Section 106

S106 is a management mechanism designed to mitigate the direct impact of specific developments. Previously specialist housing developments were able to negotiate the amounts of obligations paid under Section 106s directly with officers in charge, for example, for contributions to transport or open space.

Through the Planning Practice Guidance (PPG) (opens new window), the Government has introduced a threshold of 10 units or 1,000sqm for affordable housing through S106. This does not mean that no contributions can be sought for such developments, it only applies to contributions towards the provision of affordable housing or pooled funding for general infrastructure projects in the wider area. Specific obligations to make the development acceptable in planning terms are still appropriate.

Under new guidance issued by the DCLG on 26 March 2015 updating the online PPG (opens new window) a series of amendments have been introduced to the Planning Obligations section. As a starting point, the guidance now encourages Local Planning Authorities (LPAs) to begin negotiations with developers on s106 obligations at the pre-application stage (Paragraph: 025 Reference ID: 23b-025-20150326). For developers, this may be an unwelcome revision given that it is likely to increase upfront costs without any resolution of approval for any scheme.

A more welcome revision is the section that states that planning obligations should be negotiated and resolved within the statutory time period unless a longer period is agreed in writing (Paragraph: 028 Reference ID: 23b-028-20150326). The final major revision is the introduction of the requirement for Local Planning Authorities to make available a public register identifying what contributions have been received and how they have been used (Paragraph: 024 Reference ID: 23b-024-20150326). The suggestion is that the information could be included as part of the Annual Monitoring Reports prepared by local planning authorities.

Pooling s106 Contributions

From April 2015, LPAs have been able to pool together no more than 5 s106 payments to fund an individual infrastructure project. This means that where a new development is proposed in an area where other recent developments have been completed developers / consultants should check how many other contributions have been received. For example, if there have been 5 other contributions recently towards open space then the LPA should not be able to request further contributions towards open space. This process should be made easier with the requirement to maintain a public register of past planning obligations. Current guidance is not clear; however, it is considered that the pooling of contributions will only commence as of 6 April 2015 with the introduction of the new guidance.

Tariff-Based s106 Contributions

It is common practice in LPAs at the moment to use a tariff-based system for securing s106 agreements. There are two issues in respect to this system:

  1. Whether it meets the s106 tests
  2. The implications of the limitations on pooling of resources.

There remains a debate on whether existing tariff based systems meet the s106 tests. The s106 tests contained within the CIL Regulations, and NPPF, are:

  • Necessary to make the development acceptable in planning terms,
  • Directly related to the development,
  • Fairly and reasonably related in scale and kind to the development.

Any tariff system must be based on detailed evidence of need, relevance to development, workings and justification for tariff amounts and a program for delivery. The PPG also clearly sets out that any tariff based obligation that is capable of being funded by the levy is to be restricted (Paragraph: 101 Reference ID: 25-101-20140612). In practice, this means that there are likely to be grounds to consider challenging the majority of tariff-based approaches to the collection of contributions post 6 April 2015.

In addition, the Growth and Infrastructure Act 2013 (opens new window) states that on sites where the level of affordable housing imposed is having a negative impact on the viability of schemes developers can ask the Local Planning Authority (LPA) to modify the amount and then to appeal if the decision was not favourable. This is now contained within the Growth and Infrastructure Act 2013.