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Planning Contributions

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Introduction

This page provides information on the Planning Contributions and how they are used in Hackney. By following this guide you can improve the chances of your application being determined within the Government timeframe.

Planning Contributions Explained

Planning Contributions in Hackney

S106 Legal Agreement Template

You can view a copy of our standard s106 legal agreement template.  This templates contains most of our standard clauses for your information. Click on the link in the downloads box on the right hand side to download a copy of the template.

Planning Contributions Explained

What are Planning Contributions?

“Planning obligations…(also called "s106 agreements") are private agreements negotiated, usually in the context of planning applications, between local planning authorities and persons with an interest in a piece of land (or "developers"), and intended to make acceptable development which would otherwise be unacceptable in planning terms. … The outcome… should be that the proposed development concerned is made to accord with published local, regional or national planning policies.” (Circular 05/05)

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What are the requirements for a Planning Contribution?

The framework for the current system of Planning Contributions in England is set out in section 106 (s106) of the Town and Country Planning Act 1990 (substituted by the Planning and Compensation Act 1991) and the Office of the Deputy Prime Minister’s (ODPM) Planning Circular 05/2005.

Under s106(1) of the Act, Planning Contributions may be used to:

(a) restrict the development or use of the land in a specified way;

(b) require specified operations or activities to be carried out on the land;

(c) require the land to be used in a specified way; or

(d) require a sum or sums to be paid to the authority on a specified date or dates or periodically.

In accordance with Circular 05/05, Planning Contributions must be:

i) necessary;

ii) relevant to planning;

iii) directly related to the proposed development;

iv) fairly and reasonably related in scale and kind to the proposed development; and

v) reasonable in all other respects.

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When are Planning Contributions applied?

When assessing an application, local planning authorities (LPAs) can take into account conditions which would make the proposal acceptable when the only other alternative would be to refuse it.

Government guidance and legislation set down strict tests on the suitability of conditions. Applicants can appeal against conditions if they believe them to be unreasonable.

In some cases (especially in the case of large scale proposals), the LPA may wish to control the impact of the development, but the desired restrictions go beyond those allowed for conditions.

S106 of the Act enables a person with a legal interest in a piece of land to enter into a legally binding “obligation” with the LPA.  This includes all other owners of the land and takes the form of a deed, registered against the title.

In the context of a planning application, the LPA can take into account the provisions of a “contribution” when making its assessment.  Similar to conditions, the “contribution” may help to make a proposed development acceptable in planning terms when it may otherwise not be.

Unlike conditions, the “contribution” can relate to land outside the application site and/or not under the control of the applicant.  For example, a developer may be asked to contribute towards infrastructure costs arising out of the development. This could include new roads and sewers, or social amenities such as affordable housing, open space, or community facilities. These 'costs' should directly arise from approval of the development although this is not always easily identified.

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How are Planning Contributions secured?

S106 of the Act states that Planning Contributions can be by way of “agreement or otherwise” and must be entered into by an instrument executed as a deed. The most common forms are:

Legal Agreement

This is a legally binding agreement pursuant to s106 of the Act, made between the applicant, all other parties with an interest in the land and the LPA. The agreement may include Contributions for both parties such as the applicant providing a certain portion of affordable housing, or a financial contribution which the LPA agrees to spend on a specific project.

These are the most common form of securing Planning Contributions, hence why the terms “s106 legal agreement” and “s106 agreement” are used synonymously with the term “Planning Contributions”.

Unilateral Undertaking

This is a legally binding contribution prepared and entered into solely by the applicant undertaking to make contributions in relation to a development. These are usually conditional on planning permission being granted for the development.

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Are Planning Contributions a local land charge?

Yes. Section 106(11) requires Planning Contributions to be registered as a local land charge, regardless of the form they take.

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Are there alternatives to Planning Contributions?

In a limited range of situations, the use of a condition to secure works may be possible. The ODPM advises that where it is possible to impose a condition instead of a contribution, a condition should be used.

