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PLANNING OBLIGATIONS COULD HELP FUND MORE AFFORDABLE HOUSING

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Local authorities were today urged to make better use of 'section 106' agreements to deliver more affordable housin...
Local authorities were today urged to make better use of 'section 106' agreements to deliver more affordable housing and infrastructure.

The call to action came as the government published new guidance for local authorities and developers on how better to use planning obligations. The guide offers practical advice on how to improve the development, negotiation and implementation of section 106 agreements. It also provides real life examples of how to make the process quicker, whilst providing more certainty, and includes a model legal agreement prepared by the Law Society.

A recent study by Sheffield University showed that there is still a great deal of inconsistency between local authorities in the use of planning obligations. The research showed that sixty per cent of medium and large and ninety per cent of minor residential planning permissions do not include s106 agreements at all.

Planning minister Yvette Cooper said:

'We all know that land values can rise dramatically once planning permission has been given. Yet in the majority of cases developers pay nothing towards infrastructure and affordable housing. That is why we are looking at new ways to raise more from planning gain. And in the meantime we are urging local authorities to make more use of section 106 agreements to provide the affordable homes we need.'

The guidance is aimed at improving the use of the current planning obligations system. The government has also consulted on proposals for a Planning-Gain Supplement (PGS), to capture a modest portion of the land value increase resulting from planning permission. The government will make further announcements on PGS by the end of 2006.

Notes

1. The DCLG's 'Planning Obligations: Practice Guidance' was published today and is available here. Copies of the document are also available from DCLG publications priced£10.

2. This guidance is based on research led by Chris Watts and James Wells at the Halcrow Group with an expert panel formed of John Henneberry from the University of Sheffield, Steven Walker of Oxford Brookes University, Rob Lane of the University of Westminster and Rob Waite from Wilbraham & Co.

3. A model legal agreement, prepared by the Law Society, is also available here. The model provisions have been produced by members of the Society's Planning and Environmental Law Committee, Pat Thomas of S J Berwin LLP, David Brock of Mills and Reeve, Stephen Taylor and colleagues at Swindon BC.

4. Planning obligations (or 'section 106 agreements') are agreements made under s106 of the Town and Country Planning Act 1990 (as substituted by the Planning and Compensation Act 1991). Policy on planning obligations is set out in ODPM Circular 5/05:

http:www.communities.gov.uk/index.asp?id=1500145

5. A planning obligation is a legally binding contract between a developer and alocal planning authority and usually operates alongside statutory planning permission. Through planning obligations, developers are required to carry out specified actions or make contributions when implementing planning permissions as a result of negotiations on these matters between the two parties.

6. The recent research on planning obligations 'Valuing Planning Obligations in England' was commissioned by the Office of the Deputy Prime Minister in January 2005 and was carried out by the University of Sheffield and Halcrow Group. The report is available at:

http:www.communities.gov.uk/index.asp?id=1500142

7. In December 2005, HM Treasury and ODPM published a consultation document on a proposal for a Planning-Gain Supplement (PGS), designed to capture a proportion of the uplift in land-value when planning permission is granted. PGS would work in tandem with a 'scaled-back'

system of planning obligations to support the provision of infrastructure.

8. The PGS consultation document is available at:

http:www.hm-reasury.gov.uk/pre_budget_report/prebud_pbr05/assoc_docs/prebud_pbr05_a

dbarker.cfm

9. The PGS consultation document made reference to the increases in land values arising as a result of the grant of planning permission.

The Valuation Office Agency Property Market Report, January 2005, showed that the average value of agricultural land in England was

£9,287 and the average value of land for residential use was£2,460,000.

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