CLG has issued a consultation paper asking for views on a proposal to widen the opportunities for renegotiating section 106 agreements.

As the law currently stands, s106A allows for such agreements to be modified or discharged by entering into a further deed with all other parties against whom the obligations are enforceable or pursuant to a formal application made to the planning authority. Currently, however, this formal application route is only possible once a period of five years has passed from the date of the deed.

As a reaction to market conditions and reports of s106 agreements stalling development because the obligations they contain wipe out scheme viability, the Government is proposing to permit applications to be made at any time – but only for those agreements which were made before 6 April 2010 (the date on which CIL regulation 122 came into force – perhaps not incidentally).

Authorities have already received letters from CLG encouraging them to enter into voluntary renegotiations, but removing the five- year barrier to making a formal application will mean that developers can effectively force authorities to consider such matters.

There is no proposal to amend the terms of section 106A insofar as this provides for what an authority must take into account when determining applications for modifications of section 106 obligations. CLG points out that this should not be used as a way to permit unsustainable development or arbitrarily reduce payments.

Will this proposal unlock stalled developments? It may certainly be a help, but we’ll need to wait and see if developers can successfully argue that obligations should be reduced by any significantly material amount, or that there are other (cheaper) satisfactory ways to mitigate their developments.

The consultation is open until 8 October 2012.