Section 106 Planning Obligations

The expectation was that with the introduction of the CIL regime there would be a managed reduction in the use of section 106 planning obligations. These obligations would not be wholly replaced but reliance on them would be greatly diminished. Future funding of infrastructure would in the main come from CIL receipts.

Planning obligations would focus on affordable housing (including now then new starter homes) and infrastructure directly relating to the proposed development homes. Affordable housing is an area facing considerable uncertainty as a result of the quashing by Mr. Justice Holgate in R (oao West Berkshire DC) v DCLG [2015] EWHC 2222 (Admin) of the exemption from contributing to affordable housing announced this year by the government in relation to smaller residential developments.

To help achieve this objective a number of limitations were introduced in the CIL regulations:-
(i) Reg. 122 – enacted the policy guidelines previously in Circular 05/05 requiring planning obligations to be necessary, site specific and fair and reasonable;
(ii) Reg. 123(2) – prohibiting a planning obligation which funds or provides infrastructure on the authority’s Infrastructure List;
(iii) Reg. 123(3) – the pooling restriction.

The actual outcome has been very different from the expectation in that:
(i) Authorities that have not introduced CIL are facing infrastructure funding deficits;
(ii) The application of these limitations is complicated and creating considerable uncertainty;
(iii) The pooling restriction is preventing planning obligations being used to overcome planning objections;
(iv) Grants of planning permission are being put at risk
(v) Fewer developments will be carried out and fewer houses built.

The important subject of the impact of the limitations in reg. 123 of the 2010 CIL Regulations on section 106 planning obligations is considered more fully in the following paper following paper” the words “which comes out of a series of presentations given at seminars on section 106 planning obligations put on by the Planning Advisory Service and the latest version is up to date to 11th March 2016 – CIL regulation 123 limitations and planning obligations. The slides used for this presentation can be found on the Planning Advisory Service website – Christopher Cant S106 presentation.

The increased application of the pooling restriction is resulting in shortfalls in infrastructure funding with uncompleted funding pools and uncertainty over the outcome of planning applications. How local planning authorities are responding to this is considered in “Coping with an infrastructure shortfall due to the pooling restriction” first published on the Local Government Lawyer website in February 2016.

Current planning obligation issues are not, however, restricted just to the operation of reg. 123. A developer cannot avoid payment of a pooled contribution due under a planning agreement by claiming that it did not comply with the requirements in reg. 122 of the 2010 CIL Regulations. Yet switching planning permissions to avoid making such a pooled contribution may be successful. On this issue the recent Court of Appeal decision in R (oao Robert Hitchins Limited) v Worcestershire County Council and Worcester City Council [2015] EWCA Civ 1060 is considered in this article  “A further battle over a pooled contribution” and a summary was published on Lexology under the title “Switching planning permissions – challenging pooled contributions“.