Planning gain and agreements/obligations Q & A DCP Section 4.6

These two topics are associated together as planning obligations are the legal means by which planning gain may be legally secured when such gain is to be achieved by contributions or physical provision of facilities away from the immediate site of a planning application. Planning obligations may also be used where a matter to be secured is not achievable through a planning condition. This close association is mirrored in the latest relevant ministerial advice on the subject-Circular 05/2005 Planning Obligations. This superseded former Circular 1/97 on 18/7/2005. Further discussion on both these subjects is also to be found in the relevant development topic sections of this manual.

Q & A    4.6/10

My authority is exploring the option of not using section 106 agreements to secure highway alterations and improvements arising from planning applications, but instead to use a planning condition to require an applicant to enter into an agreement under section 278 of the Highways Act. Have you any view as to the validity of such a condition?

In Circular 11/95 paragraph 13 it is stated that permission cannot be granted subject to a condition that the applicant enters into a planning obligation under section 106 or an agreement under any other powers. This would appear to be conclusive advice that your authority should not go down this road, although the Circular is only ministerial guidance and does not have any legal authority.

Do you think that seeking a financial contribution towards the acquisition of a site for park and ride on the back of a planning application for a nearby retail warehouse would be contrary to Circular 1/97 on planning obligations?

Circular 1/97 makes clear that a planning obligation must be relevant to planning and directly related to the proposed development. A financial contribution towards the acquisition of the site for a park and ride could therefore only be justified if it met these requirements and was necessary to make the scheme it acceptable in land-use planning terms. For example where, in accordance with advice in PPGs 6 and 13, it was judged necessary to improve the overall accessibility of the site and to achieve a modal shift towards non-car borne methods of transport. Thus there would have to be some harm in order to provide a basis for mitigating it via a financial contribution.

Paragraph B10 of the Circular specifically states that improved accessibility to major developments may be justified and park and ride facilities are cited as an acceptable method of dealing with this issue. Of course there must be a reasonable likelihood that the park and ride scheme would be operational at the time the retail warehouse was open for trading otherwise it would not meet the test of being necessary. Thus it must be proven that all the funding is in place and the scheme could be implemented without constraint, that is that permission has been secured.

We are currently in negotiation with a local authority about commuted sum payments for future maintenance of public open space on a residential development. The council are insisting that the financial contribution be calculated for a 30 year period. Given that the norm is 10 years is there any guidance, policy or case law which establishes what is a reasonable period?

English national guidance on the subject is found in Circular 1/97 which is generally opposed to payments for maintenance and other recurrent expenditure. However, advice is also given that any such payments should be time limited and not be required in perpetuity. In practice housing developers will often agree to provide a sum for the maintenance of open space within their developments. Ten years, as you say, is often considered to a reasonable period to allow a housing estate to "settle down", after which time the original developer would not be likely to have any further direct interest in the site. I think that a requirement for 30 years maintenance would be considered excessive should the matter arise at appeal.

It is generally accepted that the removal of unsightly buildings as part of a development proposal in the countryside can be a planning gain and thereby improve the chances of approval. However, I am dealing with a case where a client wishes to extend a converted barn, where at the time of conversion two years ago a large obtrusive building was removed as a necessary part of the works. The proposed extension would occupy barely a fifth of the footprint of the original unsightly building and would also be significantly less visible. Do you think that it is reasonable to argue that the planning gain achieved from the earlier removal is a factor in favour of the current proposal?

I do not think that it is reasonable to pursue this argument as any planning gain that might have been derived from the removal of this building has already been spent.

Last year I was granted a Lawful Development Certificate (LDC) which allowed operation of my business in breach of an hours condition. In have just been informed by an inspector in relation to another appeal concerning the removal of a personal permission attached to the same premises that, if he was considering upholding my application, he would be minded to dissolve my recently awarded LDC as a trade off. Is this legal?

The inspector would not be able to expunge the LDC unilaterally, but it may be possible that you could enter into a planning obligation under section 106 to surrender your rights and those of your successors in title to the freedom from hours control allowed by the certificate.

As a Land Management degree student I have recently stumbled across the term "enabling development". Would you be so kind as to offer me a precise meaning of the term?

The term "enabling development" is not formally defined in planning law or guidance. However, in the glossary to Development Control Practice, enabling development is described as "development which would not normally be granted planning permission, but which may enjoy favourable consideration if it enables the attainment of an important planning objective with regard to other land or buildings in the same ownership."  In practice the concept is most frequently utilised in relation to dilapidated listed buildings, when it has often been argued that the only way that sufficient funding may be generated for restoration purposes is from some form of lucrative development on associated land. Where this argument has been accepted a planning obligation is essential to secure the restoration project. There are many examples of relative court and appeal cases to be found at (4.613).

A Tree Preservation Order (TPO) was taken to planning committee for confirmation against the background of a neighbour dispute. Members decided to confirm the Order but only after the owners entered into a legal agreement relating to a maintenance programme. The programme is to be drawn up by our legal department in the form of a section 106 agreement. Is there any precedent for this course of action?

