End of appeal route leaves little room for renegotiation, by Jamie Carpenter

Earlier this year, the government surprised many in the sector by announcing that a temporary appeal mechanism to allow developers to challenge affordable housing obligations was to be killed off.

The section 106BC appeal mechanism was introduced by the Growth and Infrastructure Act 2013 to allow affordable housing obligations to be appealed where they are claimed to make schemes unviable.

The government’s decision to activate the mechanism’s "sunset clause", which came just months after a pledge to extend the scheme’s lifespan, has left some practitioners puzzled. They point to the fact that in some parts of the country economic conditions have not improved since the scheme was introduced, as well as figures showing that most recent appeals have been allowed, as evidence that it is still required.

Where appeals have been allowed, these did not necessarily result in the wholesale ripping up of affordable housing contributions, proponents of the mechanism point out. The decisions taken by inspectors were pragmatic and where affordable housing contributions have been reduced, this has not always been on the basis sought by the appellant, they argue.

Furthermore, the existence of the mechanism prompted voluntary renegotiations between authorities and applicants that may not have otherwise happened, observers claim.

However, others feel that the repeal of the mechanism is to be welcomed. In some instances, they say, it was being abused. Ministers’ intention was for the scheme to be used to rewrite section 106 agreements agreed in different economic conditions that were holding back housebuilding.

But commentators told Planning that some appellants had used the scheme in a different way, "banking" a planning permission, then shortly afterwards seeking to use the mechanism to challenge their local council’s position on affordable housing. Such tactics do little for public confidence in the planning system, they rightly point out.

In the absence of the mechanism, there is much less scope for applicants to seek to renegotiate affordable housing obligations, putting local planning authorities in a much stronger position, commentators agree. Applicants only have the right to challenge a section 106 agreement if it is more than five years old. If the agreement is less than five years old, an applicant can seek to renegotiate an agreement, but the authority has to be willing to do so.

Those concerned about the impact of the loss of the appeal mechanism take some comfort from the promise of a section 106 dispute resolution service, legislated for in the Housing and Planning Act.

In the meantime, experts suggest, applicants are best advised to negotiate on viability at the point at which they put their initial application in. Those that seek to renegotiate developer contributions further down the line could now find their options severely limited.

Jamie Carpenter, deputy editor, Planning // jamie.carpenter@haymarket.com

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