Section 106 is a type of restrictive covenant, typically used to provide a sustainable solution to local housing requirements, such as provision of affordable housing in London where ownership may be restricted to people living within a specific distance of the development or subject to a maximum salary criteria specified by the local planning authority.
At present, very few mortgage providers will lend on properties affected by a s106 Agreement, which limits choice for home buyers, and for homeowners affected by the obligation who want to remortgage.
From 1st December, Leeds Building Society will change its criteria to permit lending on properties subject to a s106 Agreement.
This will apply across its whole range of competitive mortgages, including shared ownership.
Martin Richardson, Leeds Building Society’s General Manager – Business Development, said:
“A s106 agreement is increasingly becoming a common feature on new-build properties, which is one reason we decided to make changes to our criteria to support more borrowers.”
“We are always seeking to innovate and find new ways to respond to demand, particularly in under-served markets such as this, where the number of borrowers likely to be affected is sure to grow.
“In addition to applying to brand new properties, Section 106 can affect an existing property - at present, prospective home buyers or affected homeowners looking to remortgage to a better deal have very limited choice.”
Commenting on the Society’s criteria changes, Adrian MacDiarmid, Head of Mortgage Lender Relations at Barratt Development plc, said:
“Leeds Building Society has made an enormous contribution to the New Build mortgage market this year and this is another valuable step which broadens the appeal of their proposition into an area that is not otherwise well served.
“We look forward to further developing our relationship with them for the benefit of our mutual customers.”
Kevin Belsham, UK Sales and Marketing Director for Taylor Wimpey, commented:
“At present there is a significant lack of banks and building societies prepared to lend to customers wanting to buy affordable properties.
“Today’s announcement from Leeds Building Society is a step change in the right direction, highlighting its proactive approach to engaging with housebuilders and mortgage brokers to offer mortgages that meet our customers’ needs.”