I have not heard of a planning obligation being used in this way, and wonder whether the powers given by section 106 extend to TPO cases. Does any reader have an input?

A local authority is minded to give planning permission for a commercial development on land owned by three parties, subject to an agreement. Access to the whole site is to be obtained via land in one ownership alone. To ensure that the council’s aspirations for comprehensive development are delivered, a section 106 planning obligation has been prepared by solicitors representing the other two landowners. This states that "all roads and services are to be constructed to adoptable standards within each phase or sub-phase of the development and to the boundary of each phase or sub-phase so as to provide access to the adjoining land and made available for public use before any building constructed in the relevant phase is first occupied." The council, however, are of the view that "the draft planning obligation represents an unwarranted interference with private property rights by defeating any potential ransom situation that arises because of the juxtaposition of the various land ownerships." Is the council right in its view?

It would seem that this local authority is attempting to safeguard the landowner who holds the access key to this development, although this landowner would have the right not to sign the obligation which has been drafted. This difficult question is discussed at (4.442), and ransom strips are dealt with at 7.1392. The court case R v Gillingham Borough Council ex parte Parham Ltd [1987] would seem to be highly relevant to any discussion as to whether a condition or agreement requiring the provision of an access facility to the boundary of a site, is necessary for a reasonable and relevant planning purpose.

My clients have a long leasehold interest of a development site which is to be the subject of a sec 106 agreement regarding social housing, financial payments and highway works. For commercial reasons they are reluctant to approach the freeholder, as landowner, to enter into the agreement, as it is felt that it will delay matters or require a financial contribution. Is there any way they can persuade the local authority to exclude the freeholder from the agreement?

The only way to convince a local authority that it should enter into a planning agreement without the freeholder of the land concerned being a party, is to persuade it that all the planning or community benefits embodied will be delivered. I would not blame a local authority for being sceptical on this point particularly as in producing a section 106 agreement, it is normally necessary to show that the appellant has title to the land or if not, that the landowners are included within its terms i.e. are signatories and agree to be bound by its provisions.

My Council is preparing supplementary planning guidance to secure development contributions for open space consistently and fairly. In line with current local plan policy, we are proposing to set a standard rate per dwelling which will then be used to implement a 10 year rolling programme of improvements and enhancement to open spaces across the Borough. A range of improvements would be identified which could be shown to benefit housing developments in any part of the municipality. On site provision would be sought only in a minority of cases when a development is large enough to justify it, or where there is already an identified shortfall. Do you have any comments on this approach, or know of any appeal decisions which might elaborate on cash payments going to a "central pot" for distribution in this way?

No payments of money may be required by planning condition. Therefore the only planning mechanism for such contributions is a legal obligation under sec. 106 of the 1990 Act.  However Circular 1/97 advises that obligations should only be sought when they are directly and fairly related in scale and kind to the proposed development. Specific guidance is given that development plan policies are likely to be unacceptable if they require blanket contributions to a central fund. Needless to say this statement of ministerial policy is a major impediment to the thrust of your council’s proposals.

At appeal financial contributions from single unit housing schemes upwards have been accepted which go towards a fund for the provision or improvement of open space in a locality where it can be demonstrated that the facilities which could be provided from that fund would be of practical use in satisfying the needs generated by future occupiers.
Do any readers have experience of this issue which will assist the enquirer further?

A planning authority has refused to accept a unilateral planning obligation to secure local needs occupancy in perpetuity. Instead, to maintain consistency and protect its interest, it requires a Sec 106 Agreement, for which it is seeking a payment of £500. Is the authority justified in doing this?

Advice on the proper use of planning obligations is set out at Annex B of Circular 1/97. This explains that it is reasonable to expect that developers and planning authorities seek to resolve any planning objections by agreement, but where a developer considers that negotiations are being unnecessarily protracted or unreasonable demands are being made, a unilateral undertaking may be offered. This will usually happen at appeal. A planning authority is not bound to accept any unilateral obligation and I can see why in most circumstances it would prefer its own wording for an obligation, especially if this has been tried and tested before. The requirement to pay the authority’s costs for drawing up the agreement does not appear to be expressly authorised by the 1990 Act but in my view is reasonable and is certainly common practice.

There is a right of appeal against the planning authority’s failure to accept the undertaking. However, if you are not willing to enter into the obligation by agreement with the authority, one possibility might be to seek its views on a draft unilateral undertaking prior to its execution, but in that event, you might perhaps just as well go the whole hog.

Response

With regard to the query about a planning authority’s refusal to "accept" a unilateral obligation, a planning authority cannot do this if it has been prepared and submitted, and is not allowed to determine the application without taking its contents into account. If it is simply a matter of preferring its own wording, it should be possible to get a copy of a recently completed Sec 106 Agreement from some other developer and to copy the relevant wording into the covenants in the unilateral obligation, and thus ensure that the terms are correct. As long as the developer only offers a unilateral undertaking, the planning authority is correct. However, it puts itself in the wrong if this is actually submitted but then ignored simply because the authority wants a Sec 106 agreement.

