Plan-it Law

New model s106 agreement

The Law Society has just published a new model s106 agreement.

This updates the previous version by referring to the new statutory tests and giving guidance on procurement issues. The agreement now also contains a dispute resolution clause.

There are two new alternative versions of example affordable housing clauses. The first provides a cascade mechanism involving tender processes and the option for the planning authority to call for a transfer of the relevant land itself. The second new example brings in Housing Corporation (or at least the successor thereto) standards and funding requirements.

Other than that, there are a few new model clauses dealing with further heads of obligation - such as travel plans and car clubs - but the agreement is nonetheless in a form which practitioners will (hopefully) have got used to using.

THE STATE OF THE PLANNING SYSTEM – WHERE ARE WE NOW? WHERE ARE WE GOING?

I have the privilege of a sabbatical this year, now in fact.  Which seems to me to be a good time to take stock of the existing system as the Coalition Government is proposing major changes.  I’ve written a short article about it which you can read here. Well actually it’s a few pages so I thought a summary might help.  But please do read the full article.

It seems to me that the existing system has some serious operational problems.  The Local Development Framework system was a commendable effort to get people involved but from the beginning was a cumbersome beast, full of acronyms and initials, with involved procedures and rigid front end loading.  The development management system (as we now call development control) is better – it has the advantage of dealing with actual applications for permission, but is weighed down with unnecessary procedures.  The guidance on “validation” of applications has created more hurdles than ever, with long lists of documents to accompany an application being generated by planning authorities.  I still fail to see why we need to have design and access statements, even as recently reformed.  But Killian Pretty is helping to improve development management. 

Then we have the Planning Act 2008, overlaying the Infrastructure Planning Commission and the new way of permitting national infrastructure projects.  I am on record here for exampleas saying this suffers from a democratic deficit – the final decision, balancing the public good,  is taken by technocrats.

And we must not forget CIL.  The Regs came into effect on 6^th April this year.  But it’s got a lot of oddities, some of which I feel sure are mistakes.  And alongside it we see the codification of the policy tests for s.106 agreements.

So what does the Coalition propose?  Local decision making and abolition of RSSs, abolition of the IPC and introduction of democratic accountability to the permitting of major infrastructure, financial incentives to accept new development, a presumption in favour of development on non-designated land,  restrictions on the grounds of appeal and the creation of a third party right of appeal.  And the replacement of the tariff and scaling back of s.106.

Apart from the commitment to local decision making it’s difficult to find a principle or unifying thread in these major changes. 

I applaud the changes to the infrastructure permitting system.  But do we really think local authorities will volunteer to take the housing needed to deal with rising numbers of households?  Third party rights of appeal will simply gum up the system and be good for lawyers (in the short term).  Opponents of development already use judicial review.  And that is costly.  It also fails to understand that there is still a presumption in favour of development (albeit qualified).  A third party appeal right fails to understand the basis for the system.

The change to the grounds of appeal will make the development plan absolutely supreme, with no room for anything else.  Whilst in theory authorities will still be required to have regard to the plan and material considerations, with conformity with the plan forming the only ground of appeal why will they bother with other material considerations?

Then we have the tariff and CIL.  There are some real problems with the CIL Regs, some of which look like mistakes.  Our posts on the CIL category of www.plan-it-law.comdraw attention to some (not all).  For example the provisions designed to prevent double recovery can be circumvented with just a little ingenuity and care.  I suggest a better way in the main article (and I did so to DCLG/ODPM when Circular 5/05 was being drafted). I have two pleas for change on CIL and s.106 – that the straitjacket of s.12 Planning and Compensation Act 1991 be removed and for any change to be underpinned by a good understanding of the principles and law of the existing system.

In fact that is my plea for any reforms – get a good understanding of the current system first, and have a coherent set of principles underlying the changes which mesh with the existing system.

I am going to read the Uthwatt Report on sabbatical. Many people look at bit blank at this point, but it was the report, written during the Second World War, which led to the modern planning system.  I have never read it before but I am struck already by its terms of reference which included “To advise, as a matter of urgency, what steps should be taken now or before the end of the war to prevent the work of reconstruction thereafter being prejudiced.”

That was our last coalition government.  I’ll let you know what Uthwatt said when I am back in August.

David Brock

May's conundrum - s106, material considerations and CIL

May's conundrum, from our e-bulletin Future Perfect?, as written by David Brock reads as follows,..

The CIL regulations codify some of the policy tests for s.106 agreements and say that a non-compliant s.106 cannot be a reason for granting permission. But planning applications must be considered having regard to material considerations and the development plan - s.70 Town and Country Planning Act 1990. Most planning agreements will be material considerations.

So is the effect that:

a) The CIL regs contradict s.70?

b) Planning authorities must take into account even a non-compliant s.106 which is a material consideration, and have regard to it, but cannot grant because of it?

c) Planning authorities must take into account even a non-compliant s.106 which is a material consideration, but in specifying reasons for grant under Article 22 of the General Development Procedure Order 1995 must not refer to the s.106?

