Guidance Print Planning obligations

Planning obligations

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When can planning obligations be sought by the local planning authority?

Planning obligations assist in mitigating the impact of unacceptable development to make it acceptable in planning terms. Planning obligations may only constitute a reason for granting planning permission if they meet the tests that they are necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. These tests are set out as statutory tests in the Community Infrastructure Levy Regulations 2010 and as policy tests in the National Planning Policy Framework.

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How do planning obligations relate to other contributions? 

Developers may be asked to provide contributions for infrastructure in several ways. This may be by way of the Community Infrastructure Levy and planning obligations in the form of section 106 agreements and section 278 highway agreements. Developers will  also have to comply with any conditions attached to their planning permission. Local authorities should ensure that the combined total impact of such requests does not threaten the viability of the sites and scale of development identified in the development plan.

Where the levy is in place for an area, charging authorities should work proactively with developers to ensure they are clear about the authorities’ infrastructure needs and what developers will be expected to pay for through which route. There should be not actual or perceived ‘double dipping’ with developers paying twice for the same item of infrastructure.

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Should policy on seeking planning obligations be set out in the development plan?

Policies for seeking planning obligations should be set out in a Local Plan; neighbourhood plan and where applicable in the London Plan to enable fair and open testing of the policy at examination. Supplementary planning documents should not be used to add unnecessarily to the financial burdens on development and should not be used to set rates or charges which have not been established through development plan policy.

Planning obligations assist in mitigating the impact of development which benefits local communities and supports the provision of local infrastructure. Local communities should be involved in the setting of planning obligations policies in a Local Plan; neighbourhood plan and where applicable in the London Plan.

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Does the local planning authority have to justify its requirements for planning obligations?

In all cases, including where tariff style charges are sought, the local planning authority must ensure that the obligation meets the relevant tests for planning obligations in that they are necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind.

Planning obligations should not be sought where they are clearly not necessary to make the development acceptable in planning terms.

Planning obligations must be fully justified and evidenced. Where affordable housing contributions are being sought, planning obligations should not prevent development from going forward.

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Can planning obligations be required for permitted development?

By its nature permitted development should already be generally acceptable in planning terms and therefore planning obligations would ordinarily not be necessary. Any planning obligations entered into should be limited only to matters requiring prior approval and should not, for instance, seek contributions for affordable housing.

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Are planning obligations negotiable?

Obligations should only be sought where they are necessary to make the development acceptable in planning terms. Where they provide essential site specific items to mitigate the impact of the development, such as a necessary road improvement, there may only be limited opportunity to negotiate. Where local planning authorities are requiring affordable housing obligations or tariff style contributions to infrastructure, they should be flexible in their requirements. Their policy should be clear that such planning obligations will take into account specific site circumstances.

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What evidence is required to support negotiations on planning obligations?

Policy for seeking planning obligations should be grounded in an understanding of development viability through the plan making process.

On individual schemes, applicants should submit evidence on scheme viability where obligations are under consideration. Wherever possible, applicants should provide viability evidence through an open book approach to improve the review of evidence submitted and for transparency.

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Are planning obligation contributions required by local planning authorities publically available?

Local planning authorities are required to keep a copy of any planning obligation together with details of any modification or discharge of the planning obligation and make these publically available on their planning register.

Local planning authorities are expected to use all of the funding they receive through planning obligations in accordance with the terms of the individual planning obligation agreement. This will ensure that new developments are acceptable in planning terms; benefit local communities and support the provision of local infrastructure. To ensure transparency local planning authorities are encouraged to make publically available information as to what planning obligation contributions are received and how these contributions are used. This information could be published in the authority’s monitoring report or through separate periodic reports published on the local planning authority’s website.

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When should discussions on planning obligations take place?

Discussions about planning obligations should take place as early as possible in the planning process, including at the pre-application stage. This will prevent delays in finalising those planning applications which are granted subject to the completion of planning obligation agreements.

Can planning obligations or heads of terms be on a local list?

Local planning authorities are encouraged to inform and involve all parties with an interest in the land and relevant infrastructure providers, including county councils where appropriate, at an early stage to prevent delays to the process.

 

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How can relevant infrastructure issues be taken into account during discussions on planning obligations?

Local planning authorities are encouraged to work with relevant infrastructure providers at an early stage of the planning process when planning obligations are being discussed in order to prevent delays to the agreement of planning obligations. For two tier council areas this should include county councils who provide services such as education. County councils can also be statutory consultees in the planning application process as set out in Table 2 of the Planning Guidance .

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Are there standard templates for the agreement of planning obligations?

