RegulationMay 29 2013

‘EU occupancy ruling could hit UK housing policy’

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ByKevin White

The north Wales-based former adviser and founder of the IFA Defence Union said that the ruling by the European Court of Justice on 8 May has shot “housing policy in rural Britain to pieces”.

Earlier this month the Luxembourg-based court found that a section of planning legislation which allowed people to build or buy homes in the Flemish region only if they had lived in the area for a specific length of time, or had a sufficient connection to it, constituted “restrictions on fundamental freedoms”.

Mr Owen said the European court’s ruling could herald challenges to the UK which also has local occupancy restrictions under section 106 of the Town and Country Planning Act 1990.

Councils in areas of natural beauty, such as the Lake District, north Wales and Cornwall, often grant planning permission only if the homebuilder signs a tightly-binding agreement that imposes restrictions on the homeowner when the property is sold.

Mr Owen said: “The rule means that hardly anyone offers mortgages on these types of properties, creating the potential for mortgage prisoners. If they can sell the property, they are then forced to sell to locals at a fraction of the market value.

“The fact that the European court has deemed the whole policy as unlawful should render the same concept in the UK shot.”

Gwynedd Council, in northwest Wales, has used section 106 extensively to restrict rural homebuilding and protect the Welsh language. A spokesman for the council was not willing to comment on the court ruling.


Section 106 allows a local planning authority to enter into a legally-binding agreement or planning obligation with a land developer on a related issue. The obligation is commonly referred to as a section 106 agreement.

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Glyn Jones, owner of Denbighshire-based Vale Financial Services, said: “While the principle of these agreements may be admirable, they don’t work and create a false economy by mixing the free market and local control, hence the lack of mortgage providers who will lend on one of these properties.”