It was reported in the planning press that Ministers have decided not to extend the temporary appeal mechanism that allows developers to seek to vary section 106 affordable housing obligations (which applies in England only) beyond the end of April 2016 (reported in Planning online 31 March 2016). Please note that while no official confirmation has at the date of writing been issued, the statutory provisions still provide that the right to apply for a review will expire on 30 April 2016. No draft statutory instrument has been issued to extend this period. This note therefore examines what could be done in the remaining days this month for applicants to take advantage of this provision including pre-application actions.
The Growth and Infrastructure Act 2013 introduced a new section 106BA into the Town and Country Planning Act 1990 (the 1990 Act). This new section provided for a temporary application and appeal mechanism to vary elements of section 106 agreements. This allows developers to require a review by the relevant Local Planning Authority's (LPA's) required affordable housing provision pursuant to section 106 planning obligations, in a situation where such obligations would make development proposals unviable. We examined this procedure together with the key points which need to be addressed in any application in our earlier briefing 'Variation of Planning Obligations (30 July 2014)'.
A temporary right only
At the time that the new temporary variation provision came into force, the statutory provision also provided that the mechanism would cease automatically on 30 April 2016. Subsequently the government had signalled at the end of last year an intention to extend the appeal mechanism for unviable section 106 agreements until 2018. This was included in the Autumn 2015 Spending Review announcements.
At the end of March, a spokesperson on behalf of the Department for Communities and Local Government (DCLG) was reported in the press to have stated that there was no longer a government intention to extend the temporary mechanism beyond its expiry date on 30 April 2016.
Applying for a review
Under section 106BA of the 1990 Act a developer may apply for the modification, replacement or discharge of an obligation solely concerned with affordable housing at any point after the section 106 obligation is entered into. The review must be based on the economic viability and cannot take into account other aspects of the planning consent. The developer must make a formal application to the LPA.
The process for making the application has never been set out in regulations, but guidance is given in the DCLG publication, 'Section 106 affordable housing requirements Review and appeal' (April 2013) and in its 'Annex B – Procedural Note'.
What should you do before 30 April 2016?
While no further clarification has been provided by DCLG following its announcement; it would seem that applications under section 106BA to review affordable housing provision can still be submitted to the relevant LPA until 30 April 2016.
If you are considering requesting a review of the affordable housing contribution in a section 106 agreement it seems prudent to take the following steps to preserve your ability to do so without delay:
Application to review the affordable housing obligation
- The application for a review must be made in writing – notify the LPA as soon as possible that you intend to make an application.
- The applicant must provide evidence that all signatories to the planning obligation have been notified of the application, where this is not possible the applicant must publicise the application in the local area; ensure that you can provide this.
- Evidence, including that provided for the original section 106 agreement, should be provided to support the application; ensure that you are able to provide this.
Any applicant should ensure that they first comply with any contractual obligations they are subject to for the proposed development with any third party before making any application. This could be contained in any lease, development agreement or other form of contract especially those which either relate to the satisfaction of a planning pre-condition or limitations on making applications to the LPA in respect of planning agreements.
Right to appeal to the Secretary of State
The LPA has only 28 days to determine an application to review pursuant to section 106BA. If the relevant period expires and no determination is reached, the LPA is considered to have rejected the application and the applicant will be at liberty to make an appeal to the Secretary of State (i.e. the Planning Inspectorate (PINS)). If the 28 day period for determination is due to expire after 30 April 2016 it may be prudent to give PINS notice of the intention to appeal the LPA decision in advance of 30 April 2016, subject to the LPA determination.
Our experience suggests that the relative success or failure of applications and appeals will in part turn on any or all of the following:
- Whether there has been open and constructive dialogue and engagement between the LPA and the applicant from the outset of the application being lodged and throughout the appeal process.
- Whether underpinning these applications there is in existence reliable, robust and cogent evidence that has been applied in accordance with settled and established principles on land valuation and viability assessment that addresses the question of whether the affordable housing requirement as contained in the planning obligation jeopardises the economic viability of the development proposal to which it relates.
- Whether both parties hold realistic expectations in terms of the nature and extent of those obligations that are required in order to make the development proposal acceptable in planning terms at the same time as protecting and safeguarding the economic viability of new development.
What can you do to renegotiate a planning obligation, in England and Wales, after 30 April 2016?
Planning obligations can of course be renegotiated at any point, voluntarily, where the LPA and developer wish to do so and this mechanism continues to be available after 30 April 2016 (in the same way that it was available prior to that date). This is not restricted to just affordable housing obligations. Where there is no agreement to voluntarily negotiate, and the planning obligation is over 5 years old, an application may be made for the LPA to change the obligation by modification or discharge where it "no longer serves a useful purpose" or would serve a useful purpose but in a modified way.
Specific legal advice should be taken before acting on any of the topics covered above.