The processes and implications of renting out a Section 106 house can be a bit tricky. If you are a homeowner who owns a Section 106 property, you must understand the complexities of this type of agreement. These agreements help keep affordable housing available to people who need it most.
What Is a Section 106 Agreement?
Before getting into the nitty gritty of how rental agreements work for a Section 106 home, it might be good to recap what these agreements are built on.
What is a Section 106 Agreement?
A Section 106 agreement (commonly known as “planning obligations” or “Section 106 agreements”) is a legally binding agreement between a property developer and the local planning authority. These are known in the UK as Section 106 agreements after deriving them from Section 106 of the Town and Country Planning Act 1990. The main goal is to make sure that developments contribute something back to the local community and provide housing or some other important infrastructure, the scope of which will vary, as will the economic realities of different localities.
Specifically in housing, Section 106 agreements govern the use, sale, and leasing of a property. They are intended to keep homes affordable for those who meet certain criteria, such as local workers or those with regional connections.
Standard Restrictions within Section 106 Agreements
Section 106 agreements are often stamped on properties that come with a lot of dos and don’ts. The most typical restrictions are:
- Who can live on the property? Typically, only people who meet local residency or employment criteria are allowed to buy or rent a house.
- Sale or rental price limits: A price cap is often placed on these homes to ensure they remain affordable for prospective owners or renters.
- Some uses are prohibited: This typically prohibits holiday lettings or short-term rentals (e.g., Airbnb).
These are legally enforceable restrictions designed to ensure that the property is used for its intended purpose: affordable housing for those who need it.
So, can you rent a house out under section 106?
Having established what a Section 106 agreement is, it’s time to ask everyone if it is possible to rent a Section 106 house?
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Renting out a Section 106 House — General Rules
Generally, you can rent a Section 106 house out, but only under certain very strict conditions. You will typically need to get permission from your local authority before proceeding. Whether or not you are permitted to let will depend upon the precise terms of your Section 106 agreement.
For example:
- Some leases may permit short-term rentals in certain instances, like a temporary out-of-state move for work.
- Some others may prohibit renting altogether to keep the property owner-occupied by an eligible person.
Prohibited Uses
One of the most common restrictions in Section 106 agreements is prohibiting holiday lettings. That means you are prohibited from listing your property on Airbnb or any similar short-term rental site.” These are intended to be long-term homes for local residents, not short-term lodging for visitors.
Temporary Rentals
Local councils may permit temporary rentals of Section 106 properties. For example, if you must relocate for an extended period (for work), you may be allowed to rent out your home for a fixed duration — typically not more than 12 months. But that needs the Council’s explicit approval, and you must follow their rules.
How to Rent a Section 106 House
If you’re considering renting out your property and having it identified as a Section 106 home, you must follow the right steps to do so legally without fear of consequence. Here’s a step-by-step guide:
Get the Section 106 Agreement
The process starts with finding and reading your Section 106 agreement. These terms and conditions define the specifics that will be applied to your property. If you don’t already have a copy, you can get one from your local Council or solicitor.
Please read the clauses regarding renting very carefully. They will outline whether it’s permissible and what to do.
Check with Local Authorities
Once you’ve checked your agreement, speak to your local Council about your plans. Explain your situation and respectfully ask if renting would be allowed. You will probably need to apply for formal permission if you can rent.
The Council may require:
- Justification for why you are renting.
- Information on prospective tenants (e.g., if they are eligible).
- Including a fixed rental term (e.g., temporary letting for 6–12 months).
Market the Property
If you are permitted to rent your home, you must advertise it per the Council’s guidelines. For instance:
- The property might only be marketed to persons who qualify for Section 106-type housing, such as local workers and residents.
- You might also be restricted in how and where you can market the property.
- Ensure that your listing clearly states any restrictions to avoid confusion or complications.
Doing so would be a violation of Section 106
A breach of your Section 106 agreement can lead to serious consequences.
Section 106 Agreement Breaches: Admission of Liability
If you’re subletting your home without proper permission or violating the agreement’s terms, you may face:
Fines: Financial penalties can be enforced by local councils.
Enforcement Notices—The Council may issue a notice requiring you to take corrective action (for example, remove the tenant or stop the unauthorized rental).
Legal Action: In some severe situations, the Council may seek legal action, which can incur even more costs and issues.
Responsibility
As the homeowner, you must comply with the Section 106 agreement, even if you were not the original purchaser. Not knowing the rules is no excuse, so it’s important to familiarize yourself with your responsibilities.
FAQs
Here are responses to some frequently asked queries about renting out Section 106 homes:
Q: Can I rent out my Section 106 house on Airbnb?
A: No — most Section 106 agreements prohibit holiday letting. The properties are meant to supply long-term shelter for qualified residents, not transient lodgings for visitors.
- Q: How do I secure permission to temporarily rent my house under Section 106?
- A: Contact your local Council and describe your circumstances. You will probably have to formally apply, outlining why and how long you want to rent your property.
- Q: What will happen if I rent my Section 106 house without permission?
Q: What are the penalties for renting without permission? You must follow the right process to avoid these penalties.
Not renting out a Section 106 house.
If you’re unable to rent out your Section 106 property, consider exploring an alternative:
Selling the Property: If your situation has evolved, selling your home to an eligible buyer might be more prudent.
Ownership Transfer: The property can sometimes be transferred to a family member who qualifies, like children.
Conclusion
How do you rent out a Section 106 house? These properties can be rented out in select circumstances, though developers must liaise closely with their local councils to ensure they adhere to regulations. If you are aware of what you are required to do and take the appropriate steps, then avoiding legal troubles and making wise decisions about the future of your property is possible.
If ever in doubt, don’t hesitate to ask for legal advice or your local authority for clarification. Because being in your know-how is the best way to protect your investment and peace of mind.
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