Planning obligations (known as section 75 Agreements in Scotland and section 106 Agreements in England and Wales) are contracts entered into between a landowner and the planning authority. A planning obligation can be entered into at any stage of the planning process, and most commonly arises in connection with applications for planning permission and can include financial contributions towards schools, roads, transport, public realm and affordable housing.
There will always be disagreements between planning authorities and developers over the extent of planning gain payable due to the differing objectives of the public and the private sector. The Scottish Government has made it clear that payments through planning obligations should only be sought where they meet all of the policy tests set out in their 2012 Circular ie that the obligations:
- are necessary to make the proposed development acceptable in planning terms;
- serve a planning purpose and, where it is possible to identify infrastructure provision requirements in advance, should relate to development plans;
- relate to the proposed development either as a direct consequence of the development or arising from the cumulative impact of development in the area;
- fairly and reasonably relate in scale and kind to the proposed development; and
- are reasonable in all other respects.
Planning obligations can turn an unacceptable, into an acceptable, proposal
Planning obligations can, in limited circumstances, play an important role in making an otherwise unacceptable development acceptable in planning terms. Planning Circular 3/2012 sets out, at paragraph 12, that:
"Planning agreements have a limited but useful role to play in the development management process where they can be used to overcome obstacles to grant planning permission. An agreement may mean that development can be permitted or enhanced whilst potentially negative impacts on land use, the environment and infrastructure can be reduced, eliminated or compensated for.”
Nailing down the detail of planning obligations
However, there are issues with nailing down the detail of planning obligations.
Traditionally, a planning officer will need to liaise with several internal and external consultees, to establish if there is a need to enter into a planning obligation in line with planning policy. There is a wide variety of approaches throughout the 32 local authorities in Scotland on how planning agreements are entered into, with examples of good and bad practice. For example, there can be, at times, little clarity in committee reports on the amount of contributions due and their associated payment dates. This means that once the planning committee are minded to grant planning permission, subject to the entering into of a legal agreement, there can be extensive negotiations and disagreements on its terms, which leads to delay.
Renegotiation of existing planning obligations
A developer has the opportunity to apply to the relevant planning authority to modify or discharge a planning obligation if it is felt that it is no longer in line with the policy tests noted above.
When considering an application to modify or discharge a planning obligation, a planning authority has three options:
- to refuse to modify the obligation;
- to discharge the obligation; or
- to modify the obligation in the way specified in the application.
There is no ability for the planning authority to revise the modification wording sought in the application - so, if possible, there should be engagement with the planning authority prior to the formal application being made.
Importantly, where an application is refused or deemed to be refused, the applicant has the ability to appeal the decision to the Scottish Ministers.
Despite the appeal provisions having been in place for just over four years, there have been relatively few appeals to the Scottish Ministers (around 50 so far according to the Directorate for Planning and Environmental Appeals ("DPEA") website). At the time the appeal provisions were brought into force, planning authorities feared that they would be inundated with applications from developers for review of existing planning obligations - and that this might result in a reduction in (developer) payments towards infrastructure. This has not materialised so far, but there have been some interesting decisions from the Scottish Ministers:
- A DPEA decision showed the importance of planning obligations meeting the five tests set out in the Planning Circular above. The appeal was in relation to a healthcare contribution of £11,500 imposed on a planning consent for 23 houses by Kirkwood Homes in Aberdeenshire. The Reporter found that the contribution towards a health project could not be considered necessary where there were no proposals for any such project. Expenses were also awarded against Aberdeenshire Council. A highlight of this case was that the section 75 was agreed and entered into by the planning authority and the developer only a month before the application to modify was made.
- A DPEA decision involving Falkirk Council for a mixed use development for housing and commercial in Denny is of interest. An obligation to pay £550,000 for an off-site roundabout was discharged on the basis that it failed the necessity, scale and kind and reasonableness tests. It was seen as a "nice to have", rather than essential, infrastructure. The development was only likely to generate 5% of the traffic through the junction, but the contribution sought represented over half of the cost of construction of the roundabout. The reporter also made comment that the obligation would also affect the financial viability of the development.
Planning Authorities must take care to ensure that each of the policy tests above have been met when entering into a planning obligation with a developer and check that it is in line with their own policies and supplemental guidance on developer contributions. There is no time limit on when a developer can make an application to modify or discharge a planning obligation, so a planning obligation could be challenged immediately after it has been agreed between the parties and the planning permission has been issued.
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