Planning Obligations in Developments
Planning conditions, financial, social and affordable and other housing contributions operate differently to those in Ireland. Generally, planning obligations are opposed through conditions on the planning permission and also by way of a specific Section 106 Agreement which is a formal legal obligation entered between the developer, local authority and any relevant third parties. The agreement is detailed and precise and will usually be negotiated by legal representatives. These will typically deal with transfer of lands, social and affordable housing conditions and a range of other issues relevant to the development.
S.106 Agreements
Planning obligations and contributions which are secured by way of planning conditions in Ireland are secured by way of Planning Agreements or “Section 106” Agreements in England and Wales. Planning obligations are usually the means providing a public benefit or other obligation which the Planning Authority deems necessary as a package in granting the planning permission. The effect of the financial crisis and reduced local authority funding after 2010 increased pressure for use of section 106 agreements to recoup development benefit from developers.
The community infrastructure levy regulations also operate in parallel and the proper imposition of obligations under each must take account of the other. Issues also arise in relation to the relationship of section 106 obligations with other statutory powers of local authorities. This has arisen in particular in the context of discretionary services charges
Section 106 obligations are planning obligations are commonly financial obligations but they need not be financial in nature. There may be a restriction on development or use of land. They may require certain works on land. They may require that the land be used in a particular way.
The test for financial obligations pursuant to section 106 agreements are
- necessary to make the development acceptable in planning terms
- directly related to the development
- fairly and reasonably related in scale and kind to the development
Content
The Planning Agreement is generally entered between the developer and the local Planning Authority. It may drawn up as a legal agreement by the parties’ solicitors. The planning obligation will usually derive from an agreement with the Planning Authority which would be formulated before the final grant of planning permission.
Planning obligations can restrict development in some way and can require specific activities to be carried out or can provide for the payment of money. It is normal practice for the planning obligation to be made before the grant of a planning permission.
The DCLG has issued policies as to the appropriate content of planning obligations. They are to be fair open and reasonable and are not to amount to a purchase of a planning permission. They must be necessary. The obligation must be relevant to planning, must be necessary, directly related to the development, be fairly and reasonably related in scale and reasonable in all other respects. The circular indicates that a matter such a the provision of affordable housing mitigation the impact of development by compensating for loss or damage caused by the development by replacement of landscape, open space, right of way etc.
Examples of planning obligations could include a contribution towards costs of the new access road, bus shelters, open space, improved junction layouts, new or improved rail/bus station facilities, park and ride, measures for cyclists, pedestrians, library facilities, social education, recreation or sporting facilities. They are also used to secure inclusion of affordable housing in residential developments.
The Planning Agreement can provide for the payment of a sum or the provision of a benefit in kind by way of planning contributions.
In 2006 the DCLG published practice guidelines for Local Authorities on conditions and a model Section 106 Agreement drafted by the Law Society. The Section 106 Agreement deals with such matters as are necessary in order for the proposal to be acceptable to the Local Authority but which cannot be dealt with by way of conditions. They can be a very flexible means of solving problems that a development may cause. Section 106 planning obligations may have long run consequences for the land. They are registered as a Local Authority charge and will be thereby notified to all future owners of the land.
The 2016 Act has powers to require the Government to appoint someone to investigate where disputes arise over a planning obligation agreement. Further regulations and guidance can set out the procedure to apply for an appointed person and how their role is to function.
The Secretary of State has the power to make regulations which restrict, or impose other conditions on, the enforceability of planning obligations which relate to the provision of affordable housing. For example regulations may restrict or place conditions on the enforceability of planning obligations which provide for affordable housing on sites of a certain size, or where the development is of a specific nature (such as providing a certain type of housing). This does not prevent parties from entering into planning obligations relating to affordable housing provision on these sites, but it will limit the
remedy available should these obligations be breached.
Housing Policy
Section 106 agreements are used to secure affordable housing, to specify the type and timing of this housing and to secure financial contributions to provide infrastructure or affordable housing.
The former housing policy was set out in PPS 3 issued by the DCLG. It directed local planning authorities to plan for a full range of market housing. In particular, they must take into account the need to deliver low-cost housing as part of the general housing mix. Affordable housing is defined to include social rented housing and intermediate housing.
Social rented housing is rental housing owned and managed by local authorities and registered social landlords for which guideline target rents are determined through a national rent regime. Intermediate affordable housing is defined as housing at prices and rents above those of social housing but below market costs.
The procedure for providing affordable housing usually takes the form of the developer entering a Section 106 Agreement where either land is transferred to a housing authority, charitable organisation or similar body. Alternatively, the developer itself may undertake the role of registered social landlord and manage the units as affordable housing either directly or through a housing association.
The obligation is likely to deal with the mix of affordable housing, nomination rights, occupation criteria, location and provision to assure the units remain affordable. In some circumstances the local authority makes a financial contribution to enable the local authority to provide the houses elsewhere.