Local planning authorities are encouraged to use and publish standard forms and templates to assist with the process of agreeing planning obligations. These could include model agreements and clauses (including those already published by other bodies), that could be made publically available to help with the planning application process. Any further information required by the local planning authority, or issues raised by the applicant regarding planning obligations, should be addressed at an early stage of the planning application process. Use of model agreements does not remove the requirement for local planning authorities to consider on a case by case basis whether a planning obligation is necessary to make the development acceptable in planning terms.

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Is there a timeframe for negotiating planning obligations?

Planning obligations should be negotiated to enable decisions on planning applications to be made within the statutory time limits or a longer period where agreed in writing between the local planning authority and the applicant.

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Do applicants have to agree to a planning obligation?

Applicants do not have to agree to a proposed planning obligation. However, this may lead to a refusal of planning permission or non-determination of the application. An appeal may be made against the non-determination or refusal of planning permission.

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Can local planning authorities draw on other resources and expertise in considering planning obligations?

It may be appropriate in some cases to consider collaborative agreements to make use of the skills of officers from other local planning authorities or contractual arrangements to make use of external third party experts so that planning obligations can be agreed quickly and effectively. Local planning authorities and developers may want to discuss the provision of extra resources to enable the speedy determination of planning obligations, for example when handling large and possibly detailed planning applications.

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Can an agreed planning obligation be changed?

Planning obligations can be renegotiated at any point, where the local planning authority and developer wish to do so. Where there is no agreement to voluntarily renegotiate, and the planning obligation predates April 2010 or is over 5 years old, an application may be made to the local planning authority to change the obligation where it “no longer serves a useful purpose” or would continue to serve a useful purpose in a modified way (see Section 106A of the Town and Country Planning Act 1990).

Sections 106BA to 106BC of the 1990 Act used to provide an application and appeal procedure for the review of affordable housing obligations based on economic viability without taking into account other aspects of the planning consent. These provisions were repealed at the end of 30 April 2016. Guidance concerning applications made under section 106BA continues to apply to applications received before the end of April 2016.

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Do local planning authorities have to pay back unspent planning obligations? 

Local planning authorities are expected to use all of the funding received by way of planning obligations, as set out in individual agreements, in order to make development acceptable in planning terms.  Agreements should normally include clauses stating when and how the funds will be used by and allow for their return, after an agreed period of time, where they are not.

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Can there be an appeal against a refusal to change a planning obligation (Section 106 agreement)? 

Applications made to local planning authorities to modify a planning obligation, which pre dates April 2010 or is over 5 years old, may result in refusal or non-determination. If so, an appeal may be made. An appeal to the Planning Inspectorate under section106B of the Town and Country Planning Act (1990) must be made within 6 months of a decision by the local authority not to amend the obligation, or within 6 months starting at the 8 weeks from the date of request to amend if no decision is issued.

Appeals under section 106BC on affordable housing viability will still be considered if:

  • an application was made under section 106BA before the end of 30 April 2016; and
  • all procedural requirements are met.

Such an appeal to the Planning Inspectorate must be made within 6 months of a decision by the local authority not to amend the obligation, or within 6 months commencing with the date which is 28 days (35 days if the Mayor of London is involved) from date of request to amend if no decision is issued. Guidance continues to apply to applications and subsequent appeals provided an application was submitted before the end of April 2016.

 

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Are there any circumstances where infrastructure contributions through planning obligations should not be sought from developers?

As set out in the Starter Homes Written Ministerial Statement of 2 March 2015, starter homes exception sites should not be required to make affordable housing or tariff-style section 106 contributions.

There are specific circumstances where contributions for affordable housing and tariff style planning obligations (section 106 planning obligations) should not be sought from small scale and self-build development. This follows the order of the Court of Appeal dated 13 May 2016, which give legal effect to the policy set out in the Written Ministerial Statement of 28 November 2014 and should be taken into account.

These circumstances are that;

  • contributions should not be sought from developments of 10-units or less, and which have a maximum combined gross floorspace of no more than 1000sqm
  • in designated rural areas, local planning authorities may choose to apply a lower threshold of 5-units or less. No affordable housing or tariff-style contributions should then be sought from these developments. In addition, in a rural area where the lower 5-unit or less threshold is applied, affordable housing and tariff style contributions should be sought from developments of between 6 and 10-units in the form of cash payments which are commuted until after completion of units within the development. This applies to rural areas described under section 157(1) of the Housing Act 1985, which includes National Parks and Areas of Outstanding Natural Beauty
  • affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension to an existing home

 

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Do the restrictions on seeking planning obligations apply to Rural Exception Sites?

