Planning and development: will new national guidance result in local action? - Kuits Solicitors Manchester
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Planning and development: will new national guidance result in local action?

Planning and development: will new national guidance result in local action?

10th June 2020 - Published by Kuits planning team

When it comes to financial or in-kind contributions, housing numbers and viability, there has always been an inherent tension in the relationship between the developer and the planning authority – even pre-COVID19. Naturally, planning authorities are reluctant to reduce contributions that they see as fairly and rightly mitigating the impact of development. It will therefore be interesting to see what action will be taken on board, following the release of a raft of guidance by the government in May designed to help the development industry during the global pandemic and perhaps most importantly, how the recommendations will be put into practice by local planning authorities.

Background

In its May release, the government acknowledged that there are greater flexibilities within planning obligations made under section 106 of the Town and Country Planning Act 1990 than with Community Infrastructure Levy payments, which are bound by a tight and complex set of regulations (and which the government intends to amend in due course).

The guidance around planning obligations brought a welcome relief to developers, as planning authorities were ‘encouraged to consider’ whether it would be appropriate for those obligations, such as financial contributions, to be deferred. It was recommended that deeds of variation be used to agree these changes and, further, that local authorities take a pragmatic and proportionate approach to the enforcement of section 106 planning obligations during this period.

Certainly, this opportunity to delay payments or the delivery of obligations – commonly required to be paid before commencement of development or upon completion or occupation of open market dwellings – until much later in the construction program, could make a significant difference to the dwindling cash flow of developers. The last thing either developers or the government wants in the middle of a housing crisis is the further stalling of sites. This would undoubtedly appear to be a positive step to assist the housing market, but it remains to be seen how effective payment deferrals alone may be and how the planning authorities will react to the ‘encouragement’ to be more flexible.

However, in what may well prove to be good news for our clients with sites in Manchester City Council’s administrative area, at a meeting of the Executive last week, the Chief Executive’s report considered its response to the government’s encouragement.

Response

The committee report noted that the Council appreciated the ‘impacts of the new economic landscape on the viability of development’ and acknowledged that appraisals of planning obligations would be affected. The report suggested that it will be ‘far more likely’ that contributions would be captured at the end of, rather than the commencement of, development.

As the government guidance is, after all, only guidance, the development industry is asking for similar legislation to that temporarily brought in following the last recession, which specifically allowed the renegotiation of affordable housing obligations. Currently, any renegotiation of section 106 agreements must be done by agreement with the planning authority if agreed less than five years previously, or on application (with the right of appeal) if after that time. However, the impact upon already stretched planning and legal officer resources should not be underestimated if, as anticipated, developers leap to take advantage.

Final thoughts

We consider Manchester City Council’s attitude as a sensible one, especially as the current and future economic reality is so fundamentally different to that when the contributions were negotiated. It is suggested that, if planning authorities are approached to reconsider the timing or quantum of contributions, it is more likely that all planning authorities would take that suggested ‘flexible’ approach to timing rather than the overall quantum of payments. Robust viability studies would be needed to support the latter submissions, which may prove difficult in the shifting sands of the current pandemic. As any drop in house prices cannot be predicted with certainty, planning officers may consider it premature to reduce the quantum and prefer to vary existing agreements’ payment triggers in the first instance.

It is to be hoped that Manchester City Council puts its proposals into practice and that other planning authorities follow suit in order to support the development industry.

For specialist planning law advice, please contact Victoria Leam on 0161 503 2998 or email victorialeam@kuits.com.

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