The distinction between the offer of a unilateral obligation and its presentation, and between the terms of the unilateral undertaking and the actual deed itself, is not one that I would dispute. In my reply, references to the obligation were intended to mean its contents, bearing in mind the context of the question and complex mechanisms usually associated with restricting occupation to local needs in the longer term.

In the case of outline planning applications, is it possible to require a section 106 agreement at the reserved matters stage? My council's solicitors tell me that all legal matters must be resolved at the outline permission stage but are unable to convince me why this should be the case. Can you help?

A reserved matters application is not one for planning permission, which has already been granted subject to various conditions, and matters completely outside the scope of the original permission cannot be introduced at this stage. Generally, therefore, planning obligations will be sought prior to permission being granted. However, I can find nothing in the 1990 Act or circular 1/97 that rules out the making of an agreement when reserved matters are approved, although such an agreement would have to satisfy the so-called "necessity test" set out in the circular. As this is largely based on the same criteria that apply to conditions, guidance on the imposition of these set out in circular 11/95 may be helpful by analogy. The circular explains that the only conditions that may be applied when the reserved matters are approved are conditions which directly relate to those matters. Therefore, if a similar approach is taken to any planning agreement, providing it does not derogate from the principle of the development and the permission already granted, I can see no reason why it should not be sought. There are several circumstances where such action might be justified, but only to deal with issues that could not have been reasonably foreseen at the outline stage.

An agreement was made in 1986 under sec 52 of the Town and Country Planning Act 1971, apparently to enable an authority to withdraw several enforcement notices and to authorise development in an area edged-red on an accompanying plan. However, there is no related planning permission, although two permissions had been granted over 20 years previously. The agreement states that the landowner is not prevented from exercising any existing use rights or using or developing the land in accordance with any valid permission. I have always understood that planning agreements could only be made as a prerequisite to a grant of permission and not as an alternative to this. In my view, the owner should be required to seek retrospective permission for the development purportedly authorised by the agreement. Please advise.

Leaving aside certain doubts over whether sec 52 agreements remain enforceable, the 1971 act imposed no duty for these to be made only in connection with a grant of planning permission. However, as with obligations authorised under similar provisions at sec 106 of the 1990 Act, this has proved to be their most common use.

In refusing to quash a sec 52 agreement, in J A Pye (Oxford) Ltd v South Gloucestershire District Council [2001] the courts drew a distinction between the statutory framework for the determination of planning applications, and that for planning agreements. It was held that the vires of any agreement depended simply and solely upon whether or not it was entered into "for the purpose of restricting or regulating the development or use of the land", as stipulated in sec 52 of the act. The agreement you describe would appear to fall within the scope of this section. But while an agreement cannot be a substitute for a planning permission, if the development in question is immune from enforcement action because of the four-year or ten-year rule, then it will now be lawful in any event.

Is it lawful to issue a decision notice that includes a condition requiring a sec 106 planning obligation to be submitted to the local planning authority for approval prior to development taking place?

Paragraph 13 of Circular 11/95 makes it clear that permission cannot be granted subject to a condition that the applicant enters into a planning obligation under section 106 of the Act or an agreement under other powers. While circular advice has no statutory force, meaning that an agreement sought by condition is not necessarily unlawful, this approach was upheld in a ministerial decision made in 1987 in relation to similar provisions under sec 52 of the 1971 Act. Nevertheless, there have been a number of appeal decisions where current guidance has not been heeded. These include one from Buckinghamshire in 1989 where a condition required that an agreement be entered into for the provision of car parking within a town centre, and another from Yorkshire in 1991 where a condition required that development should not be commenced until a legal agreement for commuted payments to offset the provision of 83 car spaces had been concluded. In a more recent case from Hampshire (DCS No. 50531779), an inspector stated that a situation where an undertaking did not include an affordable housing provider could be remedied by a condition requiring an appropriate agreement with the provider. There is, of course, nothing to prevent a Grampian-type condition being imposed to prevent development commencing or being occupied until certain off-site works, which may be the subject or consequence of a funding agreement, have been completed.

An authority is insisting that my company enters into a planning agreement to secure a financial contribution towards new road infrastructure by a specified date about a year away, regardless of whether the scheme proceeds. The firm does not own the land but has a limited life option with the landowner. Neither wishes to enter into the agreement on such terms. Surely the authority is being unreasonable, as such a contribution should be triggered only on commencement or occupation?

The authority's approach is unacceptable and amounts to a breach of the fundamental principle that planning permission may not be bought or sold. Advice on planning obligations in Circular 05/2005 explains that contributions may be sought from a developer to compensate for loss or damage created by a development or to mitigate its impact. However, any obligation must pass the tests in paragraph B5, which includes a requirement that any obligation must be directly related to the proposed scheme. If the development does not proceed, there can be no justification for insisting on financial contributions. This is reinforced by advice elsewhere in the circular that unless the developers implement the permission by carrying out a material operation as defined in Sec. 56(4) of the Town and Country Planning Act 1990, they are not bound to comply with the relevant obligations.

