing Federation are all well placed to help bring lenders’ concerns to the attention of local authorities and housing associations. 

The briefing note is just one part of the work the CML have been pursuing to highlight and lobby for improvements that will make low-cost home-ownership schemes more successful.