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The Financial Timebomb Ticking For Owners Of New Homes

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http://www.yorkshirepost.co.uk/news/The-financial-timebomb-ticking-for.6677665.jp

Unsuspecting home buyers in Yorkshire could be sitting on a financial timebomb after plans emerged to pursue individual homeowners for huge bills which should have been met by developers under planning legislation but have gone unpaid.

Councils can demand cash from builders for environmental and infrastructure projects under what are called Section 106 agreements, which are legally binding and are drawn up when planning permission is granted.

But if the developer defaults on the payments, legal responsibility can pass to buyers, and one Yorkshire authority is now considering a plan to pursue individual purchasers for the unpaid cash.

Sheffield Council has drawn up a list of several developments where payments have not been made, and said action must be taken to recover the money, a move which sparked outrage last night.

It is understood owners of currently affected properties may not be aware of possible liability because no formal action has yet been taken, so no warning would have appeared on the public register at the time of purchase.

Members of the Liberal Democrat-controlled authority will meet tomorrow to discuss measures which may lead to the council launching legal claims to enforce agreements worth hundreds of thousands of pounds.

Because the developments in the spotlight are complete and almost fully occupied, planning officers will advise that the option is now open to pursue private purchasers for cash.

Chairman of the planning committee involved, Janice Sidebottom, said the authority had always aimed to make developers pay up first, but admitted that individuals could become liable.

She added: "It would be a long way down the process. It also depends how far it is worth pursuing, but I suspect the council's auditor and other council taxpayers probably would not be happy if we did not get the money back.

"What the council is trying to do is bring the developer to court earlier. It would then be easier for a solicitor to pick up that there is a charge on the property."

Planning officials across the country are facing similar difficulties and the Government's Planning Advisory Service has received inquiries on how to deal with the situation from councils nationwide.

Timothy Kirkhope, the Yorkshire MEP who leads the Conservatives in Brussels, described pursuing homeowners as "ridiculous" and said councils should chase developers for money much earlier.

He added: "This has worrying implications for people across the country and should serve as a warning. It is serious and the council should be careful before proceeding against individuals.

"The question arises over whether the local authority has been negligent in not getting the money sooner. They should really have the section 106 money upfront before properties are sold."

On one of the worst-affected developments in Sheffield, an apartment building in the city centre, builders have failed to pay a sum of £90,030.35 which was supposed to be used for public open space.

If the bill remains unpaid by the developer, the owners of each property in the 80-flat block could be left to pay a share of around £1,100 to meet obligations.

John O'Connell, of the TaxPayers' Alliance, said homebuyers were facing tough enough conditions and added: "It doesn't seem fair that because the council cannot get the money from developers they turn to taxpayers to foot the bill, especially after they have already paid out other costs.

"Much more needs to be done when these contracts are drawn up to ensure that taxpayers are not left ill-informed and do not have to pick up the tab when things go wrong."

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Whoops.

Should have taken the money up front, or in installments perhaps...

Sounds like the council hasn't had it's eye on the ball enough.

Counter sue (having obtained all documentation under the Freedom of Information Act) the local authority for failing to perform its statutory duty of enforcement of the Section 106 Agreeement(s), seek prosecution and accordingly demand compensation. Make sure all Planning Officers and a District/County Councillors are named in the Writ. Seek personal bankruptcy of the named Councillors (there will be back handers somewhere for sure)

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Whoops indeed. I have seen no evidence that buying new is a good idea, only a very bad one. What with HNBC only honoring guarantees if ALL flats are sold in flat blocks.

I can see struggling developers passing this cost on to unsuspecting homeowners in their droves.

Of what I have seen new build wise here on the sunny Isle of Wight, is that you'd have to be clinically insane to buy one in the first place.

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It's onlt £1,100 each house. That's nothing to an up and coming property investor, who probably paid £200k plus for the luxurious 1 bedroom executive apartment.

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I am pretty sure that individuals will be bailed out and the losses socialised. This is the mentality of society now and it will continue to be so until after a major reboot.

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the socialists have run out of money and are now cowardly going to subvert every last drop from the weakest - despite the socialist proclamation that leveraged home ownership was a way for poor people to get rich only a short time ago

funny how when the money runs out they break ranks in order to protect themselves

you couldn't make it up, and yes I know they are libdems, but it's the soviet socialist republic of sheffield so they're all the same

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Whoops indeed. I have seen no evidence that buying new is a good idea, only a very bad one. What with HNBC only honoring guarantees if ALL flats are sold in flat blocks.

I can see struggling developers passing this cost on to unsuspecting homeowners in their droves.

Of what I have seen new build wise here on the sunny Isle of Wight, is that you'd have to be clinically insane to buy one in the first place.