The National Planning Policy Framework states that “…the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable.”
In addition, the Growth and Infrastructure Act, introduced in 2013 to reduce the red tape that the government considers hampers growth, allowed developers to renegotiate economically unviable section 106 agreements on stalled housing developments. This has had a particular impact on affordable housing provision.
Agreements with Utility Services Providers
Frequently, development sites need to be linked when adjoining public road (described as a highway). The Highway Act provides that if a Highway Authority is satisfied that it would be to the benefit of the public by the Authority to enter an agreement with a person (normally a developer) to carry out highway works the Authority may do so on terms that the person pays the whole or part of such costs.
Highway Act Agreements will commonly be required where say in relation to new estates which require connection to the highway network which is maintained at public expense
The water and sewerage authorities were privatised in the UK 20 years ago. It is often necessary to enter specific agreements with the water and sewerage body for the area so that they allow connection to services and allow for the take over of pipes, water mains and sewers.
Community Infrastructure Levy
The Community infrastructure levy was established under the Planning Act 2008. It is in the nature of the local tax implemented by the planning authority. It applies only in England and Wales.
The levy is a means by which developers of large developments of new residential or commercial contribute to new or improved infrastructure.The legislation seeks to ensure that monies collected are spent the purposes for which it is collected. The fundamental obligation is that the levy supports development in the authority’s area.
The community infrastructure levy is effectively a charge payable by the developer in accordance with the planning authority’s charging schedule. The charge is calculated in accordance with the number of factors including the size of the development. The overall purpose is that costs incurred in providing infrastructure to support a development are funded by the developers/owners.
In setting different rates in a charging schedule, the planning authority should aim to strike an appropriate balance between
- the total cost of infrastructure to support the development taking into account actual
- other expected sources of funding
- the potential effects of the imposition of the imposition
- the desirability of funding from the levy
Liability is charged on the development of land. it commences once development starts. The obligation generally lies on the developer as defined. In some cases, where nobody else is deemed developer, it is apportioned between persons having a material interest in the relevant land.
Minor development is excluded. There is other discretion to grant relief in exceptional circumstances.
Authorities prepare charging schedules. A public consultation is undertaken. There may be an oral hearing. Persons potentially affected may make representations .
In principle the charge applies to new development rather than the replacement of existing development without new infrastructure
Payments can be instalments or on account. Payment may be by transfer of land. There are provisions for surcharges for failures to assume liability and other circumstances. Notices may issue to prevent development pending payment.
There is limited provision for appeal.
Reporting Benefits
When a LPA accepts a planning application, common examples are a Community Infrastructure Levy or Government grants. A planning officer must compile a report of these potential benefits when making their recommendations. The
Secretary of State may issue regulations about publishing financial gains to other bodies and what
particular information must be included in such reports.
Any report to a local planning committee recommending granting planning permission, must explain how any neighbourhood development plan has been considered.
Highway Act
Frequently, development sites need to be linked to an adjoining public road (described as a highway) and to the water and sewerage system
Section 278 of the Highway Act provides that if a Highway Authority is satisfied that it would be to the benefit of the public, the Authority may enter an agreement with a person (normally a developer) to carry out highway works. The Highway Authority will usually be the Council or effectively the roads department of the Council. The Highway Authority may require on terms such that the developer pays the whole or part of such costs. Highway Act Agreements will commonly be required where say in relation to new estates and developments.
Section 38 agreement is entered into and provides a method for a highway that has been constructed or that is to be constructed becomes maintainable at the public expense. A publicly maintainable highway will in most cases include provision for drainage of the highway. (Drainage of highways is defined in Section 100 (9) of the Highways Act 1980).
Adoption of a drainage system through a Section 38 Agreement is for a drainage system which drains an adopted highway only. The drainage system only takes runoff from adopted (or prospectively adopted) highways and no private drainage or development drainage outfalls into the system. The final adopting authority is the Local Authority or Council. The cost of entering into such an agreement varies dependant upon the size of the development.
Water Industry Act
A Section 104 agreement is entered into and provides a method for a drainage system that has been constructed or that is to be constructed becomes maintainable at the Sewerage Authorities expense.This agreement permits the adoption of a sewer or lateral drain by a sewerage undertaker.
Adoption of a drainage system through a Section 104 Agreement is for a drainage system which drains private areas (such as roofs and driveways) and also highway drainage (if both drain into the same sewer system). The final adopting Authority is the Sewerage Undertaker. The cost of entering into such an agreement varies dependant upon the size of the development and drainage system required.
A section 106 agreement permits a new connection to an existing adopted public sewer. An application is made via either the Council or Sewerage Undertaker which, when approved, allows connection of a proposed sewer system into an existing system. As part of this application submission of details of flows and connection type are required for the Sewerage Undertaker to check and approve.
