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Section 106 Consultation
Department for Communities and Local Government
Fry Building
2 Marsham Street
London
SW1P 4DF
[email protected]
18 March 2015
Dear Sir/ Madam
Section 106 Planning Obligations – speeding up negotiations consultation
London First was established in 1991. We are a not-for-profit membership organisation with a
mission to make London the best city in the world in which to do business.
Our Members reflect the diversity of London’s economy, representing property, transport, finance,
professional services, creative industries, hospitality, retail and higher education.
We work in partnership with business leaders from across these sectors to identify and address
the core challenges that our capital faces, with the shared goal of strengthening London’s global
competitiveness.
We welcome the opportunity to respond to the Section 106 Planning Obligations – speeding up
negotiations consultation paper. We have set out our detailed comments to the questions posed in
the consultation paper below:
Question 1: Do you agree that Section 106 negotiations represent a significant source of
delay within the planning application process?
Yes, Section 106 negotiations are a significant source of delay within the planning application
process to secure an implementable planning permission.
The negotiation process to agree a Section 106 agreement does take too long. One main reason
for the protracted delay is due to the lack of an incentive or performance target placed on local
planning authorities to resolve Section 106 negotiations in a timely manner.
In our view, local planning authorities start the Section 106 discussions too late in the planning
application process. As a result, the preparation of draft documents associated with the Section
106 agreement are delayed as the associated resources within a local authority, such as legal
services, are having to prioritise competing demands (developers are often willing to pay for
external support in such situations but many local authority legal departments reject this because
of the potential implications for future resource/budget).
We support the Government’s proposal to ensure agreements are dealt with within the statutory
deadline on condition that this does not result in an inflexible stance being taken by local planning
authorities, which in turn results in developers being held to ransom and forced to sign unworkable
impracticable deeds that require later variation or take the matter to appeal (this is happening in
some areas where LPAs are imposing their own deadlines as part of the decision making process).
London First supports the need to require local planning authorities to engage on the scope of
Section 106 agreements during the pre-application stage and encourage the greater use of
standardised clauses through the process.
A key concern is the inconsistency of the approach of local planning authorities to Section 106
negotiations. A number of local planning authorities have specific guidance on planning
obligations/Section 106 agreement which enables a degree of certainty and transparency, from the
outset, as to the nature and content of any Section 106 agreement. However, this does not apply to
all local planning authorities. It would be helpful if there was a requirement for every local planning
authority to publish guidance setting out the nature of the planning obligations which will be sought
in respect to particular types of development. This information would then enable developers to
prepare both detailed heads of terms and possibly a draft Section 106 agreement which can be
submitted as part of the planning application documentation and provide clarity to the community.
The same principles and timescales ascribed to determining a minor or major planning application
should apply to Section 106 negotiations and the cost of negotiating Section 106 agreements should
be an integral part of the planning application fee.
Question 2: Do you agree that failure to agree or complete Section 106 agreements are
common reasons for seeking extra time to determine a planning application?
Yes, we agree the failure to agree or complete Section 106 agreements is one reason for seeking
extra time to determine a planning application.
Local planning authorities are generally reluctant to engage in Section 106 discussions with the
applicant early on in the planning process. Similar to the way local planning authorities manage
planning conditions, they tend to only discuss Section 106 matters as the committee report is being
prepared.
To help mitigate the time it takes to agree Section 106 agreements, local planning authorities
should be required to engage with applicants on Section 106 matters much earlier on during the
planning process; in our view at the pre-application and throughout, since obligations are often
highlighted by consultee and community responses.
Engaging in regular meetings with the applicant during the pre-application stage to discuss what
the Section 106 package should include will provide clarity on what local community benefit is
being derived from the development and would form part of the viability assessment which will
accompany the planning application. By having the heads of terms for the Section 106 agreement
as part of the committee report it will ensure both the planning committee and community are clear
what will be delivered if the application is approved. We should add that these must be detailed
heads of terms which contain the more mundane points of legal documentation as well as the
“headlines” of eg. the amount of a contribution, if they are to fulfil the objective of speeding up the
Section 106 process.
Indeed, we would go further and suggest that there is no reason why a draft Section 106 agreement
cannot either be appended to a committee report or at least made available to the committee for
consideration. There should be nothing secretive about Section 106 negotiations and this added
layer of transparency should hopefully speed up the timescales for determining a planning
application because it will force both the local planning authority and a developer to focus their minds
and attention on the actual content of the Section 106 agreement, as opposed to agreeing basic
heads of terms. It would also avoid the lawyers being able to "reinvent the wheel" post a committee
resolution by removing some of the scope for the negotiating points which depart from the matters
reported to and considered by the planning committee.
Question 3: Do you agree that the current legal framework does not provide effective
mechanisms for resolving Section 106 delays and disputes in a timely manner?
The current statutory framework does not provide an incentive to conclude Section 106
negotiations promptly, nor does it provide for effective sanctions where delays and/ or disputes
occur. We look forward to working closely with Government in drafting primary powers in the next
Parliament to streamline the Section 106 process.
