Hackney Council has rejected claims that it is “sitting on” millions in unspent house-building money, saying the money is received under strict conditions, and a large chunk is spent on affordable homes “as soon as possible”.
In April, housing groups complained to the Huffington Post website that councils are “hoarding” £375 million of Section 106 money which could be spent on building new homes.
Section 106 money is paid by developers to local authorities to lessen a development’s extra burden on public services.
Hackney Council says Section 106 money – of which it receives around £7 million per year – comes with an agreement on what the money can be spent on.
However, more than half of the £20 million the council currently has in Section 106 money is earmarked for affordable homes and transport.
A council spokesperson told the Hackney Citizen: “The council currently has about £20 million in Section 106 contributions, which will be spent in various ways over the next two years to benefit the borough.
“£8.8 million will be spent on borough-wide projects, relating to areas such as schools, employment and skills training, and £11.58 million will be spent on projects tied to specific developments, such as affordable housing and transport infrastructure.”
They added that this is “entirely sound and standard practice across the country”.
Back in April, James Prestwich, head of policy at the National Housing Federation, an association for social housing providers, told the Huffington Post: “It is deeply concerning that councils in England and Wales are sitting on a pot worth hundreds of millions specifically earmarked for affordable housing.”
A spokesperson for affordable housing campaign PricedOut told the website: “Although there are many reasons councils might not have spent all of their Section 106 contributions, the size of the underspend is staggering.”
But the Hackney Council spokesperson said: “There are generally two types of Section 106 funding.
“The first is not specific to a particular development or project and will be received in larger amounts, to be spent on broad items like affordable housing, as defined in the Section 106 agreement.
“Affordable housing contributions are spent as soon as possible on the council’s house-building programme.”
The spokesperson continued: “The second and more common type of s106 funding is subject to more strict terms and conditions within an s106 agreement.
“This will usually mean phased payments in smaller amounts over a longer period of time for agreed items or sites such as highways.”