Section 75 and other planning arrangements

The Planning Act passed in Scotland in 2006 contained provisions in relation to Section 75 Agreements. Such Agreements have been part of the planning scene for a long time – Section 75 is the relevant section in the 1997 Town & Country Planning (Scotland) Act. The predecessor section was Section 50 (of the 1972 Act) and the equivalent provisions in England are found in Section 106 of the relevant legislation there.

Use of Section 75 Agreements has grown over the years and they are undoubtedly a useful means of addressing issues which may arise in the context of a planning application. As Scottish Government guidance makes clear however they should not be used to duplicate planning conditions and planning conditions should be used in preference to Section 75 Agreements (see Planning Circular 1/2010) 

That Circular also sets out a number of policy tests all of which should be met to justify the use of Section 75 Agreements. These are as follows:-

The use of a Section 75 Agreement should be necessary;

The Agreement should serve a planning purpose;

The Agreement should be related to the proposed development;

The obligations in the Agreement should fairly and reasonably relate in scale and in kind to the proposed development;

It should be reasonable in all other respects.

While planning agreements have been with us for some time, the 2006 Act proposed changes which have now come into effect. Some of these changes are of considerable significance.

Generally rather than referring to planning agreements what we are now to talk about are "planning obligations". The new Section 75 Agreement makes clear that a planning obligation can take the form of an agreement with the planning authority or a unilateral undertaking. In England it has been possible to enter into unilateral undertakings for some time. It is a matter of some debate as to whether or not the fact that we now have unilateral obligations in Scotland will be of great significance. They might be useful to side step situations where (for whatever reason) it is not possible to enter into a planning agreement – either a land owner will not co-operate or indeed where the planning authority will not co-operate. However, except in exceptional circumstances it seems probable that having an agreement will be preferable to a unilateral obligation.

The new Section 75 also spells out (see Section 75(3)) what a planning obligation may deal with including specifically the payment of a specified amount or periodic sums. While this is more specific it does not seem to signal any real change.

Usually Section 75 Agreements will be recorded either in the Sasine Register of the Land Register (but they need not be). If they are registered however (and typically they will be registered) the Section 75 Agreement (or planning obligation) is to be enforceable against the owner and successors in title. Interestingly enough there is a specific sub-section which now to includes heritable creditors in possession as "owners" so far as enforcement is concerned. The drafting of the Act is such that the person who enters into the Section 75 Agreement could potentially remain liable for obligations in terms of that agreement notwithstanding that they dispose of the land (see Section 75C). When drafting a planning obligation going forward it will be necessary to ensure that the document itself deals with ongoing liabilities.

Up until now there has been no provision permitting a land owner to seek to vary a Section 75 Agreement other than by agreement with the planning authority. Section 75B of the 2006 Act changed that and these changes have now been brought into effect. The consequence of that is that a land owner having sought the agreement of a planning authority to vary a Section 75 Agreement or planning obligation may appeal to Scottish Ministers if the planning authority are unwilling to do so. There appears to be issues about how any decision made on an application (appeal) to the Scottish Government can be registered. This may require further intervention by way of a Statutory Instrument.

In order to give guidance upon this issue the Scottish Government have published an Annex to Circular 1/2010. This sets out the process or procedure that needs to be gone through to seek to modify or discharge a Section 75 Agreement (or planning obligation). Paragraph 20 provides that when a person "against whom a planning obligation is enforceable" wishes to modify or discharge it "they have to apply (under a Section 75A(2)) to the planning authority seeking their agreement for the modification or discharge." On one interpretation this appears to suggest that the only way to go about matters now is to apply in terms of the legislation. It is not clear therefore whether a more informal consensual approach is still possible. The Act does not set out any criteria which are to be applied to an application for modification or discharge and the Annex to the Circular suggests in paragraph 30 that the relevant criteria to be applied are those set out in the Circular (briefly summarised above). Specifically paragraph 31 is in the following terms:-

"This is not to say that there should be a presumption against any application. The planning authority should take into account any changes in circumstances; for example it may be that external factors affecting the development mean that the obligation is no longer reasonable and that a modification to reflect the change in circumstances is appropriate. It is therefore important that the applicant clearly sets out their grounds for seeking a modification and the exact terms of the modification sought."

Clearly it will be interesting to see how the Scottish Ministers approach such applications going forward. It seems unlikely that they will lightly vary a Section 75 Agreement or planning obligation containing significant obligations if (a) a planning permission was fairly recently granted and (b) the terms of the Section 75 Agreement or planning obligation were critical to that grant. One issue which may however be particularly problematic is the impact of the current economic climate. The Chief Planner (apparently at the request of the Cabinet Secretary) has recently written to local authorities in respect of affordable housing highlighting that in the current economic climate it may not be appropriate to insist upon provision at levels which have previously applied particularly where there is no funding to support the development of that affordable housing. It is possible to envisage situations where a party may apply to a planning authority to vary an agreement in respect of affordable housing because of the current economic position and if refused seek to apply to Scottish Ministers in terms of the legislation which is now into effect.

The Annex to the Circular deals with the procedures which are to be followed through in an appeal to Scottish Ministers. It appears that the options available to Scottish Ministers are to discharge the obligation, to decide that the obligation (Section 75 Agreement) should be modified in accordance with the changes sought by the applicant or to determine it should continue in effect without any modification. They do not appear to have the right to vary it in a way different to that sought by the applicant.

If the Section 75 Agreement has been registered then any determination varying it or discharging it will equally need to be registered. While the Annex to the Circular highlights this issue and contains some guidance on the point, it is far from clear as to how in practice this will be achieved given the difficulties there can be with registration.

Incidentally the Annex to the Circular appears to proceed on the basis that the new provisions apply not only to new style planning obligations but old style Section 75 Agreements. While this is welcome if it is in fact the case, the drafting in the Act is not entirely clear on that point.

The changes to the Act also brought in a new form of planning agreement known as a Good Neighbour Agreement. There was little consultation about these. They have to be entered into with a community body and they cannot provide for payment of any monetary sums. Rather Section 75D(6) provides that they may require operations or activities specified in the agreement to be carried out in, on or under land or require the land to be used in the way specified. This provision is in amplification of Section 75D(1) which indicates that a Good Neighbour Agreement can govern operations or activities relating to the development or use of land either permanently or for a specified period.

It was understood that Good Neighbour Agreements should be the exception rather than the norm. The Annex to the Circular provides in paragraph 18:-

"A GNA should not be viewed as alternative to a planning obligation. A planning authority should not GENERALLY seek to make it a requirement for the grant of planning permission that a GNA should be put in place" (emphasis added).

The use of the word "generally" is slightly worrying and it may be that in some instances we will see planning permissions granted or resolutions passed to grant planning permission subject to a Good Neighbour Agreement being entered into. That may be difficult if there is doubt about the identification of the community body or its willingness to enter into such an agreement.

It is hoped that Good Neighbour Agreements should be the exception rather than the norm – whether that is the way the Government sees it now is less clear.

The Annex also contains provisions about modification and discharging Good Neighbour Agreements which to a large extent mirror those in relation to planning obligations (Section 75 Agreements).

Clearly the right to appeal a Section 75 Agreement is welcome should it be necessary. Some of the other changes however are less clear and considerable care will be necessary in drafting planning obligations or agreements going forward to ensure that the new legislation is fully taken into account.