There have clearly been alot of very ill people buying these boxes called housing. WHAT on earth pursuades people to part with £many 000's for a tiny box which devalues in the short term and deficitely devalues in a HPC we have now begun!

There is no doubt that the best policy for everyone is to stay away and rent until sensible prices resume. Buyers Solicitors may be negligent in not asking a developer's Solicitor in 'enquiries' whether they can confim the developer has carried out its S106 obligations and to ask for evidence of payment.

Edited by plummet expert

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the socialists have run out of money and are now cowardly going to subvert every last drop from the weakest - despite the socialist proclamation that leveraged home ownership was a way for poor people to get rich only a short time ago

funny how when the money runs out they break ranks in order to protect themselves

you couldn't make it up, and yes I know they are libdems, but it's the soviet socialist republic of sheffield so they're all the same

I remember that lefty pinko Thatcher selling all the socialist build housing off to the private individuals. She was probably too busy reading Marx and attending anti-war demos to think through the consequences of turning a place to live into a get rich scheme - the crazy Trot that she was.

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I remember that lefty pinko Thatcher selling all the socialist build housing off to the private individuals. She was probably too busy reading Marx and attending anti-war demos to think through the consequences of turning a place to live into a get rich scheme - the crazy Trot that she was.

unfortunately for you the obscene leverage and dodgy banking was Brown's idea, not Thatcher's

shame subtleties like concepts and logic pass you by

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unfortunately for you the obscene leverage and dodgy banking was Brown's idea, not Thatcher's

shame subtleties like concepts and logic pass you by

The Friedmanite culture whereby the market can do no wrong and regulation is a restriction on trade was pure unadulterated Thatcherite policy.

Ridiculous to blame "socialists" for the housing boom. Unless the mid-80's one was their fault too?

Edited by Timak

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unfortunately for you the obscene leverage and dodgy banking was Brown's idea, not Thatcher's...

NuLabor = Old Tory

Rinse and repeat... oooh that stinks! :lol:

Edited by DarkHorseWaits

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The Friedmanite culture whereby the market can do no wrong and regulation is a restriction on trade was pure unadulterated Thatcherite policy.

Ridiculous to blame "socialists" for the housing boom. Unless the mid-80's one was their fault too?

excuse me

Gordon Socialist Brown hobnobbed with the banksters over champagne, and let them regulate themselves

this is the defijnition of a champagne socialist. Oh the shame you must feel.

a socialised ponzi scheme is not free market.

the fault lay firmly at the door of the no more boom and bust socialistas

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Ridiculous to blame "socialists" for the housing boom. Unless the mid-80's one was their fault too?

Hint: state control of interest rates through a central bank is certainly not a free market policy.

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It's not just councils that are bringing these bills out of nowhere.

A few years ago, I had a flat that had been originally been built in 1999. The water was included in the service charge, which the management paid based on a single meter feeding the block's water pumping station.

Anyway, fast forward 7 years, and the water company write to the management telling them that individual meters on new flats have been a legal requirement since 1999, and that the builder was negligent in not installing them, and can meters be installed at the first opportunity. (This all came to light when some new owners moved in, and forgot that the water was included in the service charge, so told the water company - who promptly sent them a bill for £4000 for the month, the subsequent complaint was investigated, and the lack of individual meters was discovered).

The builder refused to have anything to do with the problem, and refused to acknowledge any mistake. The management had no choice but to install individual water meters, at a cost of about £80,000 - necessitating an emergency rise in the management fee. Legal action against the builder was considered, but in view of the time period, the advice was that any action would be almost impossible.

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Members of the Liberal Democrat-controlled authority will meet tomorrow to discuss measures which may lead to the council launching legal claims to enforce agreements worth hundreds of thousands of pounds.

Then they'll issue a statement claiming that this sort of dodgy behaviour proves that they are a serious political party now and worthy of running the country.

Like they've tried to claim after reneging on their student fees pledge.

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Should the possibility of this potential charge not have been explained to the buyers by their solicitors?

If the sols didnt do this then they should pick up the bill.

My thoughts entirely, bump.

This is supposedly what you pay the solicitors for in all this. I cant see what other value they bring, other than acting as glorified forwarders of everyone elses mail.*

*Which is exactly all that I suspect most solicitors and conveyancers actually do or want to do.

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It's onlt £1,100 each house. That's nothing to an up and coming property investor, who probably paid £200k plus for the luxurious 1 bedroom executive apartment.

Completely wrong! -1

These people are known as "entrepreneurs" not property investors.

TBH though, the homeowners will pay nothing if their solicitor failed to warn them of the potential liability. The professional indemnity insurers will foot the bill.

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  • 284 Brexit, House prices and Summer 2020

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      • down 5% +
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      • Even
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      • up 5%



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