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Policy & Activities

10 October, 2012

HBF Response - Renegotiation Of Section 106 Planning Obligations: Consultation

Thank you for consulting the Home Builders Federation (HBF) on the above proposals.

The HBF is the principal representative body of the housebuilding industry in England and Wales and our representations reflect the views of our membership of national and multinational plc’s, through regional developers to small, local builders. Our members account for over 80% of all new housing built in England and Wales in any one year.

QUESTION 1

Viability of development is, of course, key to the delivery of much needed houses across the country and requirements under Section 106 agreements can lead to sites being unviable as markets and values change over time. It is, therefore, essential that development proposals are able to be re-assessed in terms of both their viability and impact on the area in which they are proposed in order that developments are not stalled merely on the grounds of their viability.

We acknowledge that the tests for planning obligations were strengthened in 2010 through the implementation of Regulation 122 of the CIL Regulations. However, many local planning authorities appear to believe that this repositioning of their approach towards obligations only applies when (or if) they have an adopted CIL in place. Thus many authorities continue to seek planning obligations that do not meet the statutory tests.

We are aware that some commentators are suggesting that because S106 agreements are precisely that – agreements between the LPA and the applicant – that there should be no provision for re-negotiation of their terms. We do not agree.

This is not least because many LPAs impose policy requirements on developments that are then secured through S106 agreements as part of the issued planning permission. In effect, therefore, S106 agreements are not agreements at all but are a legal bond, used by many local planning authorities for securing an element of development value to contribute towards public infrastructure. This should, of course, now be dealt with through CIL and thus we would welcome a more fundamental review of S106 approaches. We are currently working with the government on the practical implementation of CIL where this point can be strongly re-iterated.

 

Following this stronger clarification of the interaction between CIL and S106 we believe that many of the measures currently dealt with through the signing of a S106 agreement should be dealt with through attaching conditions to the permission. This would allow for viable solutions that reflect market conditions at the time of implementation of the permission rather than at the time of consent to be in the control of the developer.

It is, of course, notable that applications to implement permission without complying with a condition attached to it can be made at any time following the issuing of planning permission and we believe that this should also be the case with S106 agreements.

QUESTION 2

The proposal to allow formal renegotiation of a planning obligation made before 6 April 2010 is welcomed. However, this provision will, of course, age over time meaning that it will, within 2 years, be of no value (since the relevant provision of 5 years of S106 will over-ride the proposal). We suggest, therefore, that the government should consider a more permanent change to S106 to allow a formal request to reconsider any obligation when that obligation is 3 years old (rather than the current 5 year period). This proposal would have the benefit of being more responsive to market and policy changes in the future without the need for further piecemeal changes to the regulations and would ensure a greater understanding of the process by LPAs, developers and local communities.

One of the practical reasons for suggesting the above is due to the way the government has handled similar temporary changes to the planning system to allow it to respond to the recent economic climate. Allowing applicants to extend their planning permissions through amendment of the implementation cut-off date was similarly time limited. Thus there are a number of planning permissions (and associated S106 agreements) that were extended since April 2010 yet their viability assessment was conducted prior to 2010 and was not subject to the more rigorous tests set out in R122. These too should be open to re-negotiation.

If the government is not minded to introduce a rolling 3 year period to the formal re-negotiation process we would suggest that the proposed 3 year period should be reduced to 2 years ie: apply to S106 agreements signed prior to 6 April 2011. The introduction of the 2010 regulations and the new statutory tests for agreements took some time to register with local authorities (and in some cases has still not changed their approach towards new agreements) and thus this period is considered to be a more pragmatic approach to introducing this provision aimed at helping unlock as many sites as possible. This would greatly increase the number of sites assisted by this measure and release more than the 62% of stalled units predating April 2010 suggested in paragraph 2 of the consultation document.

QUESTION 3

With regard to the impact on affordable housing provision of the proposed measures we are aware of the government’s more recent announcements on proposals to encourage a more flexible approach towards the provision of affordable housing through the planning system. We believe that this flexibility would be best secured through a much wider definition of the term “affordable housing” and for the provision of such housing to be secured through a condition attached to planning permission thereby allowing a developer greater flexibility over how to meet the requirements of the permission when implementation occurs. This would allow developers to reflect changes in availability of funding over time, and provide a much wider range of tenures on sites to reflect the very fluid nature of both the market and specific types of tenure changes over time.

Overall, therefore, the HBF welcomes the government’s proposals to help unlock stalled development. However, we believe that it can go further to ensure that such flexibility is fully integrated into the planning system rather than merely being a short term, stop gap measure as a response to the market at this particular time.                

We would, of course, be happy to discuss any of the above representations in greater detail and look forward to the proposed changes being implemented as soon as possible.

Andrew Whitaker
Planning Director

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