Plan for earlier section 106 deal rejigs

Developers whose schemes stalled during the credit crunch could be able to force the renegotiation of section 106 planning gain deals after two years rather than the current five under government plans to kick-start development on mothballed sites.

Housebuilding: government strategy could force councils to renegotiate section 106 deals after two years
Housebuilding: government strategy could force councils to renegotiate section 106 deals after two years

The coalition's housing strategy for England (see panel) proposes allowing developers who agreed deals before April 2010 to appeal against council refusals to renegotiate deals more promptly than they can at present. It says that a consultation on the plans will be published by the end of January 2012.

Under the proposals in the strategy, the period of time that developers would have to wait before being able to formally request the renegotiation of section 106 deals would be reduced from five years to two years for planning applications agreed on or before 6 April 2010.

A spokesman for the Department for Communities and Local Government confirmed that the change would not apply to applications agreed after this date.

Currently, section 106 agreements must be five years old before developers can formally ask for them to be renegotiated. Developers are free to approach councils to request a deed of variation before five years have elapsed, but there is no right of appeal should the authority refuse.

The proposal would allow developers of schemes where a planning application was agreed before April last year to make a formal application for the modification of their section 106 deal after just two years and appeal to the secretary of state against any refusal.

The strategy says: "We will ensure that any resulting appeals are dealt with promptly by the Planning Inspectorate to give certainty to both developers and local communities."

Roger Hepher, head of planning and regeneration at consultancy Savills, said: "There has been nothing to stop you from going to local authorities and asking to renegotiate the package, but the problem to date has been that they held all the cards. There was no way you could force their hand. To reduce the appeal period to two years is positive and rational."

The Department for Communities and Local Government said the measure was needed to encourage action on stalled development. The housing strategy says there are 133,000 homes with planning permission "that are currently not progressing".

Housing minister Grant Shapps told MPs last month: "Many of the local deals struck during the height of the boom ... placed unreasonable demands that simply do not make sense in today's economic climate."

Gerry Hughes, senior director at consultancy GVA, said: "What we're finding is that many of these obligations simply kill the viability of schemes and stop development taking place."

The proposal follows a statement in March from decentralisation minister Greg Clark that encouraged councils to "reconsider, at developers' request, existing section 106 agreements that currently render schemes unviable".

Hughes said it was right that the government was now bringing more pressure to bear. "It hasn't taken off," he said. "A number of more enlightened authorities are playing ball. But there are a number of circumstances where it's not been a priority."

However, Cameron Watt, head of neighbourhoods at umbrella body the National Housing Federation, said: "We are very concerned that, since renegotiation was first encouraged in the Treasury's Plan for Growth in March, there seems to be a trend of some local authorities too readily dropping section 106 affordable housing requirements."

He added: "Government should make it clear that there are some planning standards, including certain affordable housing requirements, that should not automatically be waived over viability concerns."

Laying the Foundations: A Housing Strategy for England is available via PlanningResource.co.uk/go/referencesection

See Tony Fyson, p17

Key Strategy measures

A £400 million Get Britain Building fund intended to lead to the construction of up to 16,000 homes on sites that already have planning permission "but have been shut down because of economic conditions"

A competition to promote the development of large-scale housing projects, including those on brownfield sites, where there is clear local support and appetite from the private sector

£50 million of new funding designed to help tackle some of the worst concentrations of empty homes

A small advisory group of experts led by Tony Pidgley, chairman of developer Berkeley Group, will look in detail at how the government "can unlock the release of and maximise development" at kay surplus public sector sites

Elements of the land auction model, which seeks to capture a greater share of the land value uplift created by the planning permission, will be trialled at public sector-owned sites at Catterick, West Lancashire and Hastings.


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