Stuck with a planning obligation to pay infrastructure contributions on a small scale site?

Local planning authorities will be scurrying to deal with a rush of applications from developers who are in possession of small scale sites that are subject to existing agreements, entered into before November’s change in government guidance.

In November 2014 the government announced the following circumstances where infrastructure contributions through planning obligations should not be sought from developers due to the disproportionate burden of developer contributions on small scale developments.

  • For sites of 10-units or fewer, that have a maximum combined gross floor space of 1000 square metres, affordable housing and tariff style contributions should not be sought;
  • Affordable housing and tariff-style contributions should not be sought from any development consisting only of the construction of a residential annex or extension to an existing home;
  • In designated rural areas (including National Parks and Areas of Outstanding Natural Beauty), authorities may choose to implement a lower threshold of 5-units or less, beneath which affordable housing and tariff style contributions should not be sought. This will also apply to all residential annexes and extensions. In addition, in a rural area where the lower 5-unit or fewer threshold is applied, affordable housing and tariff style contributions should be sought from developments of between 6 and 10 units in the form of cash payments, which are commuted until after completion of units within the development.
  • A financial credit, equivalent to the existing gross floorspace of any vacant buildings brought back into any lawful use or demolished for re-development, should be deducted from the calculation of any affordable housing contributions sought from relevant development schemes. This will not however apply to vacant buildings which have been abandoned.

These changes in national planning policy will not apply to Rural Exception Sites which, subject to the local area demonstrating sufficient need, remain available to support the delivery of affordable homes for local people. However, affordable housing and tariff style contributions should not be sought in relation to residential annexes and extensions.

The downside is that there are many small scale sites with as yet unimplemented planning permissions that are subject to agreements requiring contributions which were entered into before the November 2014 changes. The new guidance does not apply retrospectively. Prospective developers of such sites making enquiries of local planning authorities are being told that obligations entered into before the change are enforceable by local planning authorities provided they were validly required when they were entered into.

However developers of small scale sites who do not wish to comply with their existing obligations have a number of options:

  • planning obligations can of course be renegotiated by agreement at any time, where the local planning authority and developer agree to do so;
  • where there is no agreement to voluntarily renegotiate, and the planning obligation predates April 2010 or is over 5 years old, an application may be made to the local planning authority to modify or discharge the obligation. Under such an application, the Council will consider whether the obligation still serves “ a useful purpose” or would continue to serve a useful purpose if modified; and
  • in addition, Section 106BA (inserted by the Growth and Infrastructure Act 2013) allows applications to be made to modify the affordable housing requirements of any Section 106 agreement regardless of when it was signed. This review must be based on economic viability and cannot take into account other aspects of the planning consent. It addresses affordable housing requirements only.

If all else fails developers can apply for planning permission for the same development setting out the case for non-payment, to be considered against current guidance.

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