Blog: What Section 76 means for the housing market in Northern Ireland

Drew Nesbitt

Next year will see renewed interest in Section 76 across all of Northern Ireland’s 11 boroughs.

This considerable shift in focus is the result of local councils producing their own local development plans for the first time and the maturing of the housing development market in Northern Ireland.

Emerging policies in new local development plans will mean that all housing development schemes of a certain size will need a planning agreement that adheres to the requirements of the Affordable Housing Policy.

While home builders in the UK are used to paying taxes for this, thanks to the very similar Section 106 which turned 30 last week, changes to Section 76 which was created in 2015 and that has only been lightly used are likely to bite. problems in the housing market in Northern Ireland.

It also acts as a double-edged sword for homebuyers, with those looking for affordable housing enjoying the benefits of lower cost housing and other buyers absorbing the projected increase in house prices. Since the new regulations will have a significant impact of up to 20% on existing systems and costs. Leaving many developers to take part of the hit and raising the cost of buying for homebuyers to take the rest.

How will section 76 work in practice?

The new direction means that all residential development schemes of a certain size will also have to provide social/affordable housing. In the Belfast City Council area the threshold is over five units and planning agreement is needed to provide affordable housing with more opportunities for first time buyers, key workers and low income families. The other 10 Northern Ireland councils will follow, however, there may be different requirements and thresholds between boroughs.

Although the deadline may seem distant, actors in the housing sector must be prepared. We are already seeing significant change and pushback from the new rule, particularly in Belfast where the local council is using it as draft policy, with some developers even having to scrap their plans because of it.

We have spoken with property developers who originally had their planning permission about to be approved only to receive a last minute call from the local council and planning office who have reconsidered their application and now wish to apply a deal under Section 76. The backlash of this means additional costs for the developer, in some cases up to a six-figure increase, with the worst case scenario meaning plans are scrapped altogether.

Larger home builders and developers may already have had last minute extra costs, significant extra costs or even council affordable housing demands, so they can be financially prepared. But there will be additional pressure applied to small and medium-sized developers who haven’t had to consider these implications before.

Chris Brison

What can developers and homebuilders do to prepare?

The key for developers and home builders is to plan for Section 76, it is important to keep in mind that any residential development project, even those that are currently being planned or are due for Going forward, are likely to be assessed against new policies and Section 76 requirements.

By preparing, they will be able to take advantage of the current flowering opportunities that await them in Northern Ireland. Unlike the previous two decades, the consequences of the pandemic mean that there is now, more than ever, an abundance of qualified young people who have settled into jobs, are close to their families and enjoy the work-life balance. life in Northern Ireland. .

Since 2020, Northern Ireland, particularly Belfast, has also become a hub for business opportunities through the expansion of companies such as PwC and technology organizations. It is even now the leading cybersecurity destination in Europe, with international companies such as Black Duck Software, WhiteHat Security, Rapid 7, Proofpoint and Alert Logic establishing operations across the city.

Additionally, following the announcement that Belfast’s two main universities are revitalizing the city with their student accommodation, the appeal of younger generations is not slowing, which will further stimulate supply and demand in the housing market. This means there is a golden opportunity for Northern Ireland, Northern Ireland businesses and homebuilders.

Chris Bryson is director of planning at Gravis Planning and Drew Nesbitt is a partner at Wilson Nesbitt

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