Let us have your comment...the first three correct answers will receive a five per cent discount on their next bill for planning law advice.

That pesky scaling back of section 106 agreements

It always pays to read the small print carefully. Beverley pointed out on April 27th that the scaling back provisions in the CIL Regs only apply to CIL development - building a building basically.  At the weekend I noticed that while the scaling back says a non-conforming planning obligation cannot be used as a reason to grant planning permission, it does not stop the s.106 agreement from being a material consideration.  And of course, planning applications must be decided on the basis of all material considerations - that's what s.70 TCPA 1990 says.  So a non-conforming planning agreement which relates to the development of land is a material consideration (that's Stringer v. SofS) and the LPA must have regard to it. But it must not use it as a reason to grant permission. 

Is there a way round this.  The scaling back only applies to section 106 agreements. So we need to find other powers, preferably which make the obligations run with the land. That would be s.16 Greater London Council General Powers Act 1974 in the Greater London area. Section 278 Highways Act 1980 is a candidate for highway issues. And can't we deal with the rest by entering a restriction against dealings at the Land Registry?

New policy document for planning obligations - consultation

As I was going through the consultation paper the other day, I was reminded of a point which struck me as odd when the Planning Act 2008 itself was coming through. This relates to the way in which "development" is defined in the 2008 Act (see section 209) and in the CIL Regulations (see regulation 6).

The point is this. It seems clear from the CIL Regulations and the draft guidance (e.g. para 1.29) that the "statutory effect" of Circular 5/05 is intended to apply only to development "that is capable of being charged CIL". I have to confess that I don't quite follow why it has to be limited in that way - but certainly it is part of the CIL regime.

You are then drawn to look at the definition of "development" - which brings you to section 209 and regulation 6. In both places, the definition of "development" seems to me to be limited and only refers to its meaning within section 208. Yet it is section 206 which empowers the charging authority to charge CIL for "development in its area".

I set out extracts from section 209 and regulation 6 below and would be interested to hear any views from readers.

209 Liability: interpretation of key terms

(1) In section 208 "development" means—

(a) anything done by way of or for the purpose of the creation of a new building, or

(b) anything done to or in respect of an existing building.

Meaning of "development"

6.—(1) The following works are not to be treated as development for the purposes of section 208 of PA 2008 (liability)—

(a) anything done by way of, or for the purpose of, the creation of a building of a kind mentioned in paragraph (2); and

(b) the carrying out of any work to, or in respect of, an existing building if, after the carrying out of that work, it is still a building of a kind mentioned in paragraph (2).

(2) The kinds of buildings mentioned in paragraph (1)(a) and (b) are—

(a) a building into which people do not normally go;

(b) a building into which people go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery

CIL - Regulations take effect

The Regs came into force last Tuesday. So what's changed.  No-one has introduced CIL yet of course but there are some early adopters are leading the way.DCLG have told us they have a support group for them. 

The first change is some uncertainty about what can now be included in a section 106 agreement.  The PAS discussion forum includes a question whether the recommendation of the Planning Minister (on 25 March 2010) to secure Local Labour and Training obligations fits the tests in Reg 122.  The question is, are they necessary to make a development acceptable in planning terms?  That will largely depend on the plan policies, but it's a striking example. And it must be good to ask; after no-one wants to grant a permission which is vulnerable to judicial review at the hands of a disgruntled objector.

DCLG has issued a couple of useful guides this one giving general guidance  and a guide for authorities on setting CIL .  There's also a Mills & Reeve guide which you can also have by emailing barbara.robinson-haynes@mills-reeve.com .

Alongside this is the consultaion on section 106 agreements which really doesn't say much you didn't already know.

But one serious danger for landowners has not been noticed by many (or if it has, please do let me know by commenting, or emailing - david.brock@mills-reeve.com ).  The problem is this.  If CIL is not paid, liability falls on the landowners of the land in the planning application.  As we know, landowner consent is not needed for planning applications.  And often, applications are made over land of persons who have yet to do a deal with the developer.  Now, those people will be at risk that the developer (which could be a specially incorporated company - an SPV- with no other assets) becomes insolvent, leaving them with the bill for CIL.

CIL - urgent action on s.106 agreements under negotiation

The CIL regulations are now out and will come into force on 6th April. CIL will take some months to implement of course as there is quite a lengthy process before a charging schedule can be adopted. However the main provisions on the scope of s.106 come into force on 6th April. 

These state that a planning obligation under s.106 cannot constitute a reason to grant permission if it is not necessary to make the development acceptable in planning terms, directly related to it and fairly and reasonably related in scale and kind.

I have always said that this regulation hands a major weapon to objectors.  This is a relatively simple way to challenge new permissions. A permission with a s.106 which strays beyond the policy tests will have been granted on an unlawful and therefore irrelevant consideration.  Judicial review beckons.