The restrictions on seeking planning obligations contributions do not apply to development on Rural Exception Sites – although affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension within the curtilage of the buildings comprising an existing home.

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What are tariff-style contributions?

Some authorities seek planning obligations contributions to pooled funding ‘pots’ intended to provide common types of infrastructure for the wider area.

Planning obligations mitigate the impact of development which benefits local communities and supports the provision of local infrastructure. In applying the planning obligations local planning authorities must ensure that these meet the three tests that are set out as statutory tests in the Community Infrastructure Levy Regulations 2010 and as policy tests in the National Planning Policy Framework. These are: that they are necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. For sites where the threshold applies, planning obligations should not be sought to contribute to pooled funding ‘pots’ intended to fund the provision of general infrastructure in the wider area.

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Can planning obligations be pooled where the threshold does apply?

For sites where the threshold applies, planning obligations should not be sought to contribute to pooled funding ‘pots’ intended to fund the provision of general infrastructure in the wider area.

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How does the 10-unit threshold relate to the statutory definition of major development?

For the purposes of section 106 planning obligations only the definition of 10-units or less applies. This is distinct from the definition of major development in article 2 of the Town and Country Planning (Development Management Procedure) (England) Order 2010

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Are there any exceptions to the 10-unit threshold?

Local planning authorities may choose to apply a lower threshold of 5-units or less to development in designated rural areas being areas as described under section 157 of the Housing Act 1985, which includes National Parks and Areas of Outstanding Natural Beauty. No affordable housing or tariff-style contributions should then be sought from these developments.

Where this lower threshold is applied, local planning authorities should only seek affordable housing contributions from developments of between 6 to 10-units as financial contributions and not affordable housing units on site. Any payments made (whether as an affordable housing contribution or contribution to a pooled funding pot for general infrastructure provision) should also be commuted until after completion of units within the development.

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What is the procedure for claiming a commuted contribution under a planning obligation?

The terms of commuted contributions should form part of the discussions between a developer and a local planning authority and be reflected in any planning obligations agreement. Agreements should include clauses stating when the local planning authority should be notified of the completion of units within the development and when the funds should be paid. Both parties may wish to use the issue of a building regulations compliance certificate (called a completion certificate when given by a local authority and a final certificate when given by an approved inspector) as a trigger for payment.

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Does this mean that no planning obligations can be sought for development under these 5 or 10-unit thresholds?

Some planning obligations may still be required to make a development acceptable in planning terms. For sites where a threshold applies, planning obligations should not be sought to contribute to affordable housing or to pooled funding ‘pots’ intended to fund the provision of general infrastructure in the wider area. Authorities can still seek obligations for site specific infrastructure – such as improving road access and the provision of adequate street lighting – where this is appropriate, to make a site acceptable in planning terms.  They may also seek contributions to fund measures with the purpose of facilitating development that would otherwise be unable to proceed because of regulatory or EU Directive requirements.

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What is the vacant building credit?

National policy provides an incentive for brownfield development on sites containing vacant buildings. Where a vacant building is brought back into any lawful use, or is demolished to be replaced by a new building, the developer should be offered a financial credit equivalent to the existing gross floorspace of relevant vacant buildings when the local planning authority calculates any affordable housing contribution which will be sought. Affordable housing contributions may be required for any increase in floorspace.

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What is the process for determining the vacant building credit?

Where there is an overall increase in floorspace in the proposed development, the local planning authority should calculate the amount of affordable housing contributions required from the development as set out in their Local Plan. A ‘credit’ should then be applied which is the equivalent of the gross floorspace of any relevant vacant buildings being brought back into use or demolished as part of the scheme and deducted from the overall affordable housing contribution calculation. This will apply in calculating either the number of affordable housing units to be provided within the development or where an equivalent financial contribution is being provided.

The existing floorspace of a vacant building should be credited against the floorspace of the new development. For example, where a building with a gross floorspace of 8,000 square metre building is demolished as part of a proposed development with a gross floorspace of 10,000 square metres, any affordable housing contribution should be a fifth of what would normally be sought.

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Does the vacant building credit apply to any vacant building being brought back into use?

The vacant building credit applies where the building has not been abandoned.

The policy is intended to incentivise brownfield development, including the reuse or redevelopment of empty and redundant buildings. In considering how the vacant building credit should apply to a particular development, local planning authorities should have regard to the intention of national policy.

In doing so, it may be appropriate for authorities to consider:

  • Whether the building has been made vacant for the sole purposes of re-development.
  • Whether the building is covered by an extant or recently expired planning permission for the same or substantially the same development.
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