Today we’re going to take a whistle stop tour of planning obligations, or developer obligations as they can be known, covering all the basic considerations you need to keep in mind if you’re looking to progress with one.
The requirements of a planning obligations will vary depending on the Council you are in, but regardless of this, there are a few key things you should be aware of.
So, what exactly is an Planning Obligation?
A planning obligation is a tool, in the form of a legal agreement, for placing restrictions on developers, often requiring them to minimise the impact on the local community and to carry out tasks which will provide community benefits, and can include the payment of sums of money.
Essentially planning obligations should only be used for a development where it is not possible to address unacceptable impacts through a planning condition.
They must meet ALL of the following tests:
- 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 do I know when a Planning Obligation is required?
To establish what obligations are relevant to a proposal Council’s often publish planning policy documents, such as a Planning Obligations Supplementary Planning Document. If you’re in doubt, contact the relevant Council’s Planning Policy Team for information on the contributions required if there is nothing on their website.
The costs of developer obligations should be included in your overall costings for any development proposal as in some instances they can be substantial.
What are the mechanisms for securing a planning obligation?
The key ways to secure developer obligations for a proposed development are via a section 106 agreement (s106 agreement) or a Unilateral Undertaking.
What is a s106 Agreement?
In short, it’s a legal agreement is between a developer, local planning authority and any other interested party, such as landowner, mortgagee etc. Section 106 agreements form part of the Town and Country Planning Act 1990 and must be necessary to make the development acceptable in terms of planning, directly related to the development in question and be fairly and reasonable related in scale and kind to the development.
All people with an interest in the application site will be required to agree and sign a s106, the applicant, owner, the Council etc this includes any Bank if there is a mortgage on the site. Make sure you know who will be required to be a party by checking your title deeds.
S106 agreements can be negotiated (unlike Community Infrastructure Levy (CIL) obligations) prior to being formalised, depending on the circumstances of a proposed development. For instance, if a developer can demonstrate that a development is not viable with specific obligations via a viability assessment.
The common use of planning obligations is to secure affordable housing and financial contributions to provide locally specific infrastructure. However, these are not the only uses for a s106 obligation. 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 on a specified date or trigger.
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 an injunction.
Is there a Template for s106 Agreements?
Some authorities produce templates for s106 agreements which they publish on their website, if your planning authority does not have templates a quick internet search can bring up others which could be adapted and used.
Submitting Heads of Terms for planning obligations with a development proposal can help progress a planning application. Some Council’s require this to be submitted with an application and is part of the validation process. To help you in the process we’ve produced this Heads of Terms Template for you to use. This may not be all the information you need to submit however it’s a good starter for 10.
You should ensure you take appropriate legal advice in relation to obligations and preparation/completion of a s106 legal agreement. Make sure that your scheme is viable with the obligations included as if not you could have problems later down the line!
What’s the legal costs?
Costs associated with the production, checking etc of a s106 Agreement can vary depending on if you require a legal representative.
As well as your own legal costs it’s likely you will pay the Council’s. Your local authority’s legal team can draw up a s106, they will generally charge for this service, however sometimes it’s the same fee as if they just check (before signing) a s106 you or a representative have produced, so it’s worth checking before preparing a draft agreement.
What is a Unilateral Undertaking?
A Unilateral Undertaking is a simplified version of a s106 planning agreement, which is relatively quick and straightforward to complete, and is entered into by the landowner and any other party with a legal interest in the development site. They can assist in ensuring that planning permissions are granted speedily, which benefits both applicants and the Council.
A Unilateral Undertaking is an alternative to a s106 agreement and can in general be used for small scale obligations, the Council does not need to be party to these agreement and therefore you should not have to pay their legal fees as they should consider the Unilateral Undertaking as part of the normal planning process. Some Council’s do however charge for ‘checking’.
There still maybe an obligation to pay the Council’s costs in monitoring and managing the implementation of the planning obligation. These charges are generally set out in a Supplementary Planning Document or other guidance provided by the Council.
Is there a Template for an Unilateral Undertaking?
Similar to a s106 agreement some Council’s publish templates for Unilateral Undertakings, a quick internet search can find some basic templates. Don’t overcomplicate things it doesn’t have to be war and peace!
When do I submit/sign a planning obligation?
Planning applications can be ‘minded to approve’ by your local authority subject to a s106 Agreement or Unilateral Undertaking covering the obligations necessary to make the development acceptable. However, the decision will not be issued until the agreement is signed and complete.
If you submit an appeal and there is a need for a planning obligation this must be completed and submitted at the outset of the appeal. A Planning Inspector will not approve a development subject to a s106 agreement. See out ‘Town Planning, The Basics …Appeals’ eBook for more information.
Once signed can I change a Planning Obligation?
In some instances, costs for a development can change which can affect the viability of a scheme. We’ll be honest with you this may not be an easy process and if you are in a situation where you need to look at modification of a s106 Planning Agreement take a look at our Practical Guide: Modification of s106.
Planning House have secured approval for the modification of a previously agreed s106 legal agreement for residential development where the spiralling costs associated with archaeological works rendered the scheme unviable if the s106 agreement was not discharged: Planning Success – Modification of s106 Legal Agreement.
How can Planning House Help?
A town planner can provide you with the guidance you need for a smooth transition please feel free to CONTACT US to discuss your situation.
If you’re not sure we’re the right fit for you then take a look at our blog on When to Hire a Town Planner and our download on choosing a Town Planner to help you find a town planner that’s right for you.
More information about Planning Obligations / s106 Agreements can be view in the National Planning Practice Guidance.
Take a look at our eBook: CIL & s106 – which gives the basics on CIL (Community Infrastructure Levy) and developments which may trigger the need for additional works or financial contribution (via s106 agreement). It’s better to know in advance what the financial implications might be.