Guide to section 106 agreements

Introduction

Section 106 agreements, also known as planning obligations, are agreements between developers and local planning authorities that are negotiated as part of a condition of planning consent.

The Town and Country Planning Act 1990 enables local authorities to negotiate contributions towards a range of infrastructure and services, such as community facilities, public open space, transport improvements and/or affordable housing.

These guidelines aim to highlight the appropriate use of planning obligations and explain the council’s internal procedures to try to reduce any potential delays.

More about planning obligations

Planning obligations can be positive (requiring a specified action to be taken before the start of a development), negative (preventing development from taking place until a specified action has been taken by the developer) or restrictive (restricting how the development may be used by the developer).

More specifically, planning obligations, including unilateral undertakings (agreements which place obligations solely on one party) may:

be unconditional or subject to conditions
restrict development or use of the land
require operations or activities to be carried in, on, under or over the land
require the land to be used in any specified way
impose any restrictions or requirement for an indefinite or specified period (enabling, for instance, an obligation to end when a planning permission expires)
require payment to be made either in a single sum or periodically, for either a specific amount or based on a specific formula.

Planning obligations are tied to the land. They may be enforced against anyone who originally enters into the agreement and any successor in title, unless the agreement specifies otherwise. Under the Local Land Charges Act 1975, these obligations must be registered in the Local Land Charges Register.

Appropriate use of planning obligations

The policies relating to planning obligations are set out in the North Devon Local Plan (adopted July 2006) and the Devon Structure Plan 2001-2016 (adopted October 2004), which together make up the Development Plan.

The Development Plan also makes clear where obligations are likely to be requested in connection with a particular type of development, or in relation to specific sites. The Planning and Development Service may also produce supplementary guidance on specific planning obligations incorporated into development briefs.

Current Government guidance in relation to planning obligations is set out in the Communities and Local Government Planning Circular 05/2005 (July 2005) called ‘Planning Obligations’.

Circular 05/2005 states that planning obligations must be:

relevant to planning
necessary to make the proposed development acceptable in planning terms
directly related to the proposed development
fairly and reasonably related in scale and kind to the proposed development
reasonable in all other respects.

The use of planning obligations is governed by the fundamental principle that planning permission may not be bought or sold. It is therefore not legitimate for unacceptable development to be permitted because of benefits offered by a developer. Similarly, planning obligations should never be used purely as a means of securing a share in the development profits for the local community.

In addition, there are several other key principles guiding the appropriate use of planning obligations:

Planning obligations should only be used where they are necessary to the development and are fairly and reasonably related in scale and acceptable in planning terms
The council should not use its development control powers to require benefits from property owners which are unrelated to the development under consideration
The council should not seek to control matters which are not proper planning considerations and should not normally use planning obligations to impose restrictions on tenure, price or ownership
Where developers are expected to enter into planning obligations on a regular basis in relation to similar types of development, the council should set out its policy in its Local Plan
Local Plan policies should not, however, specify standard conditions or planning obligations to be imposed on certain kinds of planning permission because they must be based upon the individual circumstances of each application
Local Plan policies should give a clear indication on the types of development for which agreements of these kinds may be appropriate
Government guidance is that planning conditions should be used in preference to planning obligations.

Pre-application discussions

In line with government guidance, the council’s Planning and Development Service encourages pre-application discussions for all applications. The purpose of this is to guide applicants and developers through the process and to ensure that they are aware of their information requirements.

Developers are encouraged to discuss their proposals informally with both the Planning and Development Service and other service agencies (for example, Devon County Council as local education authority and local highway authority) prior to submitting an application. This will ensure that any infrastructure or service requirements, as part of a planning obligation, are identified at the earliest opportunity. This is particularly important with complex or major applications, as it will help provide a better mutual understanding of objectives and the constraints that exist, until the planning obligation has been completed.

Developers will be advised by the Planning and Development Service of the likely costs and requirements of any planning agreements, to enable those considerations to be taken into account in negotiations between developers and landowners. Developers and their professional agents are therefore expected to have read policy requirements set out in the Development Plan, together with supplementary planning guidance on developer contributions, which are available from the council’s website.

If the Planning and Development Service requires a planning permission to be the subject of a planning obligation, the applicant or agent will be informed as soon as possible. The service will also identify a named officer who will be responsible for the management of individual planning obligations and ensure guidelines are followed.

The named officer will then liaise with the applicant or agent to obtain the following information and documentation:

Proposed Heads of Terms for the negotiated planning obligation or unilateral undertaking as appropriate
Name and address of the owner, owner’s agent and solicitor
Name and address of the applicant (if different from the owner, agent or solicitor)
Name and address of any mortgagee
Name and address of any other third person with an interest in the land (for example, parish council)
Confirmation as to whether Devon County Council needs to be made party to the agreement
Proof of owner’s title to the land (for example, HM Land Registry’s office copy entries and filed plans, or Epitome of Title for unregistered land)
Copies of any documents showing interests in the land from other third parties (for example, copies of any option agreements or conditional contracts) although those with no formal interest in the land may not be parties to a planning obligation
Copies of any site location plans or any relevant drawings
Copies of any other relevant information (for example, agricultural appraisal reports).

