Preventing Dodgy Developers from Ruining new Communities - Shaun Bailey MP

As his constituents suffer in an incomplete housing estate with broken sewers and faulty streetlights, West Bromwich MP argues for planning reform.

This article is written by Shaun Bailey, Conservative MP for West Bromwich West.

Image Credit: Sandwell Council / Parliament

Planning reform is often a contentious issue; but we all want a system that is fair and prevents avoidable damage caused by reckless developers. The public need to have confidence that there are provisions in place to prevent communities and the government from being forced to finish incomplete and often substandard infrastructure when a property developer goes under.  

Aurora Living Limited was a housing developer in the process of building the Alexandra Grange development within my constituency when they fell into administration and were subsequently dissolved. This meant the company left an incomplete development without the promised funding, but after properties had been purchased and residents had moved in. These resident were then left stuck with an incomplete housing estate, unadoptable roads, broken sewers and with faulty streetlights. Residents of Alexandra Grange have moved into the estate expecting their dream home only to find out their community was a living nightmare. All these problems make it impossible for residents to sell their homes leaving them trapped.

Image Credit: Sandwell Council

In addition, the developers ‘Planning Obligations’, commonly called S106 agreements, were never paid. These agreements consist of monetary contributions that a developer makes to the local authorities to support new infrastructure around the development. When a developer goes under very often this money that provides vital support to integrating a development into the community goes undelivered.

The problem with the regulations extends further. This crisis was entirely predictable as Aurora Living had a track record of missing and poor-quality remedial works, dating back six years prior to the company’s bankruptcy, with a string of failed projects.

A sensible planning system would build in safeguards to prevent forgotten infrastructure and would never have given these developers a chance to make another mess, after they had shown such a poor track record of complete projects in the past. During my time as a Member of Parliament, I have raised these issues on the floor of the House, worked with two separate Housing Ministers to try and find a solution to the problems raised. While I have made progress, we need to find solutions to prevent this from happening in the first place.

The government are taking steps to fix some of these problems, especially around S106 funds. The Department for Levelling up, Housing and Communities is bringing to bring a new bill to Parliament that will include reform of the planning sector, with it rewriting the way developers contribute to the infrastructure within our communities.

The government is taking dramatic action repealing Section 106 of the Town and Country planning Act and instead implementing Infrastructure Plans, funded by a levy on sold properties, removing the ability for developers to hold off paying their fair share towards the community while selling off the development’s housing stock. This would instantly solve the significant problems of S106 funds arriving late or never at all. This would better protect residents as it would provide the money to finish the development without question at the point residents move in.

However, fixing S106 only solves part of the problem. Tackling the effect of developers’ bankruptcies on the residents living in incomplete homes is more challenging. One possible solution would be a cross industry insurance fund, where-by developers contribute a small sum after the sale of each new build house with this money being paid out to residents in the event their developer files for bankruptcy before completing a development. With over 250,000 houses being built per year, only a meagre contribution would be enough to provide assurance to every new homebuyer that they would be safe if their developer goes under. Government could also look to fine or limit companies that consistently fail to fulfil their obligations to new tenants so companies such as Aurora Living Limited are not able to continue to build a portfolio of failure. I look forward to further government proposals when the planning bill returns to Parliament. 

While these changes would prevent the problems with S106 funding and unfinished development happening in the future, it still does not support those who are already affected such as my constituents on Alexandra Grange. During my meeting with ministers, I have argued that Government need to do more to assist those most affected by failed developments and hold those responsible to account.

If these changes to the system were implemented, the damage to my constituents in Alexandrea Grange would have been prevented and mitigated.

This article was written by Shaun Bailey MP exclusively for Counter Cut.