The Government has recently commenced consultation flowing from a commitment in the Autumn Statement 2014 to consult on measures to speed up the negotiation of Section 106 Agreements, in order to deliver a faster and more effective planning system. The consultation also seeks views on student accommodation and affordable housing contributions – this KnowHOW focuses on the measures related to Section 106 Agreements.

What is the Government seeking to address?

The consultation (which applies to England only) cites feedback from the development industry indicating that Section 106 negotiations are causing significant delays to the planning process. It confirms that negotiations on agreements should be concluded within the statutory timeframe of 8 or 13 weeks for minor and major applications (or 16 weeks in the case of EIA development). The Government wants the process of finalising Section 106 Agreements to be as swift and efficient as possible and acknowledges that delays to agreements mean a delay to the delivery of much needed housing and commercial development.

The consultation states that it supports the use of time limits attached to planning committee resolutions requiring the associated Section 106 Agreement to be completed within a set timeframe.  It also recognises the drawback of such arrangements in that applicants are usually willing to agree to further extensions of time where matters haven’t been resolved rather than accept a refusal. In these cases there is little incentive for applicants to appeal on grounds of non- determination as the entire merits of their case will be open for scrutiny as opposed to the specific areas of disagreement on the Section 106.

This is recognised and the consultation acknowledges that the current appeal route provides “too blunt a mechanism” where Section 106 negotiations are the principal source of delay to a planning permission being issued. The Government’s conclusion on the current arrangements is that the statutory framework provides insufficient incentive to conclude negotiations promptly and that there is no effective sanction where delays and/or disputes occur.

What is being proposed to deal with the problems?

The Government states that in the short term it will issue amended guidance to achieve the following:-

• To confirm that Section 106 negotiations should be concluded within statutory timescales;
   
• Setting out expectations of earlier engagement at the pre-application stage and to front load discussions around the scope of Section 106 requirements;
   
• Encourage greater use of standardised clauses;
  
  and
   
• Set expectations for greater transparency about what has been raised by Section 106 Agreements and what it has been spent on. 

In addition to amended guidance the consultation also proposes the concept of a dispute resolution service which would allow for referral of a Section 106 Agreement to third party where statutory or agreed timeframes have elapsed. The Government rules out a “deemed” solution where a draft agreement submitted by an applicant becomes the final Section 106 Agreement in the absence of the applicant and Council agreeing its content.

It is explained that the resolution service would be given the power to decide the final form of the referred legal agreement and this would be binding upon the parties involved.  It is proposed that there would be a fee for this service and that confirmed timescales would be in place for a decision to be made.  The consultation seeks views on all of these matters including who the appropriate referral body or person(s) might be. The legislation to achieve these changes, if required, would not be brought into force until the next parliament and, subject to the views of respondents, a further consultation on detailed proposals will be held ahead of any amendments to primary legislation.

Our Analysis

It is reassuring that the Government recognises there are problems with the Section 106 negotiation process and that reform is needed. The most eye catching part of the consultation is the proposal to establish a new Section 106 dispute resolution service. Unfortunately there is little detail as to how this might work in practice and views are sought on its operation and which bodies or appointed persons would be suitable to operate the service.

Despite the introduction of the Community Infrastructure Levy, Section 106 Agreements continue to play a major role in the planning process.  Reform is needed as the current system lacks teeth and there is no mechanism to ensure that agreements are dealt with swiftly.  Our experience is that the Section 106 negotiation process frequently outlasts the period for determination of applications and can, on occasions, extend for many months thereafter. Such delays are often, at no fault of the applicant, related to lack of available expertise and stretched resources at Local Authorities.

The use of standardised clauses is potentially helpful. In this regard, whilst draft heads of terms can often be readily prepared, it is often the case on larger and more complex schemes that a bespoke agreement is needed. It is unlikely that standardised clauses would be of any real benefit in these cases but may assist on less complex schemes and in providing a template to deal with the most frequent of requirements such as affordable housing.

Where legal agreement negotiations are stalled then the ability to defer to an external body, to consider its merits and arbitrate, could provide an attractive alternative route to the appeal process. In principle such a mechanism is a welcome concept as it would alleviate the need for applicants to burden themselves with the costs, uncertainty and protracted timescales associated with appeal.

Judgement will need to be reserved until details emerge of whether there will be controls or limits on the types of schemes which can be referred, whether the wider merits of the planning case could be considered, who will act as arbitrator in such cases and their precise remit and powers. It is unfortunate that any legislative reform to deal with the issues has been delayed until the next Parliament, however, further consultation on the detail is promised before any such changes would come into effect.

The consultation concludes on 19 March 2015 and the original documentation and response details can be viewed here. 

We hope you find this useful.  If you have any questions, please do not hesitate to contact us.