However, the use of negative conditions (called “Grampian conditions”) preventing development from occurring until certain work is done, are notoriously complicated and require careful consideration before they are used. Case law has established that there must be a reasonable likelihood of such work being able to be carried out before such a condition can be used.

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Can Planning Contributions ensure my planning application is approved?

The section 106 process often raises public and government concern that developers try to “buy” their planning permission by offering extra bonuses (such as large payments) to the LPA. This concern is reinforced as LPAs are increasingly setting out likely Planning Contribution requirements as part of development briefs in a practice often referred to as ‘planning gain’.

Planning Circular 05/2005 states planning permission cannot be bought or sold simply because a developer promises benefits or inducements which are not necessary to make the development acceptable in planning terms, however much these are valued by the authority. Planning Contributions are taken in the context of the entire proposal and should result in the proposed development being made acceptable in planning terms and accord with planning policies.  

Similarly, Planning Contributions cannot be used as a means of securing for the local community a share in the profits of development (a "betterment levy").

If an authority is not prepared to enter into an agreement, a developer can still offer a unilateral undertaking as part of their planning application. This must be taken into account by the LPA when considering the application.

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How are Planning Contributions enforced?

Planning Contributions are enforceable under the Act by the LPA. The LPA has two avenues for enforcement:

(a) by applying for an injunction from the courts; or

(b) by entering the subject land, carrying out the work and recovering any costs incurred doing so.

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Can Planning Contributions be discharged?

A Planning Contribution may be modified or discharged only in the following circumstances:

(a) at any time by written agreement between the LPA and all parties to the agreement; or

(b) any time after five years (unless otherwise specified in the agreement), by application to the LPA.

Where an application is made to modify or discharge a Planning Contribution, the LPA may decide to either:

(a) continue the Planning Contribution without modification;

(b) discharge it, if it no longer serves a useful purpose; or

(c) if it continues to serve a useful purpose, but would serve that purpose equally well if it had effect subject to the modifications applied for, then allow the modifications, provided it does not place any burden on a third party.

Where the LPA decides not to allow a modification or change, the applicant may appeal the determination to the Secretary of State, pursuant to s106B.

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What are Heads of Terms?

The issues on which a s106 legal agreement is based are called the Heads of Terms.  Each of these terms will involve a specific contribution such as a financial contribution or undertaking.  There must be agreement on what the Heads of Terms are before their specifics can be negotiated.

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Planning Contributions in Hackney

What Heads of Terms is Hackney likely to require?

In Hackney, there are a large range of possible Heads of Terms for Planning Contributions.  The following is a list of common matters we may seek contributions for.  Please note that not all are applicable to every development.

  • Affordable Housing
  • Education Facilities and Life Long Learning
  • Health Facilities
  • Other Community Facilities
  • Training and Employment Land Provision
  • Transport Impacts Associated with all Development
  • Strategic Transport Impacts Associated with Major Development
  • Public Art
  • Town Centre Management
  • Public Parks, Children’s Play Areas and Recreation Facilities
  • Sustainable Design and Development
  • Local Labour and Construction

In addition, it may be necessary to add other Heads of Terms to cover Planning Contributions unique to the proposed development.

Through the pre-application process, the likely Heads of Terms can be identified early.  This allows both the applicant and the LPA to commence negotiations (and possibly even reach agreement) before a planning application is formally submitted.

Pre-application discussions on Planning Contributions can drastically decrease the time spent on the legal agreement once the planning application has been submitted.  It may also avoid the possibility of an application being refused where the agreement cannot be completed within the 8 or 13 week timeframe.

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On what basis does Hackney justify its Planning Contributions?

In addition to Circular 05/05, our Unitary Development Plan (UDP) is the primary consideration in determining planning applications.

Strategic Policy ST3 states:

“The Council will, where appropriate, seek Planning Obligations (i.e. contributions) to secure relevant planning benefits from new developments. Planning Obligations will be judged appropriate where they are necessary to the granting of permission; relevant to planning and to the development to be permitted; where the need for the benefits arises directly from the development concerned; and where the benefits sought are reasonably related in scale and kind to the proposed development.”