While my council has approved car-free developments, its parking section continues to issue parking permits to new occupiers. This has resulted in congestion, the very objection raised by opponents of such developments. Talks are taking place over the use of planning agreements or conditions to prevent occupiers from holding or applying for permits. Can such controls be used?

Car-free housing is a relatively new concept based on the more sustainable patterns of urban living promoted in PPG3 and PPG13. It allows higher residential densities and external amenity space to be achieved. It is becoming increasingly common, especially in major cities. Such developments aim to reduce car dependency and will therefore only be appropriate where a site is easily accessed by public transport and is close to local services and facilities. As car-free housing is generally located in controlled parking zones, developers are normally required to enter into a Sec. 106 agreement to prevent occupiers from obtaining on-street parking permits. The use of planning obligations for this purpose has been expressly supported in several decisions, including a call-in case from London in 2002 (DCS No: 32733660). Some inspectors have held that such obligations are unnecessary because a council has ultimate control over issuing permits or because of difficulties over enforcement. However, these views are very much in the minority.

Outline permission was granted for housing solely on the basis of a site plan edged red with no details or illustrative layout. At the reserved matters stage the authority indicated that a Sec. 106 agreement would be required to secure provision for affordable housing, education facilities and off-site open space. In my view, it is now too late to require this because an obligation could only be justified if it directly relates to the approval of the reserved matters. However the authority argues that since "siting" relates to density and the number of dwellings exceeds the threshold in relevant development policies, the need for an agreement is triggered. Surely the authority could have sought more data at the outline stage and requested the agreement then?

A reserved matters application is not one for planning permission, which has already been granted subject to various conditions, and matters completely outside the scope of the original permission cannot be introduced at this stage. Planning obligations will normally be sought before permission is granted. However, I can find nothing in the Town and Country Planning Act 1990, Circular 05/2005 or this month's practice guide on obligations that rules out making an agreement when reserved matters are approved, although such an agreement would need to satisfy the policy tests set out at Annex B of the circular. Since these are largely based on the same criteria that apply to conditions, Circular 11/95 guidance on the imposition of these may be helpful by analogy. This explains that only conditions directly relating to these matters may be applied when reserved matters are approved. Although the term "siting" is not defined in planning legislation, reserved matters no longer include this term under the new provisions that took effect yesterday (Planning, 4 August, p16). Instead, reserved matters now include "layout" and "scale". In a decision from Suffolk in 2002 (DCS No: 54941042), an inspector relied on the judgment in R v Secretary of State for the Environment ex Parte Chichester District Council [1992] to support his view that density was a reserved matter because it related to siting and design. But in a case from Buckinghamshire in 1998 (DCS No: 30570826), it was held that "siting" did not cover the provision of public open space. The inspector averred that since this was a crucial matter it should have been subject to a condition. In your case, I think that an obligation would only be justified if it is required to refine the general terms of any agreement made when the permission was granted or if it is a requirement of a Grampian condition imposed at that stage.

Outline permission was granted for a housing scheme with all matters reserved, subject to prior completion of a Sec. 106 agreement to secure a minimum of 20 per cent of the units as affordable homes. All the reserved matters have now been submitted, with the affordable units clearly indicated on the site plan. However, despite being minded to approve the application, the authority will not do so until a deed of variation is entered into to ensure that the existing agreement still applies and to expressly identify the affordable units. Since the original agreement was sufficiently clear as to what proportion of units had to be affordable and these are clearly shown on the site plan, would the new deed be considered necessary and reasonable in the eyes of Circular 05/2005?

It is difficult to comment on this without seeing the site layout or the terms of the obligation. Because your application is for reserved matters approval and not for a new permission, the existing agreement will continue to be valid and enforceable regardless of whether it is modified by a deed of variation under Sec. 106A of the Town and Country Planning Act 1990. If the agreement was drafted in accordance with guidance in Circular 6/98, which deals with affordable housing, and Circular 05/2005, which sets out Government policy and guidance on planning obligations, it should not be necessary to modify it at the reserved matters stage. Such action is not considered in Circular 05/2005 or the practice guidance on planning obligations issued last month. I would seek legal advice.

My company recently purchased a site with outline permission for housing. An adjoining field outside the site but in the applicant's ownership is the subject of a Sec. 106 agreement whereby the owner agrees to extinguish all or any existing or claimed use rights. Reserved matters have now been approved and the houses are nearly complete. We propose to subdivide the field with fences, as shown on an illustrative plan accompanying the outline application, and sell each section with the adjoining house. Prospective purchasers are querying what the land can be used for. Apart from advising that they could keep a horse or use it as a wildflower meadow, for what other purpose could the land be used without permission?

It is difficult to comment without seeing the agreement. However, I assume that its primary aim is to prevent the field from being used as domestic gardens. Despite the terms of the obligation, I do not think it could take away rights to use the field for agricultural purposes, since such a use would not comprise development. It is possible that the authority was concerned about the effect of livestock on future residents. Otherwise I cannot envisage what use would fall within the scope of the agreement. Contrary to your understanding, the creation of paddocks for keeping horses would require permission. I would seek legal advice and ascertain the reasons why the agreement was required.

