What is a Section 106?

In short, a Section 106 is a legal obligation accepted by a developer when building properties to also serve and facilitate the local community. The obligation will very often mean that the property in question would be kept ‘affordable’ and will have conditions attached to ensure the person living there has some form of connection locally.

Why Section 106 agreements and Affordable Housing are Important

Property is a fascinating thing (at least I think so) and it has long been seen as a relatively safe investment as prices continue to steadily increase. It’s safe to say that in most parts of Cornwall, buying a home will get you a better return over a year or so, than putting the equivalent money in your current account or even a savings account!

With this continual increase in average house prices exceeding the rate at which salaries increase, a very real need emerges to facilitate people who cannot afford to buy on the open market. Coupled with this, and particularly relevant to people looking to buy their home in Cornwall, is a strong desire to ensure that those living and working in local towns and villages are able to find accommodation to buy in their home town or village. Without this, the community loses those residents and they are forced to relocate. In some locations in Cornwall that are particularly popular with tourists and visitors, properties are highly sought after; meaning prices rocket and locals are quickly priced out of the market, so affordable housing that requires a local connection means those residents can continue living and contributing to their local community.

Buying a Property with a Section 106 Agreement on it

Buying a property is daunting at the best of times, and can be a stressful exercise. I’m sorry to say that buying a property with a Section 106 agreement on it is no exception, and there are some added measures in place to enforce the agreement’s obligations.

Very often, properties that are protected with a Section 106 or ‘s106’, are marketed by estate agents, but as the 106 is, in essence, a planning obligation imposed by your local planning authority, your local council will be involved in overseeing the sale. They will need to agree that applicants fulfil the required conditions against the 106 agreement specific to the property.

Viewing a property labelled with a s106, is only possible where you qualify to apply for the property, so speak to the estate agent to understand whether you are eligible before getting your hopes up and assuming you can visit the property for a viewing.

What Qualifies You as ‘Local’?

Typically, to demonstrate a local connection, you will need to:

Have been resident or in employment of 16+ hours per week in the parish for more than 3 years
OR Have formerly been resident in the parish for more than 5 years
ORHave a close family member (Mother/Father/Sister/Brother/Son/Daughter) where that family member has lived in the parish for more than 5 years
OR(sometimes accepted) Have been born in the parish.

So What Does ‘Affordable’ Mean?

A section 106 agreement invariably dictates that a property may be sold for a maximum amount – this amount is usually a percentage of its open market value; thereby keeping it affordable. The percentage can vary from agreement to agreement and so can the other conditions and clauses, so it is important to read the agreement thoroughly and if you are in any doubt to consult your local authority or the housing association attached to the property.

For more information from Cornwall Council regarding affordable housing, please click here: https://www.cornwall.gov.uk/housing/affordable-housing/

To register your details with us as a purchaser, please click here: https://andrewexelby.co.uk/register-with-us – if you are looking for affordable housing, please add that to your requirements!