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25 Feb
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Government Reforms to S106 negotiations…helpful or a hindrance?

This week the Department for Communities and Local Government (DCLG) published their consultation on Section 106 (S106) negotiations in response to the Autumn Statement 2014. This included a commitment to consult on measures to speed up the negotiation and agreement of S106 agreements as part of its commitment to delivering a faster and more effective planning system.

Despite these reforms, we have some concerns over how these changes will work in practice and whether they will ultimately be a helpful way of speeding up the planning process or actually be a hindrance to developers in reaching a mutually beneficial position with the LPA. Let’s not forget what the aim is…to start development as soon as possible?

 

Scope of the consultation

Views are sought on proposals relating to the following two areas:

  • Speeding up the negotiation and completion of Section 106 planning obligations
  • Whether the requirement to provide affordable housing contributions acts a barrier to development providing dedicated student accommodation.

Questions to be discussed include:

  • Opinions on the current S106 negotiation process.
  • Whether there should be a set timescale for negotiating S106 agreements and if this should be supported by a legislative change.
  • Whether there should be a dispute resolution mechanism put in place where S106 negotiations breach statutory or agreed timescales.
  • The ways in which a dispute resolution mechanism should be implemented and utilised in the negotiation process.

 

Delays in negotiation

At present, S106 agreements are negotiated alongside the planning decision making process and should be concluded within the statutory timeframes of 8 weeks, 13 weeks for major development or a longer period agreed in writing between the applicant and local planning authority. Any delays in finalising Section 106 agreements can hold up decision notices being issued, which in turn delays the delivery of much needed development.

In reality, many S106 agreements are not finalised until much further down the line with many major applications approved with a resolution to grant, pending the S106. Some negotiations can take weeks, months or years to resolve.

Delays in negotiations may arise for a variety of reasons including:

  • What is fair, reasonable and necessary mitigation in the circumstances of the case, exacerbated by parallel viability testing to ‘prove’ what is affordable
  • Detailed and robust drafting of the agreement itself
  • Limited legal capacity. Particularly in smaller authorities
  • A lack of incentives to resolve negotiations quickly

 

What are the proposed changes?

The Government is planning to amend guidance in the short term which will:

  • Confirm that S106 negotiations should be concluded within the statutory planning application timescales.
  • Set expectations of earlier engagement at pre application stage.
  • Set expectations for greater transparency about what has previously/historically been raised through S106 and what it has been spent on.
  • Encourage greater use of standardised clauses.

 

Is it likely to work in practice?

Based on NJLs recent experience of negotiating S106 agreements on a range of different projects we are sceptical over how the reforms will work.  In particular we would note the following:

  • In the majority of cases it is not feasible to negotiate a S106 within the statutory decision period. This is due to a number of reasons such as severe delays in the receipt of consultation responses from statutory consultees e.g highways or education. This issue is out of the applicant’s hands however, the responses are paramount to setting the level of obligation required.
  • There is concern that if a S106 has not been signed off within the decision period, the LPA may take the option to automatically refuse an application. In addition, it is not clear how this will be explained to committee members.
  • We agree with the idea of a proposed dispute mechanism where statutory or agreed timeframes have elapsed but do not see how this would be workable in practice.
  • Quite often the delays are not of the fault of the applicant but of the LPA’s legal team or planning department due to under-resourcing. If this is the case, there is no clear guidance in relation to this.
  • It is not fully understood how the changes will be enforced or who and in what ways the party responsible for any unnecessary delays will be held accountable. 
  • Developers may be forced to come to an agreement quickly and prematurely and agree to contributions set by the Council that are not feasibly deliverable later in the development process making the scheme ultimately unviable. If this happens it is not clear what mechanisms are in pace to prevent a stalled development or to prevent a new planning application having to be submitted.

We can see the benefits of speeding up the process. We do not however see how the process can be diluted as every scheme is unique and will require a unique approach. We would welcome ‘timescales’ guidelines, like 8 week and 13 week which currently exists within the planning application determination process but this should only be guidance.

If you have any views on this topic, your comments can be submitted to the Department for Communities and Local Government before the 19th March at planning.consultation@communities.gsi.gov.uk.

Alternatively, if you wish to discuss your development proposals with us and would like to know more about the approach to negotiating S106 Agreements, please contact us here.

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