Casebook has recently reported decisions where inspectors have deleted conditions requiring the submission of a planning obligation or payment of financial contributions to the authority. Does this mean these conditions are ultra vires and should no longer be imposed?

Circulars 11/95 and 05/2005 explain that it is not Government "policy" to sanction conditions that require developers to make financial contributions or enter into a planning obligation. As you say, inspectors have struck down such conditions in several decisions taken recently. However, this does not mean that these conditions are unlawful. A test case that should clarify this is currently before the High Court. In the meantime, there is a strong body of opinion that favours the use of Grampian conditions to achieve a similar end, as evidenced by their growing use by many authorities. Advice in the Government's good practice guide on planning obligations suggests that authorities can use Grampian conditions in this way, so long as they are careful and the conditions are precisely worded. This is reinforced by a best practice note issued by the Planning Officers Society in March 2005 and prepared by a group that included representatives from the Government and the Planning Inspectorate. The practice note outlines a limited range of appropriate circumstances where Grampian conditions may be used as a prelude to obligations being entered into. The aim here is to enable an application to be determined but prevent implementation of the permission until such time as an obligation has been put in place. Suggested model conditions are set out in the note.

When a new housing scheme or a large commercial development is submitted to my authority, developers get a letter within 4 weeks stating estimated contributions. If the applicant opts to pay via a section 106 agreement they can, but they would need to stump up for the council solicitor’s costs. Alternatively, they can send the council the money which is receipted and put in a holding account.  If permission is given the council retains the money and if they are refused the money is returned. Is this practice lawful? Without a section 106 agreement do the applicants have any right to their money back, or does the council have any restriction on what they spend the money on? SH.

I have not come across this particular practice before, and certainly it is not endorsed by current ministerial guidance in Circular 05/2005. However, this does not make it unlawful and reader’s views are invited on the points that SH raises. GH

Response

I can advise that this authority has tried the same process with considerable success, especially for the simpler contributions. Obviously it can’t work for affordable housing provision unless there is a contribution in lieu, but even then that’s probably beyond the scope. I did post a very similar enquiry on the PAS Forum site and got a few answers, and there appear to a few authorities doing the same thing. Unfortunately my legal colleagues were unsure as to the legal validity of such a course of action and obtained counsel’s opinion. Again, unfortunately, the legal advice coincided with your response. It was not considered to be an approach endorsed in the circular and we ought to desist forthwith from operating such a procedure. This we  did and are now using unilaterals for whatever we can, but this is not as simple or effective as the fast track method. If alternative legal views are made known to us I would be happy to go back to it. NG.

Two of the main employers on an industrial estate are seeking to relocate. In order to subsidize the move they wish to apply for the residential  redevelopment of the whole estate. This is likely to be acceptable in principle, but requirements such as affordable housing are normally necessary. The applicants state that in order for the relocation to be viable they are not willing to contribute to these requirements. However, they are offering to sign an agreement which would require the relocation to take place within the boundary of the local authority. Is this within the scope of section 106  of the Town and Country Planning Act 1990,  and if so is it appropriate to offset affordable housing requirements in order to retain employment uses? RP.

Government advice is that the planning system should seek to aid economic efficiency and growth. In this case I presume that it can be shown the end result of the relocation of these two firms would provide such a benefit. There could also be other planning gains such as an improvement of local residential amenity or highway safety. In practice such matters have often been deemed material considerations strong enough to outweigh development plan allocations for employment use. It is also possible that national and local requirements for affordable housing could be waived where, as recognised in former Circular 6/98, there are ‘particular costs’ or there would be prejudice to the realisation of other planning objectives. I have not been able to identify a case where total affordable housing requirements have been offset by the benefits of industrial relocation. However, there has been at least one appeal decision, where compelling public benefit arising from the relocation of a sports stadium, has seen the dropping of any affordable requirement from the enabling housing scheme (DCS Number 100-049-347).

Needless to say, in any case where this issue arises there would have to be a very robust financial appraisal provided by the applicants that there is no way the relocation objective would be economically viable if affordable housing is to be provided. As to the general terms of the unilateral obligation offered in this particular case, I think this would fall within the scope of section 106 if care is taken to secure that its terms will be fulfilled, The most effective way to do this would be to link the completion of the relocated ‘in-Borough’ industrial development to the commencement of the housing project. GH.

For several years, my practice has offered unilateral undertakings at appeal based on a template provided by a local planning authority to secure open space contributions. Although these deeds have not been signed by mortgagees or leaseholders, they have until recently been accepted by councils and inspectors alike. However, two authorities now refuse to accept obligations without such signatures. Opinion from other planning specialists and inspectors on this is divided. Are mortgagees required to sign unilateral obligations and, if they are, does that mean that all previous obligations without their signatures are unenforceable and related payments cannot be secured?

