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I wonder if anyone can offer any insight to the following?
Background:
A site which contained a community club was bought by a developer. The developer applied to build a residential development and as part of gaining planning permission the developer agreed to build a new community building to rehome the community club.
The Section 106 agreement made between the developer and the council states the following:
‘The Owner shall ensure that the Community Facilities are made available at an affordable cost to any purchaser or tenants. The affordable cost shall limit the charge for the use of the premises whether by license, lease or agreement to allow for the recovery (where relevant) of the reasonable cost of the provision of insurance, maintenance and service charges and the payment of rates and all other applicable taxes.’
The community club moved into the new build and has been paying rent for a number of years - they also pay estate management fees (roads, grounds upkeep etc)
The developer has now made the community club aware that from this year they intend to charge an additional ‘Building Service Charge’ (£4000+)
Question:
Background:
A site which contained a community club was bought by a developer. The developer applied to build a residential development and as part of gaining planning permission the developer agreed to build a new community building to rehome the community club.
The Section 106 agreement made between the developer and the council states the following:
‘The Owner shall ensure that the Community Facilities are made available at an affordable cost to any purchaser or tenants. The affordable cost shall limit the charge for the use of the premises whether by license, lease or agreement to allow for the recovery (where relevant) of the reasonable cost of the provision of insurance, maintenance and service charges and the payment of rates and all other applicable taxes.’
The community club moved into the new build and has been paying rent for a number of years - they also pay estate management fees (roads, grounds upkeep etc)
The developer has now made the community club aware that from this year they intend to charge an additional ‘Building Service Charge’ (£4000+)
Question:
- Shouldn’t the current rent that is being paid cover the building service charge?
- If the community club pays both the Estate management fees and the new service charge, would that be considered ‘reasonable cost of the provision of insurance, maintenance and service charges and the payment of rates and all other applicable taxes’ ?
- Therefore if the club continues to pay rent in addition to these charges wouldn’t the developer be profiting from and generating income from them, thereby contravening the section 106 agreement?
- Who decides what’s considered an affordable cost? Would the council have any power to intervene?
