Whether the district council can put ‘clawback clauses’ on developers that successfully apply to say they can’t afford contributions to the community, will depend on each application, the authority has said.
As reported last week, Emerald Homes has been told it doesn’t have to pay the £685,000 towards healthcare and education or build any of the affordable homes it had originally agreed to when it received planning permission for 119 properties at Home Farm in Deeping St Nicholas.
The company successfully argued to South Holland District Council that the development would no longer be ‘viable’ which is deemed to be a less than 17.5 per cent profit on the cost of the build.
The Lincolnshire Integrated Care Board expressed ‘disappointment’ at the loss of funding ‘required at Munro and Beechfiled Medical Centre to deal with increased numbers.
An independent viability assessor CPV agreed that the development was not viable with the contributions but it also urged South Holland District Council to introduce a ‘clawback clause’.
“We would strongly recommend that this is retained to allow viability considered at a later date, during the delivery of the project,” its report to the authority as part of the planning process.
In recent years there’s been numerous applications from house builders quoting viability studies to get out of or reduce the amount of contributions to the community it has signed up for to obtain planning permissions in what are known as Section 106 agreements.
The ‘clawback clause’ is not something that’s been included in South Holland but it said it could do so as part of the next Section 106 agreement for the site.
A spokesman said: “A clawback mechanism is intended to ensure that developer contributions can be reviewed if the financial circumstances of a development improve.
“In this case, a viability assessment concluded that a reduction in Section 106 contributions was justified based on current market conditions.
“A clawback provision would allow this to be revisited at an agreed stage in the development so that if viability improves additional contributions could potentially be made.
“Whether such a mechanism is appropriate will depend on the circumstances of each individual application. Clawback arrangements would need to be agreed through the Section 106 process and considered on a case-by-case basis, having regard to planning policy, viability evidence and the particular circumstances of each application.”
