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What is Section 76 and will it affect my Development plans?

Wilson Nesbitt Real Estate Partner Drew Nesbitt offers his insights and advice on the latest Section 76 rules which apply to Developments in Northern Ireland.

These include tackling timescales and infrastructure needs; which need to be met against the backdrop of the outlined main priority- of producing large scale, high quality developments. By familiarizing themselves with the policy and its implications, developers and housebuilders can ensure they meet the new criteria, factor in additional costs, and make the necessary plans.

What are the upcoming changes with Section 76?

Section 76 was introduced in 2015 and is the equivalent of England and Wales Section 106, however, it’s much younger and has been far less frequently used.

Following the preparation of new Local Development Plans across all 11 councils, Northern Ireland will experience a significant increase in the use of Section 76 agreements, meaning that house builders and developers will be required to provide a certain amount of affordable housing if their development is over a certain size. 

When does Section 76 come into force?

Whilst the new LDPs don’t officially come into full effect until 2023, housing developers who are just in the process of either planning or submitting an application from here on in, are likely to be assessed against new affordable housing policies and may need a Section 76 agreement. 

How will Section 76 work?

Each council will set their own requirements and thresholds.  Although, it’s predicted that they will operate similarly to Belfast Council, where the HOU5 policy is key in the housing sector.

What is the HOU5 policy?

Belfast Council has announced that any development over five units will need a planning agreement where 20% of those houses offer affordable or social housing.

As part of this affordable housing has to be provided as an integral part of mixed tenure development, integrated with general needs and not readily distinguished in terms of its external design, materials and finishes. 

How can developers deliver affordable housing under Section 76?

This is an interesting question.  In Belfast the HOU5 policy provides for social or affordable housing.  There is no definition of affordable (or intermediate) housing currently.  It is likely that, given the current statutory framework within which housing associations operate, this will need to involve Co-Ownership and staircasing. 

When does a Section 76 agreement have to be in place?

Developers need to have a Section 76 agreement in place in advance of planning permission being granted. 

Why is Section 76 changing?

The fundamental changes relating to housing are in line with the need to fill the housing gap by bringing more opportunities to those who have a lower income, as well as key workers and first-time buyers.  There is a housing shortfall of 28,000 dwellings in Northern Ireland.

What impact will the policies have on Northern Irish housing developers?

There have been cases where housebuilders have had to reconsider plans so that they are in line with the council’s affordable housing policies, despite their plans being well advanced.   This has left some developers with higher costs which will affect profit margin.

Can I negotiate section 76 terms?

Where developers can demonstrate that it’s not viable for the development to meet the policy in full, it is possible to negotiate with local planning authorities on a case-to-case basis but this will result in a delay to the planning process, as the planning agreement needs to be signed before consent can be issued.

Get in Touch

Our team acts for a broad portfolio of Developers, Investors and Construction companies across Northern Ireland. We offer joined up, holistic legal advice on strategic and practical issues affecting projects full asset lifecycle.

If you require advice on a Real Estate Development or Investment matter, contact Drew and our expert commercial team on 02890 323864 or make an email enquiry.

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To find out more about how we can help you with your query, please contact us.