Derbyshire Dales District Council to write-off £60,000 affordable housing debt

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A council is planning to write-off a payment of nearly £60,000 towards affordable housing after almost a decade because the developer failed to pay up and then went into liquidation.

In April 2009, planning permission was granted for two detached dwellings on land at Old Coach Road, Tansley, near Matlock.

Sheffield firm Barncroft Homes Limited had agreed to pay Derbyshire Dales District Council £61,575 to build affordable housing elsewhere.

It had committed to do so through a legally binding contract called a Section 106 agreement – in which a developer granted planning permission agrees to make a financial contribution aimed at making the application more acceptable.

However the payments never came forward, the company went into liquidation, and now the authority is asking its members to approve a decision to write-off the owed money.

A discussion will take place at a meeting of the governance and resources committee on Thursday, November 22.

Barncroft was due to make the payment within two years of being granted permission to build, and come 2011, the council formally requested the money.

However, the debt remained unpaid and “prolonged discussions” were undertaken with the developer in order to agree revised payment terms.

Despite “extensive efforts”, the debt remained outstanding and interest payments were accrued on the original debt owed to the authority.

The total debt owed to the district council at that time had increased to £69,752.14 as a result.

In early 2012 payment terms were revised again but the company again “failed” to make the agreed payments and the council began debt recovery proceedings through the courts.

The cost to the council of these court proceedings is not known at this time.

The council states: “Unfortunately, despite lengthy court proceedings and enforcement, the district council was unable to secure full payment of the debt due to the financial position of the company”.

At this point, the owed money totalled £59,438.32.

In August this year, Barncroft was placed in liquidation.

A report for next week’s council meeting states: “It is clearly regrettable that despite pursuing all potential options, the district council has been unable to secure payment of the affordable housing contribution from Barncroft Homes Limited.

“However, in the circumstances it is not considered fair or reasonable to now seek to recover these monies from individual property owners who no doubt purchased their properties [in 2009] in good faith and are possibly unaware of the circumstances surrounding this matter.

“The committee is therefore asked to consider writing-off the S106 debt that is owed as there are no further legal avenues that the district council can pursue.”