Planning obligations - Section 106 Agreements

: © CABE

The payment or delivery of planning obligations is most often made under what is known as a Section 106 Agreement under the Town and Country Planning Act 1990. This is an agreement between the local planning authority and the private sector developer in relation to a particular development.

The Community Infrastructure Levy Regulations 2010 brings into force statutory restrictions on the use of Planning Obligations as of 6th April 2010.

Purpose

The aim of planning obligations is to mitigate the impact of a new development in addition to ensuring it is acceptable to the local planning authority and community. Planning obligations have been secured to help fund new facilities (i.e. a sports hall) or pay for new or enhanced services (i.e. a bus service) as part of new developments going ahead.

The fundamental principle governing the use of planning obligations is that ‘planning permission should not be bought or sold’.

Applications

Planning obligations generally incur capital costs for on-site, off-site or in-kind contributions. Off-site contributions often tend to be a financial contribution, these can be a lump sum or endowment, or if not too complex, as phased payments.

Negotiating planning obligations is also about the process of identifying what is needed in the area to offset the negative impact of new developments, and a number of publications, including Planning Community Needs, promote community participation as a key ingredient in delivering good planning outcomes.

New Restrictions to Planning Obligations

The Department for Communities and Local Government had consulted on its intention to review the way Planning Obligations have been used by local authorities in 2009. It is currently consulting on policies detailing restrictions on their use to secure contributions from developers in draft ‘New Policy Statement for Planning Obligations’. Once finalised this statement will replace Circular 5/05: Planning Obligations and become an annex to a new PPS on Development Management.

The draft New Policy Statement for Planning Obligations proposes to:

place the Circular 5/05 tests on a statutory basis to clarify the use of planning obligations in accordance with their original purposes:
1. Necessary to make the development acceptable in planning terms;
2. Directly related to the development; and
3. Fairly and reasonably related in scale and kind to the development.
ensure no overlap between the use of CIL and Planning Obligations to remove the risk of ‘double-charging, and
limit pooled contributions towards ‘CIL-chargeable’ infrastructure of up to 5 planning obligations only.

However there is practical and legal uncertainty over how these restrictions will affect how planning obligations are currently used and negotiated. In particular, there will be questions over the continuing relevance and validity of local authority planning policies and guidance, as well as guidance from partners, on securing contributions from developers in the form of Planning Obligations. There are also questions over the relationship between CIL and Planning Obligations for local authorities who do not adopt the CIL approach.

Fortunately, CIL Regulations allow a transitional period until on or after 6th April 2014 or the date when the local authority’s first charging schedule takes effect, whichever is earlier. In addition the Government is intending to provide further guidance for practitioners by reviewing the current guidance Planning Obligations: Practice Guidance.

See further information about the impact from CIL and living places partners’ views on CIL and proposed Section 106 changes on the Community Infrastructure Levy section of the toolkit. living places will update this page regularly to reflect further developments in this policy area, publish any updated guidance from Government and agencies, and publish their formal views on the proposals when made available.

Did you know?
Recent CLG research has shown that financial contributions to specific ‘Community Works and Leisure’ infrastructure increased to £17m in 2007-08 from nearly £6m in 2005-06. Value of in-kind contributions increased to £2.6m in 2007-08 from nearly £2m in 2005-06. Specific infrastructure includes cultural, public art, library, museum and theatres works.