Published: 28.10.24
Planning Obligations – Time and Money
The topic of planning obligations and Section 106 (s106) agreements has resurfaced, as recent research by the HBF[1] estimates that over £8 billion of developer payments for infrastructure are held by local planning authorities (LPAs) in England and Wales. This figure has doubled since last year, sparking frustration among developers who are often seen as withholding contributions, while some councils delay project delivery.
Historically, planning obligations were tied to larger developments, but they’re now more frequently required for smaller sites. Our 2022 blog[2] on small site affordable housing contributions highlighted that London LPAs led the trend, with six[3] currently mandating contributions and five[4] others considering similar policies in their Local Plans. Merton, for instance, is close to finalising such a policy, and Westminster has proposed a steep tariff system that may impact development viability.
The cost burden of viability assessments is also significant, especially for small developers who must fund both their own consultants and LPA advisors. Additionally, LPAs often cause delays even for straightforward non-monetary obligations, such as car-free parking and travel plans. It is not uncommon for these to take months despite them being relatively simple documents. There is a pressing need for reform on this aspect.
In light of challenges to SME builders, the recent Radix Big Tent paper recommended a dedicated LPA support service to expedite processes for SMEs[5]. From our perspective alternative mechanisms should be used for car-free agreements, such as using Traffic Regulatory Orders (TROs), could eliminate the need for repetitive S106 agreements. For instance, Royal Tunbridge Wells uses TROs to restrict new property parking permits—an approach that London boroughs amongst others could consider.
To navigate viability issues on small site contributions, developers must stay informed of emerging policies to ensure that deals remain feasible under new plans. Overpaying for a site is never taken into account as a mitigating factor.
At Planning Insight, we have experience of dealing with Section 106 agreements and planning obligations both in terms of negotiating terms and dealing with existing agreements. Our team work proactively with local authorities and offer strategic advice on viability to keep projects on track.
[1] https://www.hbf.co.uk/policy/unspent-developer-contributions/
[2] https://www.planninginsight.co.uk/blogs/small-sites-contributions/
[3] Islington, Tower Hamlets, Southwark, Hackney, Richmond and Brent
[4] Merton, Ealing, Wandsworth, Westminster and Lewisham.
[5] Pg 35 https://radixuk.org/wp-content/uploads/FINAL-Housing-Report-OCTOBER-24_EMAIL.pdf