The Mayor of London’s Spatial Development Strategy, (“The London Plan”), published in February 2004 is also a relevant planning document.

We have also released a Draft Supplementary Planning Document on Planning Contributions for public consultation which will form part of our new Local Development Framework.  Once this document has gone through the consultation process and been formally adopted, it will form a material planning consideration.

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What is the process for preparing a s106 legal agreement?

It is strongly advised you begin the process AS SOON AS POSSIBLE to avoid delays in your planning application.  These delays can result in your application being refused if no agreement can be reached within time.  Also, there can be significant delays in the issuing of permission if a decision to grant the application has been reached but a legal agreement has not been completed.

Pre-Application Process

As part of the pre-application process, we will provide you with a list of potential s106 Heads of Terms and possible contributions for each.  You should indicate as soon as possible whether or not you are prepared to agree to these terms.  Any negotiations should commence as soon as possible.

If you are happy with the proposed Heads of Terms and contributions then you should include written confirmation of this with your planning application.  This will speed up the preparation of the s106 legal agreement and smooth the application process.

Application Process

Week 1-4

  • We determine the s106 requirements and outline the Heads of Terms.

Week 4

  • We send you a request to provide a Costs and Undertaking at Risk (an agreement to cover the legal costs regardless of the outcome).
  • You provide your solicitor details and a current copy of the title.
  • We instruct our Legal Services Department prepare a draft s106 legal agreement.
  • We both agree to the definitions of the Heads of Terms.

Week 6

  • Legal Services prepare the first draft s106 legal agreement and circulates it to all relevant parties for comment.

Week 7

  • We receive comments on the draft agreement.

Weeks 9 & 10

  • Legal Services produce further drafts as a result of the feedback until agreement is reached.

Week 11

  • The final agreement is engrossed and placed on hold subject to the Planning Sub-Committee meeting and approval.

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What are the costs involved?

In addition to any amount specified as a Planning Contribution, you will be expected to cover the Council’s reasonable costs in preparing the legal agreement.  This is generally in the order of £600 to $1,200.

In addition to the legal fees, there is also a £350 planning and monitoring fee per Head of Term.

Where planning contributions require compliance checks, monitoring, project management and implementation through the Council and its service area, then an appropriate project management cost not exceeding 7.5% will normally be included as part of the overall negotiated sum, in addition to any standard fees incurred in preparing or monitoring contributions (e.g. legal, implementation, design, monitoring and supervision costs).

These amounts can vary depending on the amount of negotiation that occurs in drafting the agreement and the complexity of the proposal.

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When and how are payments required?

The definition for each Head of Term sets out the timeframe for financial contribution payments.  As a generally rule, full payment is required prior to the development commencing.  In the case of phased development, payments which relate to various phases may only be required as the relevant phase is commenced.  Where bonds are required for later phases, these will need to be secured prior commencement of development.

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What information do I need to provide?

As early as possible in the process (preferably upon submitting your application) the following information must be supplied in order to commence preparation of the s106 legal agreement:

  • Property name
  • Property address and post code
  • Planning application reference number
  • Applicant name and contact details
  • Legal representative name and contact details
  • Current copy of title
  • Agreement to meet the Council’s costs in preparing the agreement

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Key points to note

  • Planning Contributions can be entered into by either a legal agreement or a unilateral undertaking.
  • Both legal agreements and unilateral undertakings must be in the form of an instrument executed as a deed.
  • All parties with an interest in the land must be a party to the legal agreement or unilateral undertaking.  This includes mortgagees.
  • A planning application may be refused where agreement on the level of Planning Contributions cannot be reached.
  • A planning application may be refused where a legal agreement cannot be completed within the 8 or 13 week timeframe for reaching a decision.
  • Planning Contributions are registered as a local land charge.
  • Planning Contributions can be modified or discharged.

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Page updated: 11 Nov 2008 

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