The added problem with the new regulation is that it catches permissions granted on or after 6th April even where the resolution is before 6th April.  These may not have considered closely whether the s.106 meets the policy tests.  As the effect of breach is to make the planning permission highly vulnerable to judicial review it would be good to complete any outstanding s.106 agreements on or before 5th April.  As that's Easter Monday, perhaps we could aim for completions on or before Thursday 1st April.

Of course, if you want to defeat someone else's planning permission issued after 5th April, it would be worth having a good look at the s.106.

Community Infrastructure Levy - new reliefs

In the final version of the CIL regulations, there are 2 new reliefs, both of which were trailed in the earlier consultation and which have been the subject of much discussion over recent months. The first is "social housing relief" and the second is "relief for execptional circumstances"

Social housing relief is to be available for the social housing element of chargeable development. The regulations set out how this is to be calculated but, importantly, a person wishing to claim this relief must satisfy 2 tests; 1) the claimant must be an owner of the land which has the benefit of the planning permission and 2) that person must assume liability to pay the whole CIL liability for the development which is permitted by the planning permission. An application for relief must be submitted before commencement of the development - and the claimant must wait for the authority to notify its decision on the claim before commencing, otherwise the claim lapses (as is the case with charitable relief).

I am not quite sure how in practice this is to work for phased development - where you may not even be able to fill in the claim form for the housing phase when you are looking to start on a different phase. As I flagged up yesterday in relation to the way in which an outline planning permission must be structured in order to achieve phased payment of CIL, the same issue arises for claiming social housing relief. You must ensure  your planning permission is correctly worded.

Unlike social housing relief, the relief for exceptional circumstances, where an authority makes it available in its area, is discretionary - because it will depend on satisfying the authority 1) that there are exceptional circumstances justifying relief and 2) that it is expedient for relief to be granted. The idea behind this relief is apparently to meet the concerns that some developments would be rendered unviable by CIL and whereas the potential effects of CIL on viability across the area is relevant in the setting of rates, the concerns have been that this does not go far enough where particular sites/developments have particular issues and will be unviable if CIL is to be paid.

This relief may only be granted where there is already a section 106 obligation in respect of the relevant development and the authority considers that the cost of complying with the 106 is greater than CIL and that to require CIL would have an unacceptable impact on viability. What I cannot work out is why the section 106 is relevant here? if the 106 (and therefore the relevant permission) are pre -CIL, then under the transitional provisions, CIL does not apply. If the permission has been granted post CIL, we should assume that any 106 is for matters which are not covered by CIL, so that CIL is indeed an additional burden - but why then does the 106 have to cost more than CIL?

Note that you cannot claim for this relief as well as social housing or charitable relief.  

Community Infrastructure Levy Regulations

General election timing aside, the CIL Regulations 2010 are set to come into force on 6 April. Click here for the regulations. This recently published final version follows on from the draft which was published in July 2009. Much remains the same but there are some important changes and we'll be highlighting some of the new points on this blog and in our Future Perfect? e briefing.

However, I wanted to flag up a couple of points which have not changed substantially from the July draft. The first of these related to phased development. The regulations recognise that many outline permissions will be implemented in phases. If an outline permits the development "to be implemented in phases", then each phase is a separate chargeable development which means the CIL payments will follow the phases so as to allow a phased approach to payment. However, this only works if your outline "provides for the application for approval of reserved matters within separate periods for separate parts of the development". So if all you have is an outline with, say, an extended period for reserved matters applications, because it is understood that the development will take several years and will be developed in phases perhaps dependent on market conditions as to the order in which phases come forward, then this will not be sufficient to take advantage of the phasing allowance in the CIL regulations.

The other point relates to planning permissions granted following an application under s 73 of the 1990 Act. Although we often call these "applications to vary conditions" inposed on an earlier planning permission - in law the earlier permission is unaltered and instead, the s 73 application generates a whole new planning permission. So with that in mind, take a look at regulation 9(5). This says that where a s 73 permission extends time for implementation (actually that is no longer possible but I am assuming this actually means "where you obtain a s 73 permission which itself has an updated period for implementation compared to the original"), then the chargeable development is the development for which permission is granted by the previous permission.

So does that mean, that if you never implement the earlier permission and instead implement the s 73 permission, you manage to avoid CIL?

Transitional Arrangements for CIL

We have posted before about the lack of transitional arrangements in the draft CIL regulations (eg 9th December and 23rd October). The problem in short is that planning permissions being granted now could be caught by CIL. This strikes us as unfair given that many of them will have their own section 106 agreements and that they will be bankable fundable assets, whose value will go down if CIL is applied to them.

So it's good to see that we are not alone in our concerns on this.  "Planning" magazine has today published this article about the issue from which we see that other planning lawyers have picked it up as well.

We do hope that the Government will address it with simple words in the Regulations.  Their declared intention is to bring them in on 6th April.