Changes to S106 Planning Obligations in Small Housing Developments

The Government response to the ‘Planning Contributions (Section 106 Planning Obligations)’ was published on 28 November.  The result of the response is that the following changes have been made to National Planning Policy:

  • For sites of 10 units or less and a maximum combined gross floor space of 1000 square metres, affordable housing and tariff style contributions should not be sought;
  • Designated rural areas (including National Parks and Areas of Outstanding Natural Beauty) can implement a lower threshold of 5 units or less (without a maximum gross floor space), which should not attract affordable housing and tariff style contributions;
  • Both of the above also apply to residential annexes and extensions;
  • If a 5-unit lower threshold is implemented, contributions for developments of between 6-10 units should be sought as cash payments only and should be payable from sales receipts after completion of the units;
  • The above will not apply to Rural Exception Sites (being areas of land which are on the edge of settlements or are well placed for the delivery of small affordable housing developments, to meet identified local need), though will still not apply to residential annexes and extensions;
  • A financial credit, equivalent to the gross existing floor space of vacant buildings brought back into lawful use or demolished and redeveloped, will be deducted from the calculation of affordable housing contributions sought, though this will not be applicable to vacant buildings which have been abandoned.

These changes took effect as part of the Ministerial Autumn Statement and are now fully in place in national planning policy.  As such, the changes will be treated as material considerations in the determination of planning applications.

The DCLG has indicated that there are no transitional arrangements in place for applications which have the grant of planning permission, subject to Section 106 planning obligations, but have not yet been implemented.  Developers with the benefit of such permissions may wish to apply to the relevant Local Planning Authority for the modification, or in some cases, discharge, of the S106 agreement if under the new provisions, affordable housing contributions and tariff style contributions would not be sought.

There is no obligation on Local Planning Authorities to apply this change retrospectively but there are, of course, the provisions of Section 106BA and 106BB of the Town and Country Planning Act 1990, which came forward as part of the Growth and Infrastructure Act 2013, requiring Local Planning Authorities to consider the modification of affordable housing requirements within Section 106 agreements where compliance with planning obligations would render the development economically unviable.

Where permissions have not yet been granted but have resolutions to grant subject to the prior completion of a Section 106 agreement, it may be financially worthwhile for developers to raise the issue of taking applications back before Planning Committee in order to avoid the payment of such contributions.  This will need to be balanced sufficiently against the impact on development programmes.

If you would like further information on these changes, or planning law generally, please contact Debbie Charles, Senior Solicitor in our Planning team, on 0161 838 0434.

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.