Despite the introduction of Community Infrastructure Levy (CIL), which was designed in part to
help speed up the Section 106 planning process, in practice this has not always been the case,
particularly for large developments. Our members advise us that CIL is being treated as an
additional requirement and extensive Section 106 contributions and other obligations are still
sought from a number of parties. Reaching an agreement on affordable housing contributions still
remains a significant area of negotiation.
The restriction to pool Section 106 contributions from more than five developments in April 2015
should help to limit the additional planning obligations being sought from development (whilst
adding to complexity and risk of judicial review), but we are concerned that local planning
authorities are likely to find a way around this limit which applicants will ultimately have to work with
to ensure they can secure an implementable planning permission. We are of the view that there
needs to be further clarity as to the basis upon which any local planning authority can seek
additional planning obligations.
We anticipate that some local planning authorities will suggest that developers "volunteer" planning
obligations as a means of ensuring a positive determination of a planning application. This
approach would run contrary to paragraph 204 of the NPPF and CIL Regulations 122 and 123.
We support the Government’s proposal to amend guidance to address the Section 106 delays
including:
 confirming that Section 106 negotiations should be concluded within statutory timescales;
 set expectations of earlier engagement at the pre-application stage by all parties to frontload discussions about the scope of the Section 106 “ask”;
 encourage greater use of standardised clauses (agreed in a form generally acceptable to
both developers and local planning authorities) to minimise the need to draft agreements
from scratch;
 set expectations for greater transparency about what has been raised through Section 106
and what it has been spent on.
In addition to these helpful amendments to guidance, London First suggests the following
measures should also be introduced to help speed up Section 106 agreements:
1. requirement for all local planning authorities to publish standard Section 106 guidance
2. the use of a policy-based formula to calculate contributions (subject to the limitations placed
by regulations 122 and 123 of the CIL Regulations 2010)
3. provision of draft detailed Section 106 heads of terms with the planning application
4. the applicant’s lawyer providing the first draft of the Section 106 agreement
5. greater emphasis on the role of the planning officer in project managing, mediating
competing demands, solving problems and making decisions
6. where possible obligations should be secured through conditions rather than Section 106
We believe these additional measures alongside the proposed changes to guidance will improve
the existing Section 106 process.
Question 4: Do you agree that legislative change is required to bring about a significant
reduction in the delays associated with negotiating Section 106 agreements?
Yes, the process can be improved by ensuring Section 106 agreements are dealt with within the
statutory deadline. If they are not dealt with within the statutory deadline the local planning
authority should be required to refund the fees which have been paid.
We believe sufficient resourcing of legal/ planning departments in local planning authorities is also
necessary to ensure Section 106 agreements are efficiently processed. The ability to ring-fence
funding to ensure local planning departments are appropriately staffed to help address delays is
also necessary.
Question 5: Do you agree that any future dispute resolution mechanism should be available
where Section 106 negotiations breach statutory or agreed timescales?
London First believes the introduction of a dispute resolution service could add further cost and
delay by introducing a new process and a third party. Our preference would be to require the
referral of Section 106 agreements that are not concluded within the statutory deadline to be given
to the Mayor of London to resolve within a specified timescale.
We suggest an amendment to the Mayor of London Order to give developers the option of having
a Section 106 agreement, for a referable application, to be determined by the Mayor in cases
where a period of time has elapsed, say three months, between the local planning authority
granting permission but the Section 106 agreement remains unsigned. The proposed change to
the Mayor of London Order should be possible without the need for primary legislation.
Having the option to refer a Section 106 agreement to the Mayor would help to incentivise the
London boroughs to resolve the Section 106 agreements in a timely manner.
A dispute resolution service would add an additional layer of bureaucracy which some local
planning authorities might use to help delay the resolving the Section 106 agreement.
The only way in which a dispute resolution mechanism would be effective is if there is a requirement
for local planning authorities to issue clear guidance about the scope and content of planning
obligations. There would then be some basis upon which the dispute or delay in drafting and
negotiating the Section 106 agreement can be objectively assessed. There would also need to be
a requirement for greater use of standard terms – the Law Society embarked upon the process of
preparing a standard Section 106 agreement several years ago. Unfortunately, the usage of this
standard agreement has been somewhat inconsistent. The process could be speeded up, quite
considerably, if there was a requirement to use a standard form of Section 106 agreement.
Question 6: Do you agree that a solution involving an automatic or deemed agreement after
set timescales would be unworkable in practice?
The proposition is attractive but in reality, it is unlikely to be workable in practice. There is a strong
likelihood that failure to agree an agreement within an agreed timescale would result in local planning
authorities reverting to the default position and resolving to refuse a planning application. The
incentive to a local planning authority to agree a Section 106 agreement within a set timescale would
be the ability to retain a planning application fee as opposed to the threat of loss/repayment of a
planning application fee if the timescale has not been met and the reason for failing to meet the
timescale is due to delay and/or intransigence on the part of the local planning authority.