Post application procedure

Once the pre-application information has been gathered by the Planning and Development Service, the council’s solicitor will be instructed to contact the applicant’s solicitor to request payment of the authority’s costs, monitoring fees (and any professional fees as necessary) arising from the agreement. Providing the applicant’s solicitor responds to this undertaking, the council’s solicitor will then prepare a draft Section 106 Agreement, which is sent to the applicant’s solicitor, along with a copy of the draft planning permission.

Alternatively, applicants may submit a draft planning obligation or unilateral undertaking with the application, using the local authority’s template agreement.

When the contents of the planning obligation have been agreed, it will be signed and sealed by the applicant and then by the Planning and Development Service. The local planning authority will then issue the completed agreement and planning permission.

It is important to highlight that the applicant’s solicitor may suggest changes to the wording of the draft agreement. However, the local planning authority will not accept amendments to wording which may affect the intended purpose or integrity of the obligation.

No development should be started until a completed agreement and planning permission have been issued.

Viability of the scheme

Any concerns over the financial viability of a proposed development, if all the required obligations are met, should be raised with the Planning and Development Service as early as possible. Any subsequent negotiations to reduce the level of the obligations required must be conducted on an open book basis.

Contributions will only be reduced sufficiently to enable a modest increase in the land value above existing use levels. The local authority will also not agree to reduce the extent of a developer’s contribution unless it is agreed that the proposed development achieves desirable social, economic or environmental aims.

To avoid doubt, the existing use value of garden plots is the reduction in value of the existing property due to the loss of the garden – not the market value for residential building land.

As part of any negotiated agreement, a clause will be included in the planning obligation, providing details of requested payments being index-linked. In the event of any delay in the payment, interest shall become payable subject to the rate specified in the agreement.

The planning obligation may also detail the phasing or triggers for payments and/or infrastructure contribution.

‘Grampian-type’ conditions

In a limited range of appropriate circumstances, it is possible to use negative conditions also known as ‘Grampian-type’ conditions (following the case of Grampian Regional Council v City of Aberdeen 1984), as an opening to a planning obligation. These enable a local authority to grant planning permission whilst preventing its implementation until a specific action has been taken by another party.

For example:

A Grampian-type condition can be used if it can be shown that current sewerage facilities are inadequate for a new housing estate, but that improvements to facilities are underway and will be complete soon after the houses. In such circumstances, it might be appropriate to grant permission subject to a condition that the houses should not be occupied until the relevant sewerage works are complete.

Planning obligations register

North Devon Council will maintain a planning obligations register to help the public access planning agreements. Although it is not practical to minute every change during negotiations, the register should contain a draft agreement that is reasonably up-to-date.

The Planning and Development Service will forward copies of completed planning obligations onto the relevant parties. The agreement will be scanned and linked to the record of the planning application and permission on the council’s website.

Delays

In the event that the planning obligation is not completed within six months from the initial instruction to the Legal Services Manager to prepare the planning agreement, the Planning Manager reserves the right to reconsider the decision under his delegated authority. He can also send the application back to the Planning Committee to be reconsidered.

Relevant consultees, such as the parish or town council, will also be advised of any outstanding planning obligation and any known reason for that delay.

Changes in material circumstances or revised applications

If the circumstances relevant to a planning agreement change during the course of negotiation, the Planning Manager will either report the application to the council’s Planning Committee with a recommendation that reflects the changes, or consider the changes under his delegated authority.

Revisions to previously approved schemes, which change the infrastructure and service requirements of the development, will result in the council re-assessing the planning obligation.

Monitoring and review

The advice set out in this guide will be monitored and our procedures reviewed regularly. This will be based on comments and suggestions from those involved in the process, including the council’s professional planning agents who attend the Agents’ Forum, set up by the Planning and Development Service. The Planning and Development Service will also report on completed planning obligations to the Planning Committee at regular intervals.

As part of North Devon Council’s commitment to share ‘best practice’ with comparable local planning authorities, copies of this guide will be circulated to its benchmarking partners for comment and information. Any revisions considered appropriate will be incorporated in subsequent versions.

North Devon Council will publish an annual audit report on its involvement with planning obligations to account for financial contributions. This will include an evaluation of the direct and indirect impacts of those obligations as part of monitoring responsibilities.

This information was updated in May 2009.

Contact information

For planning enquiries, contact the Customer Service Centre:

Telephone: 01271 388288
For Typetalk: precede with 18001
Text: 07624 804042
Fax: 01271 388451
Email: customerservices@northdevon.gov.uk

Our office hours are 9.00 am to 5.00 pm Monday to Friday.

Appointment based planning surgeries are held at the Amory Centre, South Molton and the Ilfracombe Centre. To make a planning surgery appointment visit one of the offices or phone 01271 388288.

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