Advice on planning obligations is set out in Circular 05/2005 and amplified in practice guidance issued by the DCLG last year. Paragraph B54 of the circular explains that local authorities should take care to ensure that all those who might need to be directly involved in complying with the provisions of an obligation have entered into it. This applies to all parties with a legal interest in the land, including freeholders, lessees, tenants, mortgagees and guarantors. The DCLG and Law Society's model agreement also states that mortgagees should be among the parties to an agreement. It explains that this is because, in the event of a default by the mortgagor, the mortgagee may take possession of the land and therefore be liable for the commitments in the planning obligation. But since an obligation runs with the land, I cannot see why it cannot be enforced against any mortgagee repossessing land that is subject to an agreement that it did not enter into. Can any reader help?

This issue was considered in a recent decision from Dorset (DCS Number OT100-048-378). The appellant had submitted a unilateral undertaking but this was not signed by any party other than the current owners of the appeal properties. The inspector opined: "I confirm that in cases where there is a party other than the landowner with an interest in the land, including mortgage lenders, it is necessary for that party to be a signatory to the obligation to ensure that they are bound by it." PM.

Section 106(3) of the Town and Country Planning Act 1990 states that an obligation is enforceable against the person entering into it and against any person "deriving title" from that person. The difficulty arises where a landowner entering into the obligation has previously mortgaged or charged the land and this mortgagee does not join in the obligation. Where mortgagees exercise a power of sale granted by a mortgage or legal charge, they do so using the statutory powers in the Law of Property Act 1925. It has long been realised that mortgagees doing so give their purchaser a legal title which is not that of the original mortgagor. So the title of the purchaser from the mortgagee does not "derive" from that of the mortgagor. Instead, it derives from the statutory power in the planning authority. It follows that the obligation will not be enforceable against that purchaser unless the mortgagees have agreed that they and their successors will be bound by it. Should the mortgagee not join in the obligation, it will still be enforceable against the mortgagor and his successors in title so long as the mortgagee does not exercise his power of sale. Section 106 of the Town and Country Planning Act 1990 makes no distinction between agreements and unilateral undertakings. Both are described as "planning obligations", which is why mortgagees should be parties to unilateral undertakings as well as to agreements. It is worth noting that this is not a new point. When I was working in local government in the mid 1970s and dealing with what were then called section 52 agreements, I ensured that anyone who had an interest in the land, including mortgagees, joined in the agreement. This was becoming standard practice with other authorities.

My client was granted planning permission for 12 holiday lodges at a golf club contingent on signing a section 106 agreement to tie their occupation to people using the golf course or its facilities. My client is happy with this. However, in the event of any contravention of the holiday occupancy tie, the agreement would require the developer to demolish the lodges within 28 days of the breach and remove all materials from the site. Since the local authority has adequate powers to deal with breaches of planning control, this requirement seems unacceptable. What is your opinion? SS.

Policy guidance on planning obligations is given in Circular 05/2005. This is supplemented by a good practice guide and the Law Society's model planning agreement. Any planning obligation must meet each of the five tests in annex B of the circular. These include requirements that the obligation must be necessary to make the proposed development acceptable in planning terms and be reasonable. In this case, a requirement to demolish the lodges within 28 days of any contravention of the obligation is clearly both unnecessary and unreasonable. It would exceed the measures necessary to remedy the breach of control, which the courts have determined must be proportionate. The contravention could be remedied by ceasing the occupation of the lodges in non-compliance with the obligation. I therefore agree that the draft terms of the agreement are unacceptable. You should consult a planning lawyer. PM.

A section 106 agreement relating to an outline permission for a large housing and industrial development requires the payment of a commuted sum for recreation purposes in the event that the industrial part of the site is developed for housing. My authority has now received an application for full permission rather than for reserved matters approval for housing on the industrial area. Does the existing agreement still apply or is a new obligation required to realise the commuted payment? MS.

It is difficult to comment without seeing the agreement and understanding what precise event would trigger its obligations. However, while it would not have been necessary to seek a new agreement in relation to an approval of the reserved matters to the existing permission, it would not be prudent for the authority to rely on the existing agreement now that a fresh permission is sought. Instead, the requirement for developer contributions should be repeated in a new planning obligation. You should seek legal advice. PM.

Permission was granted for eight flats following the submission of a unilateral obligation to offset certain impacts. Four flats were proposed in an existing dwelling, which has subsequently been converted. My client wishes to increase the number of new build units to five and this is the subject of a fresh application that excludes the converted dwelling. The planning authority requires a new obligation for the five units. This means that, because the original permission has already been partly implemented, payment must be made for 13 units when only nine would be built. The authority argues that the application should have included the conversion so that a new agreement could supersede the original and the developer could not implement part of the permission. Its solution is for us to reapply for the conversion with the new build for five units. Is its approach correct? SA.

Any new obligation that has the effect of securing contributions over and above what is actually required would be unreasonable and thus fail the policy tests set out in Circular 05/2005. In this case, much may depend on the wording of the existing obligation and the trigger for payment. The planning authority is presumably anxious to avoid a situation arising in which there are overlapping permissions and, having developed four units in the existing building, the developer subsequently being legally obliged only to make contributions in respect of the extra unit. It is therefore right to be cautious. Nevertheless, I see no reason in principle why a fresh application should not be restricted to the new build units and the existing obligation modified. A revised application covering the entire site is an alternative solution but may involve a new application fee. A development does not need to be complete for a permission to be implemented because all that is necessary is that a material operation to commence work has been carried out. You should therefore seek legal advice. PM.

