The Government has now published the long awaited revised guidance on the use of Section 106 planning agreements.

The new Circular 05/2005 –Planning Obligations (which applies to England only) replaces the previous Circular 1/97 with immediate effect. It is, in the main, an attempt by the ODPM to clarify how Section 106 Agreements should be assessed for their acceptability in policy terms and to give further guidance on the process of securing obligations.

The changes introduced at this stage do not include the so called optional planning charge or “tariff” arrangements originally proposed in the November 2003 consultation paper. The Government has struggled to move matters forward in that respect following the identification of a number of well publicised difficulties. However, the concept of tariffs will be revisited later this year as part of the Government`s response to the Barker Review of Housing Supply. It will be recalled that this suggested the introduction of a “Planning Gain Supplement” accompanied by a “scaled back” system of planning obligations.

In the meantime, the new guidance is designed to encourage the faster and more transparent delivery of planning permission and recommends a number of measures to achieve that. For the first time, the guidance will also include a “Good Practice Guide” on the use of planning obligations although that will not be published until later in the year.

There are a number of points arising from the guidance that will be of particular interest to those involved in negotiating such agreements:-

• Necessity Test - there is a subtle change to the necessity test. Whereas the previous guidance merely referred to the need for contributions etc to be “necessary” the new Circular extends this definition by introducing a new test of “Necessary to make the development acceptable in planning terms”. This is designed to remove the ambiguity over what is “necessary” to allow development to proceed. Inevitably, there is still a tension here between the policy test and the “legal” test applied by the courts. ie that for contributions to be lawful it is only necessary to show that they have some connection with the development that is more than “de minimis” .
• Affordable Housing - for the first time a clear basis for delivering affordable homes through the planning system are included in this Circular. Paragraph B12 in Annex B states “… planning obligations can be used to secure the inclusion of an element of affordable housing in a residential or mixed use development where there is a residential component”. Importantly, Paragraph B13 goes on to state that the requirement for affordable housing “…should be in line with Local Development Framework (“LDF”) policies on the creation of mixed communities”. Those policies are required to set site-size thresholds above which a specified proportion of affordable housing will be required. The presumption is that this will be on-site provision (to facilitate the creation on mixed communities) although in some cases the LPA will be able to specify a requirement for off-site provision or financial contributions in LDF documents.

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