On 14 April, the High Court granted an injunction under section 106(5) of the Town and Country Planning Act 1990 to Bath and North East Somerset Council requiring developer Flower & Hayes Limited to comply with affordable housing obligations in a section 106 agreement. The Council had brought the action against the developer for actual and anticipated breaches of planning obligations on the developer’s site in Timsbury, near Bath.
The injunction was granted by consent, thus avoiding the need for a trial, as the developer accepted that it was in breach of the obligations. The developer had breached, among other things, by letting completed homes, which were designated as affordable homes, to private tenants on the open market. It produced evidence showing that it had contacted a significant number of registered providers in an effort to dispose of the designated properties to them, but all of them considered that there were too few properties to be commercially viable.
The Injunction requires the developer to:
- prevent further units designated as affordable housing from being used or occupied in any way other than as affordable housing;
- prevent units permitted for open market occupation from being occupied until the obligations from the 2020 agreement were satisfied in full; and
- prevent the disposal of any affordable housing units on the premises to any person or entity other than a registered provider.
Due to its difficulty in identifying a willing registered provider to take on the designated affordable homes, the developer has applied to the LPA to vary the planning obligation to allow it to dispose of the designated homes on the open market and to allow it to make a financial contribution towards affordable housing to be provided off site. That application is currently outstanding. The injunction allows for the LPA to determine this variation application, but if it were to be refused or withdrawn, the developer will be required (amongst other things) to “take all steps to secure vacant possession” of the relevant homes and to ensure that they are only disposed of to a registered provider.
Many section 106 agreements contain provisions which exempt purchasers of new homes from liability for breaches of planning obligations by the developer, however this is an example where the occupier may face eviction due to the developer’s breach.
This case is a reminder of the risks for developers and occupiers alike. If you’re dealing with complex section 106 obligations, our real estate team is here to help.
