Defer Section 106 payments, says CBRE

CB Richard Ellis is calling for local authorities in the North West to allow developers a payment holiday of up to 18 months on Section 106 contributions to help kick-start development in the region.

The move, which is already being put into practice by Birmingham City Council, would allow developers to defer Section 106 payments on existing planning consents to help the cash flow of a development.

Sections 106s are conditions placed by councils on planning consents and can be expensive additions to the scheme such as highways improvements or new public facilities. On larger developments they may cost hundreds of thousands of pounds and mean the difference between profit or loss.

Rachel Douglas, director of planning at CBRE North West, commented: "Whilst many councils across the country are already being far more flexible in negotiations with developers, it's really encouraging to see a local authority being so proactive. If this approach was adopted in the North West it would ensure our key cities continue to move forward, even if it is at a reduced pace compared to the rate at which development has come forward in recent years.

"Over the past year, we have seen the viability of many developments become marginal or non-existent so any reductions or deferments in upfront costs could make the difference between a scheme proceeding or not.

"Whilst the Government are consulting on ways to assist developers and the property industry, the approach taken by Birmingham City Council can be implemented now and therefore benefits should be identifiable in the short term."

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