National flags are listed in schedule 1 of the Control of Advertisement Regulations 2007 as neither requiring deemed or express consent. Are there any restrictions on the form or height of the flagpole? SK.

The only restriction in the Advertisement Regulations is that it should not display any additional advertisement or other subject matter. There is no height restriction. This is borne out by an advert appeal decision in the Midlands (DCS number 040-829-681). Though there is no restriction on the height of poles for national flags, the maximum height for poles for flags on housing sites given deemed consent under the provisions of class 7B of schedule 3 of the Control of Advertisements Regulations 2007 is 4.6 metres. JH. 

A planning authority will accept a payment by cheque to mitigate the impact of a development upon a special protection area as an alternative to a bilateral agreement or unilateral undertaking. However they have advised that the monies will only be refunded if permission is refused but not if permission is granted but the scheme not implemented, on the basis they do not have the resources to monitor the situation. Surely if the applicant approaches them with a claim they would be duty bound to refund the money? What is your view on this practice? JA.

The authority’s stance does seem unreasonable, but the law regarding whether such advance payments are permissible is unclear. It would seem difficult, maybe impossible, to challenge the authority’s position. Instead, I would recommend providing a unilateral undertaking agreeing to make the payment when the development commences or is first occupied. JH.

Are planning authorities able to attach section 106 agreements or undertakings to planning permissions granted under the General Regulations 1992 where they intend to sell the site? Our council has submitted an outline application for housing of a scale where we would normally seek developer contributions for public open space, sustainable transport and community facilities and we intend to sell off the land to a developer with outline permission. What would be the best mechanism to secure these planning obligations? VA.

This point was explained very well by MA in this column on 10 October. Because of the legal status of a council, it comprises a statutory body; it cannot make an agreement with itself. In the scenario you describe, it would be necessary to include suitable clauses in the sale agreement to enable the council to obtain such contributions. JH.

My local authority will not accept payment for planning obligations without a legal agreement though other authorities will, especially when the sum involved is relatively modest.  What authority does the council have to insist that all applicants must enter a legal agreement to pay a commuted sum of a few hundred pounds and why can this payment not be accepted in cash? AH.

The law is unclear whether direct payments instead of planning obligations are acceptable. It is possible that such payments might be considered similar to bribes. Within this context, whilst I can appreciate the frustration and expense this might cause you, the Council’s position, though arguably slightly cautious, is reasonable. JH

Permission was recently refused for a major residential scheme. The decision notices made no reference to the applicants failing to contribute towards various infrastructure projects. Written representation appeals were lodged, but the council’s statement now recommends the inspector consider the necessity for substantial S106 contributions. Whilst S106 contributions were discussed, no agreements were reached.  The client considers the authority has acted unreasonably in introducing issues not referred to in their decision contrary to paragraph 19 of circular 05/2000 and article 22 of the Town and Country Planning (General Development Procedure) Order 1995.  What is the legal basis for an authority effectively introducing an additional refusal reason at statement stage and how might the Inspectorate treat this?  The late introduction places the client in the precarious position of having to collate signatures from numerous parties in three weeks to meet a need the client does not recognise.  IT.

Though I cannot quote legal authority for this except the one you cite that authorities should give all reasons for refusal, I have always understood it good practice to include the lack of a planning obligation as refusal reason and certainly doing this would avoid the predicament you are now experiencing. Having said that, discussions did take place about planning gain, so it could be argued you should have expected this. Thus, a request for costs for the absence of this reason would seem unlikely to be successful. I would also say, if you are facing difficulties getting suitable obligations signed in time and the lack of obligations was not referred to in the decision, it is possible the Inspectorate might adopt discretion and extend the period to complete obligations. JH. 

An application has been submitted for four garages at the end of an unadopted cul-de-sac. The applicant indicates he wishes to sell the garages to local residents. An inspector previously refused permission for two dwellings on the land as the cul-de-sac was unsuitable for additional traffic. Our highway officers consider the garages would only be acceptable if they are to be used by the cul-de-sac residents. Is it possible to use a planning condition or a planning obligation to ensure the garages are only used by the cul-de-sac residents? CB.

Circular 05/05 on planning obligations advises, "It may be possible to make acceptable development proposals which might otherwise be unacceptable, through the use of planning conditions or, where this is not possible, through planning obligations" and this seems a classic example of such a scenario. Although circulars 11/95 and 05/05 prefer the use of conditions rather than planning obligations wherever possible, in these circumstances I would recommend an obligation as it could prove difficult to draft a suitable enforceable condition, an obligation is more appropriate if land ownership is being controlled and the nature of what is being controlled could make it difficult to detect unauthorised use such that 10-year immunity might be obtained. JH.