Question 7: Could submission of a draft Section 106 agreement or unilateral agreement
during the negotiation process be a requirement of being able to seek dispute resolution
where statutory or agreed timescales are breached?
Yes, London First would welcome a requirement to submit a draft Section 106 agreement or
unilateral agreement during the negotiation process and for it to be available to the committee when
considering the planning application. If any of the provisions of the draft Section 106 agreement are
unacceptable to the local planning authority, this should be set out, clearly, in any reasons for
deferring determination of the planning application and setting any timescale within which resolution
should be sought.
Question 8: Do you agree any dispute resolution mechanism would need to be binding on
the parties involved?
As long as there is transparency in the process, we see no difficulty in any dispute resolution
mechanism being binding on the local planning authority but not to the developer. In our view, any
dispute resolution must be completed in two months.
Question 9: Which bodies or appointed persons would be suitable to provide the dispute
resolution service?
Yes. We would recommend that appointed bodies should be the Law Society, the Bar Council and
the RICS. Appointed persons should be those with relevant experience of acting for both developers
and local planning authorities drafting and negotiating Section 106 agreements. The overall process
could be overseen by the Planning Inspectorate.
Question 10: How long should the process take?
In practice, a dispute resolution service could entail a third party taking a considerable amount of
time to understand the planning application. This would include the need to understand local
planning policies, the detail behind the viability assessment and local political priorities. In order for
a third party to understand the intricate detail behind a Section 106 agreement, which is a document
that interplays with a host of other planning documents, they would need to look at the Section 106
agreement alongside the planning application and its wider context within the local authority. Such
an exercise would invariably take a long time to complete and could be counterintuitive in trying to
speed up the Section 106 agreement process.
In our view, any dispute resolution process should be limited to a maximum period of time of two
months. This should enable the draft agreements and supporting submissions to be submitted, the
appointed body/person to review and invite comments and, on receipt of those comments, issue a
final decision in a form of a draft agreement with a requirement for the parties to execute the
agreement within a prescribed period of time. If the agreement is not signed, the application would
either be refused (in the event that the developer refuses to sign) or deemed to be approved (in the
event that the local planning authority refuses to sign) and in such circumstances the agreement
would be converted into a unilateral obligation.
To be clear, a dispute resolution service could add further cost and delay to the applicant rather than
speed up the process unless it was subject to a strict timetable.
Question 11: Do you agree that the body offering Section 106 dispute resolution should be
able to charge a fee to cover the cost of providing the service?
Yes. If Government decides to pursue a dispute resolution service, London First believes it should
be seen as a cost risk to local planning authorities so that it is not used as a mechanism to delay
resolving the agreement or as a route to seek a time extension because they are too busy to
process it.
Question 12: Should all types of planning application have recourse to Section 106 dispute
resolution?
Yes
Question 13: Do you consider that any dispute mechanism would need to also involve the
determination of the related planning application?
No, it should be possible for the issue in dispute to relate solely to the nature and scope of any
planning obligations.
Question 14: Are there any ways in which this could be done where only the Section 106
agreement is the subject of the resolution mechanism?
As noted in our response to Question 13, there are already circumstances where the only issue in
dispute is the extent and scope of any Section 106 obligations. In such circumstances, the dispute
resolution should focus solely on the terms of the Section 106 agreement and should not be seen
as an opportunity to reconsider planning policy and development management issues, save to the
extent that there is any overlap or direct interrelationship between the two and it is reasonable and
sensible for the expert to review any related planning conditions in order to avoid unnecessary
duplication.
Question 15: To what extent do you consider that the requirement to provide affordable
housing contributions acts as a barrier to development providing dedicated student
accommodation?
London offers a world class higher education system which plays a vital role in maintaining the
capitals economic competitiveness. Part of this offer is providing sufficient and suitable
accommodation to house the students that wish to study in London.
Given the nature of the current land market in London, providing student accommodation is
becoming increasingly difficult, particularly given the strong preference of students to be located in
London’s central Underground zones. Placing additional planning obligations such as affordable
housing on the providers of dedicated student accommodation can, in many instances, mean that
a scheme becomes unviable.
Some London boroughs already have in place affordability schemes such as bursaries and require
developers to sign up to these. Where this is the case, a requirement to pay high CIL rates –
increasingly common for dedicated student accommodation – and also provide affordable housing
only serves to reduce the viability of dedicated student accommodation development.
A reduction in future supply, set against a background of rising demand, will only serve to increase
the cost of accommodation for the student body as a whole which threatens London’s leading
position in higher education.
We look forward to working with you on developing these proposals. If you have any queries
regarding our response please contact me using the details below.
Yours sincerely,
Faraz Baber FRICS MRTPI FRSA
Executive Director, Policy
D: 020 7665 1458 T: 020 7665 1500
Website: www.londonfirst.co.uk Twitter: @London_First
Middlesex House, 34-42 Cleveland Street, London W1T 4JE