27 February 2015

Government announces rule changes to benefit developers

Developers will welcome proposed changes whereby section 106 planning agreements will not be sought for developments below a certain size.

A section 106 agreement is an agreement under which a local authority can require a developer to mitigate the impact of a new development - for example, by making payments towards community, play educational or sports facilities, agreeing to restrictions on the development or use of land, tree planting or the provision of affordable housing as part of the development.

The Government has announced it intends to change the rules so that section 106 planning obligations will not be sought if:

  • A development (including self-build) is for ten or fewer units and the maximum combined gross floor space is 1,000 square metres or less
  • A development is in a designated rural area, is for five or fewer units and the local authority has chosen to implement this threshold. There is no maximum floor space limit. In designated rural areas where the authority has chosen to implement the five unit threshold, payment of section 106 planning contributions will be sought in cash - and deferred until the units have been completed
  • A development comprises construction of an annex or extension to an existing home

The changes are not intended to apply to Rural Exception Sites.

However, local authorities will still be able to require developers to provide site-specific infrastructure such as street lighting if the development would not otherwise be acceptable for planning purposes, even if the development is below the new thresholds.

In addition, the Autumn Statement and the National Infrastructure Plan 2014 contained confirmation that the Government is to introduce the following changes to speed up section 106 negotiations:

  • Revisions to guidance
  • A faster negotiating process
  • Setting timescales for agreement could be introduced
  • Making use of section 106 funds more transparent

Recommendation

Developers should factor the proposed changes into their business planning, as it may affect the nature and timing of future developments.