We are dealing with a listed building application to dismantle a building, with a subsequent planning application for housing on the site. The relocation site already has planning permission for the reconstruction of the building. It is in third party ownership. We are struggling to identify a mechanism to require the reconstruction of the building and have ruled out a planning agreement as the relocation is not dependant on the housing development. There are also concerns that an agreement between the developer and relocation site owner will not suffice as this could be varied or terminated and would not be within authority control. Any help would be appreciated. SE.

I would consider a s106 agreement would be possible as, if the listed building is not satisfactorily relocated there would presumably be strong planning objections to the residential development going ahead. Circular 05/05, however, favours conditions to agreements whenever possible. A condition could be imposed on the listed building consent requiring that demolition should not start until evidence of a contract has been submitted and accepted (a similar mechanism is frequently used to avoid a vacant site being left when conservation area consent is granted for demolition). Alternatively, a "Grampian" type condition preventing the residential development starting or reaching a certain stage until the building has been rebuilt could be used. Another point to bear in mind is that when the building is rebuilt, it would only be protected as a listed building if it is "re-listed".

A client wishes to relocate his factory. The site is surrounded by housing and is within the town’s residential development boundary. It lends itself to residential re-development. The business needs larger, purpose-built buildings. The work force is local and the owners wish to remain in the town. However, the planning authority wants a planning obligation requiring the business to relocate within the authority’s area and the relocated business to be operating on its new site before they can implement any permission on their current site. The authority says it wants to keep the company in the area. In the current financial market it would be impossible to relocate under these conditions. Is it lawful or reasonable to impose such a requirement in a planning obligation? SS.

Circular 05/05 advises planning obligations are "intended to make acceptable development which would otherwise be unacceptable in planning terms". From your description it seems there is not a basic objection to the residential development of this site, so this test does not appear to be met. I would, however, advise checking with the authority precisely what their justification is. Furthermore, the proposed terms of the obligation appear to be making it impossible for the firm to relocate which would presumably safeguard jobs and possibly provide new ones. Assuming these issues cannot be resolved, you would need to lodge an appeal against non-determination of the application. JH.

Planning Policy Statement 5 (Policy HE11) supports the principle of 'enabling development'. English Heritage guidance, "Enabling Development and the conservation of significant places", refers to examples where the enabling development is within the curtilage or near to the asset in question, although paragraph 3.2.5 mentions circumstances where it is 'distant' from the asset. In the latter case and where a financial payment (secured through a S.106 agreement) to fund a heritage asset is the main justification for granting permission contrary to the development plan, are you aware of cases where the lack of a 'geographical link' has been held to be contrary to the tests in circular 05/05. Otherwise, what is your view on the acceptability of such a scenario given the circular 05/05 & community infrastructure levy requirements - in particular the need for the S.106 payment to be ‘directly related to the development’? PW.

This would ultimately be a matter for the courts to decide, of course. Normally enabling development is proposed when both the heritage asset and the enabling development site are in the same ownership. In any event, even if the two sites are not in the same ownership, provided there is a planning obligation to require the necessary works to the listed building, the enabling development provides a nexus between the two schemes. Thus, as long as the level of profit from the scheme is not excessive, distance between the two sites should not, I would have thought, be a problem in terms of there being a direct relationship between the two developments. I am not aware of any appeals or other cases where this issue has been considered, however. JH.

A planning authority is refusing to register an application for an agricultural worker’s dwelling. The unitary development plan and supplementary planning document state most housing developments will be required to contribute to open space provision and maintenance. The local list for application validation says a draft unilateral undertaking must be submitted for proposals with an open space requirement. I consider it is unreasonable to require open space for an agricultural worker’s dwelling, but even if it does the council should register the application and argue about open space provision as part of the assessment. Do you agree? AB.

Circular 05/05 advises that planning gain should normally be reasonably related to a proposal and to provide infrastructure the need for which is generated by the development. Unless a proposed agricultural worker’s dwelling was very close to an urban settlement, it would be very difficult to argue that it would generate an open space requirement. Thus, if the council is not willing to register the application, I would advise waiting for the 8-week period to elapse and then lodge an appeal against non-determination. JH.

In an appeal decision where my client submitted a planning obligation to provide infrastructure payments, the inspector granted permission but commented the infrastructure contributions were not supported by supplementary planning documents as recommended by circular 05/2005. He indicated he was therefore unable to give weight to the obligation, except for one payment. Can the appellant seek a modification to the obligation and pay just the contribution the inspector felt justified? What if the Council refuses to cooperate? Should future obligations make the payments conditional on the inspector’s findings so that they are not due if the Inspector feels there is inadequate justification? RH.

It clearly would pay to negotiate with the planning authority. You need to verify whether there is a supplementary planning document. It might be that one exists, but they failed to supply it to the inspector. If this is the case, obviously you would be in a weak position. Otherwise, if they are unwilling to amend the obligation, you would need to submit a further application supported by another unilateral obligation and, if this is refused, lodge a further appeal.

Regarding your query whether future obligations could be conditional on the inspector’s findings, I think it would be very difficult to draft an obligation which would be sufficiently clear to cover all possible views that an inspector might express. If you want to explore the possibility further, I would recommend taking legal advice. JH.


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