A planning obligation is a legal agreement whereby, a developer will mitigate or compensate for the harmful impact of a new development. It is also seen as a tax, which is imposed by councils, on new developments with the aim of securing a quid pro quo for being given planning permission.
New developments deliver the homes, schools, shops, transport facilities and employment places that people need. But developments also have the potential of creating negative impact on the community and the environment, such as:
More traffic
More Congestion
More Pollution
More Disturbance
The loss of facilities and amenities
A rise in land value
Gentrification via increased rent; squeezing out those who don’t own land or buildings or can’t afford to stay.
Planning obligations are there to enable development to happen. But also, to ensure that any harm that may arise as a result of the development, is removed or reduced to an acceptable level. In particular, they enable the provision of the infrastructure needed to support development such as roads, public transport, schools, sport facilities, health facilities, open space, and affordable housing.
When a developer submits a planning application, the council assesses the actions required to minimise the impact of the proposed development and negotiates with the developer to pay for all or part of this work needed to mitigate against the impact. Planning obligations are agreed before work on the development starts and are set in a legally binding contract known as the Section 106 Agreement. This agreement is between the council and the developer.
Councils can use planning obligations to ensure a development is in line with council policies outlined in their respective Supplementary Planning Documents (SPDs). For example, by requiring: A proportion of affordable housing to mitigate the impact of the development by contributing to the extension of a local school, to provide for families moving into a development. Or to compensate for loss of damage caused by a development by replacing wild life habitats or open space which it is built on.
Planning obligations can restrict how land is developed or used. Requiring a developer to take certain actions. Requiring a developer to make payments to the council or another body to provide facilities or services.
When a council considers whether a planning obligation is appropriate, it has to apply 5 tests which is set out in legislation, and in government policy.
As already mentioned, Section 106 agreements can require developers to provide the infrastructure needed to support development such as roads, public transport, schools, sport facilities, health facilities, open space, and affordable housing. Most section 106 agreements, would at first ask the developer to provide a percentage of affordable housing out of the units to be created, usually between 10-20% of the units. The local council places conditions on these units, which may include restrictions on who can purchase the property, limits on resale prices, or requirements to sell the property at a discounted rate. The objectives is that these units can help make housing more accessible to first-time buyers, local residents, and or key workers.
Another pro is that S106 agreements can be flexible. Sometimes the developers would decline to give away 10-20% of the housing units to affordable housing and instead prefers to meet S106 obligations through paying sums of money or provision of some other community facility or amenity.
Once planning permission has been granted, it can take many months to sign the S106 Agreement, as legal teams for the council and developer negotiate the details of the agreement. Furthermore, the developer, is required to cover the cost of the council’s solicitor and their own solicitor, in this process of negotiation and drafting the S106 Agreement.
Section 106 agreements can be complex and can delay the grant of planning permission or stall the development. In some cases, the council could require an obligation from the developer that completely makes the development unviable. If the agreement is still at the negotiation phase and has not yet been signed, it can lead to lengthy and prolonged negotiations of viability with the LPA, which will almost certainly require viability evidence to agree to reduce the obligations sought. On the other hand, If the agreement has been signed and the planning permission issued, the development Works can be stalled and the LPA will need to agree to the variation of the agreement in order to reduce the obligations.
Some obligations do not actually meet the needs of the community. This is when we start to see extortionately priced statues, useless water features that rarely last as a working object for more than a year and so many bike racks that it would take an army of cyclists to sell.
S106 Agreements can lead to high property prices. Some councils demand extortionary sums of money from the development as obligations. Some developers feel it is an out and out simple cash grab by the councils; from the solicitor fees, to the cost of meeting the obligations, the final figure can amount to a significant sum. Now, one can say quite easily that, this rich property developers can afford it with their billion pounds developments. But it is really a question of whether the buyer can afford it.
For those that understand how markets work, the producer always transfers the cost of production to buyers. The more it cost to produce, the higher the prices. In the same token, do the developers actually pays for the cost of the obligations? Not at all. They simply take the amount spent to meet the obligation, divide it by the number of flats/apartment in the block and apportion the appropriate amount to the sale price of each unit.
To summarise, planning obligations are designed to enable development to happen and ensure that any harm that may arise as a result of the development, is removed or reduced to an acceptable level. Therefore, both the council and the developers must endeavour to agree on appropriate planning obligations that directly related to the development, are appropriate in scale to the proposed development, and are reasonable.
The No Pain Guide To Gain: A community guide to planning obligations
Numerous clients have put their trust in us as we are passionate about helping our clients achieve their goals through architecture and securing the requisite permissions – whether it’s creating a home where you feel safe and secure or developing spaces for commercial or residential uses. We pride ourselves on understanding the complexities of planning policies and navigating the best routes to securing approvals for your projects by being able to adapt our designs based on the National Planning Policies Framework (NFFP) and our accumulated knowledge from the vast array of planning permission we’ve successfully obtained over the years. We also believe in staying involved throughout the entire process so that nothing gets missed along the way. Hence, the final product feels like it was always meant to be there even if it looked completely different from how you first imagined it would when we started working together.
