One such cost may be a contribution to the local authority and local community as a “planning gain” which becomes an obligation on the developer and a condition of planning permission.
We can advise developers on the justification and legality of such obligations which are imposed by the planning authority. We can sometimes help to negotiate the detailed terms of such obligations with the local authority.
Section 106 agreements and Community Infrastructure Levy
Local planning authorities will specify conditions on a development as part of the granting of planning permission. Sometimes the planning authority may feel that such detailed conditions still do not tip the case in favour of a development. When this happens local authorities will often specify significant obligations that developers must follow to secure planning permission for a project.
Such obligations are typically set out in Section 106 Agreements of the Town and Country Planning Act 1990 (as amended). These “s106 agreements” are sometimes describes as “developer contributions”. The benefit to the community of such contributions can offset the dis-benefit of the project and thereby make the development acceptable overall.
The s106 agreement is intended to be focused on mitigating the direct effects of the development. The Community Infrastructure Levy (CIL) introduced in the past two years is intended to secure a developer contribution for the wider impact of a development.
The Local Government Association Planning Advisory Service states that a s106 obligation can:
- restrict the development or use of the land in any specified way
- require specified operations or activities to be carried out in, on, under or over the land
- require the land to be used in any specified way; or
- require a sum or sums to be paid to the authority (or, to the Greater London Authority) on a specified date or dates or periodically
A planning obligation can be subject to conditions, it can specify restrictions definitely or indefinitely, and in terms of payments the timing of these can be specified in the obligation.
If the s106 is not complied with, it is enforceable against the person that entered into the obligation and any subsequent owner. The s106 can be enforced by injunction.
In case of a breach of the obligation the authority can take direct action and recover expenses.
The planning obligation is a formal document, a deed, which states that it is an obligation for planning purposes, identifies the relevant land, the person entering the obligation and their interest and the relevant local authority that would enforce the obligation. The obligation can be a unitary obligation or multi party agreement.
The obligation becomes a land charge.
The legal tests for when you can use a s106 agreement are set out in regulation 122 and 123 of the Community Infrastructure Levy Regulations 2010 as amended.
The tests are:
- necessary to make the development acceptable in planning terms
- directly related to the development; and
- fairly and reasonably related in scale and kind to the development.
How we can help
We can advise on and sometimes help developers negotiate the terms of such agreements and obligations as prepared by local authority solicitors.
If you would like help with commercial property development issues please contact our team.