Speeding up section 106: the new government roadmap for section 106 in England

In recent weeks, the Ministry of Housing, Communities & Local Government has published a policy statement describing how they will seek to make affordable housing more quickly and readily available by building a "simple, more transparent and more resilient S106 system".

This article briefly outlines the issues and proposed changes.

The S106 process in a nutshell

Most developments that results in new buildings or a change to the way that land is used can result in adverse impacts on the local community. This may include pressure on public transport and facilities, insufficient school or GP places, removal of wildlife habitats or the lack of availability of housing that is affordable for local people.

To combat this, developers (or owners of the development land, if different, and their lenders) are required to enter into a "section 106 agreement" with the local authority before planning permission can be granted. 

A section 106 agreement is a contract, enforceable by the local authority, under which the developer will promise to deliver various obligations to mitigate the potential impact on the community as part of the development or through the payment of financial contributions. The terms of the agreement will be negotiated between the local authority, developer and any other parties involved, with a heavy focus on the local authority's planning policy and the conclusions of their planning officers and committee.
A key aspect of the section 106 system is the delivery of affordable housing within the development, or the payment of a financial contribution that the local authority can apply to other affordable housing projects.

The issues

One common roadblock to a speedy section 106 agreement completion is capacity within local authorities. Most, if not all, councils simply do not have the resource to produce a draft quickly or pro-actively engage in negotiations with developers. This problem can be further exacerbated where multiple local authorities need to be involved in the same agreement, for example at local and county level.

Another major issue is a drop-off in demand from registered providers of affordable housing ("RPs") for new units. If an RP cannot be found to take on the affordable housing provided in a development, the construction of the entire development can be delayed or at the very least, brand new homes may sit empty.

The roadmap

The Government proposes to try to unlock the availability of housing in the following ways:

• Address affordable homes that are already available:

New policy guidance has been published setting out the expectation that where developers can demonstrate that they have not been able to secure an RP to take on the affordable homes despite their efforts, local authorities will renegotiate section 106 agreements and allow those houses to be sold as a different affordable tenure or, if that is not feasible, on the open market. This is intended to be a last-resort measure.

• Streamlining the section 106 process through support for local authorities:

The proposed new National Planning Policy Framework, which local authorities are required to take into account, will address development viability and encourage early engagement between developers and local authorities to iron-out issues at the earliest possible stage. A national standard section 106 agreement template is also being put together to promote consistency between local authorities and speed up drafting.

• Making expectations clearer:

Clearer standards for affordable homes and a framework outlining how the entire sector - including small and large developers, local authorities and RPs - should co-operate to deliver section 106 agreements are due to be rolled out. There is also a proposal to standardise the pricing of affordable units to provide RPs with more certainty.

• Investment in delivery of development:

A package of financial measures is being explored including low-interest loans available to RPs, the pooling of RP resources, enhancing the ability of local authorities to apply funds to the purchase of affordable homes, and the use of private investment to purchase empty units.

Reflection

Implementing measures to ensure that homes that are already built or being built can be occupied is certainly a sensible step in the right direction.

It remains to be seen how quickly and effectively the other commitments can be delivered and whether, combined with a new National Planning Policy Framework, these can significantly improve the availability of homes in the context of the deepening resourcing crisis within local authorities.

How we can help

VWV's Planning & Infrastructure team regularly acts for local authorities and developers on section 106 agreements for a range of developments.

For developers, we apply our knowledge and expertise to help ensure that section 106 agreements work for the development and keep homes marketable.

For local authorities, we can help ease the immense pressure on legal teams by taking on the drafting and negotiation of section 106 agreements and liaising directly with legal and planning officers to ensure smooth delivery.

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If you would like more information, please get in touch with David Bird.