KNOWLEDGE

Spot the difference: Planning Agreements

Morton Fraser_Mhairi Foye
Author
Mhairi Foye
Associate
PUBLISHED:
29 November 2023
Audience:
Real Estate
category:
Blog

We as lawyers are delighted with a developer client's sense of elation when a planning permission is granted. However, we are also too familiar with the client frustration that follows the direction that "planning permission can be granted subject to an appropriate legal agreement being concluded…"

 

Despite all parties' best efforts, and as developers will be all too aware, planning agreements in terms of S75 of the Town and Country Planning (Scotland) Act 1997 can delay development whilst the terms of the agreement are negotiated, signed, the agreement is registered, and planning permission released. If negotiation of the agreement stalls, there is no automatic right of appeal once a planning authority has issued a "Minded to Grant" notice - a developer could attempt to sign a one-sided agreement (known as a unilateral undertaking) to move matters forward but the whole process is by its nature time-consuming.

However, what can often be of relevance to smaller developers (and particularly in light of, for example, the support provided in NPF4 to self-provided homes) is a more straightforward form of planning agreement. This is a planning agreement in terms of S69 of the Local Government (Scotland) Act 1973 which provides that local authorities have the power to do anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions. This power can enable them to enter into shorter form agreements which are not as complex as S75 Agreements and so can be concluded more quickly.

The main distinctions between the two approaches are:-

S75 Agreements:

(i) are registered against the title (so consideration requires to be given to land ownerships)

(ii) can provide for staggered payments (often the only and preferred approach for larger developers where the extent of planning contributions required cannot feasibly be paid at the outset or there are affordable housing obligations which require to run with the land)

(iii) can remain binding even if the land is sold to a separate developer, so detailed advice should be taken as part of their drafting and negotiation

(iv) can require a formal process to modify and discharge them (if there are several modifications, the result can be an overly complicated title which is unnecessarily time-consuming to deal with, so care should be taken not to over-burden the title) and;

(v) can provide for refund of the planning contribution if it is not used within a certain period of time.

S69 Agreements:

(i) are not registered against the title and so are a personal agreement (they will not bind successors in ownership) and;

(ii) generally, simply provide for the upfront payment of a contribution (so planning permission will be released once the agreement is signed and the payment is made). The Landowner's consent is also not required for entry into a S69 Agreement.

A S69 Agreement is an approach which can work well for smaller developers where what is being sought is (for example) education or healthcare contributions for a single unit or a small development and the developer is minded to pay the contribution at the outset. A hybrid approach can also be used, with smaller payments being secured by a S69 Agreement and obligations which require to run with the land being secured by a S75 Agreement.

Morton Fraser MacRoberts have expertise in planning agreements and planning strategy, so if we can assist with your project or help it reach a speedier conclusion, please do not hesitate to get in touch.

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The content of this webpage is for information only and is not intended to be construed as legal advice and should not be treated as a substitute for specific advice. Morton Fraser LLP accepts no responsibility for the content of any third party website to which this webpage refers.  Morton Fraser LLP is authorised and regulated by the Financial Conduct Authority.