Berkshire councillor alleges that move has been made to avoid triggering planning payments

Housebuilders hit by the credit crunch have started taking down half-built homes in order to avoid making planning contributions.

Paul Bettison, the leader of Bracknell Forest council and chair of the environment board at the Local Government Association, said: “I have been informed about a developer in our borough who has removed already built external walls for homes so they wouldn’t count towards section 106 payments.”

Contributions under section 106 deals – wherein developers make contributions to the local authority as part of planning permission – are triggered when builders hit pre-ordained development milestones.

The news shows how much builders are being hit by the credit crunch, with sales at less than half the level of this time last year.

Bettison said he did not blame developers for taking steps to safeguard their businesses during the downturn. He said: “Developers are taking significant risks. I’d rather they found a way of conserving cash than went bust.”

Builders have said they are stopping work on several high-profile schemes, including Bellway’s 900-home Prospect Place scheme in Cardiff, Crosby’s 102-home Potato Wharf development in Castlefield, Manchester, and the Lumiere scheme in Leeds by KW Linfoot.

However, this is thought to be the first time it has been alleged that builders have spent money on taking down homes already started.

Bettison refused to confirm which development this had happened on.

Richard Capie, director of policy and practice at the Chartered Institute of Housing, said he had also heard of the practice. He said: “The problem is getting people to actually build. We’re learning that, while section 106 can deliver great benefits for communities in a rising market, when times aren’t so good reliance on it is not such a good thing.”