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Developers urged to claim back ‘overpaid’ contributions to local councils in Scotland

Lawyers are advising that builders could claim back significant amounts which were paid to local authorities to off-set infrastructure, public facilities or affordable housing under Scotland's Section 75 Agreement.

Under this system developers would typically make a cash contribution in return for the local council undertaking infrastructure or other community works required by the agreement.

However, if the local authority did not do the work, started it later than expected or built it for less that the amount paid by the developer, then the developer could be due a refund of all or part of the amount, according to law firm McGrigors.

With the property building industry struggling in current economic conditions, McGrigors is advising developers to review all planning agreements with a view to recovering money from local authorities which have not implemented the agreed works.

'As house builders and developers review current and future costs, they should look back and review historic planning contributions and question whether these contributions have been used either as intended by the local authority or within the timescales contemplated within the planning agreements,' said John Curran, McGrigors Head of Housebuilding (UK).

Curran said that in one Central Belt development a builder had paid more than £240,000 in transport and educational contributions to the local authority and agreed the free transfer of land for 20 affordable houses.

In a planning application for an Aberdeen residential site, the developer paid £300,000 for affordable housing in advance of approval being granted, another £20,000 for traffic improvements and an unspecified amount for drainage work.

'The builders and developers need all the financial help they can get if a vitally important element of Scotland's economy is to have any hope of surviving. When the market was buoyant local authorities used their strong negotiating positions to extract commitments from developers way beyond what was justified as a result of the proposed development,' Curran explained.