All landowners know that planning permission is required for a new house or a development but they may not be aware that before planning permission is granted, the Local Authority may ask the applicant to enter into a Section 75 Agreement.
So what is a Section 75 Agreement? Basically it is a contract entered into by the landowner and Local Authority as part of the planning application process. Such agreements may:
- Restrict the use of the land.
- Regulate activities on the land which is being developed.
- Oblige the landowner to make a financial contribution to the Council which must be used for the set purposes outlined in the Section 75 Agreement. Say for example two hundred houses were to be built to accommodate two hundred more families in the area then there may be increased pressure on roads, local hospitals or leisure facilities and the developer may be asked for a financial contribution to have the roads upgraded and local facilities extended.
As with all contracts before entering into a Section 75 Agreement landowners must be aware of the significant consequences:
- Landowners should realise that a Section 75 Agreement can also apply to a single dwelling house or commercial property.
- If there is a mortgage involved then the Lender needs to consent before the Section 75 Agreement is entered into to ensure that the terms of the agreement do not breach the conditions of the mortgage.
- Once the landowner and Local Authority have come to an agreement the Section 75 Agreement is registered against the landowner’s title and will only be discharged when the financial contribution is paid or the planning obligation fulfilled.
- A Section 75 Agreement is tied to the land.
- The financial obligations can be quite extensive.
If you have made a planning application to build a new property and been asked to enter into a Section 75 Agreement it is important that you take legal advice as soon as possible. I can help you negotiate favourable terms to the agreement making it easier to sell the property in the future and making the terms more acceptable to your Lender. Please get in touch with me Ross Leatham on 0141 552 3422 or by email on rjl@mitchells-roberton.co.uk