Changes to use of planning obligations

Planning iStock 000002733689Small 146x219Polly Reynolds examines a recent update to the National Planning Practice Guidance detailing when infrastructure contributions should not be sought from developers, and considers the Vacant Building Credit initiative.

The Government launched a consultation in March 2014 which considered, in part, a new threshold at which affordable housing contributions would become payable under section 106 agreements.

The consultation resulted in an update to the National Planning Practice Guidance (NPPG) setting out situations where infrastructure contributions are not to be sought from developers.

Affordable housing contribution limits

Additional paragraphs have been included in the Planning Obligation section of the NPPG following the consultation. These are designed to encourage development to be undertaken by small-scale and self-build developers to increase the housing stock.

The updated NPPG provides that affordable housing contributions and tariff style planning obligations should not be sought for the following:

  • Developments of 10 units or less, and which have a maximum combined gross floor space of no more than 10 sqm.
  • In designated rural areas (which includes National Parks and Area of Outstanding Natural Beauty (AONBs)) the threshold for exemption from such contributions relates to five units or less. This limitation was inserted due to negative responses from National Parks and some authorities in rural areas who were concerned with the impact that the 10 unit threshold would have on development in those areas.
  • Any development consisting only of the construction of a residential annex or extension to an existing home.

The newly reformed 'planning obligations' section of the NPPG does make some allowances for charging for developments consisting of 10 units or fewer. In designated rural areas developments consisting of 6-10 units, contributions shall not be in the form of affording housing contributions but through cash payments which become due after the completion of the development of the units. The NPPG advises that the date for payment for these deferred payments should be agreed in advance and be contained in any planning obligations agreement.

These restrictions on affordable housing contributions and tariff style planning obligations do not apply to 'rural exception sites' where such contributions will continue to be enforced as before.

The NPPG explicitly provides examples of situations where planning obligations will still be needed for developments which fall under the development thresholds.

Local planning authorities may still need planning obligations for infrastructure matters, such as "improving road access and the provision of adequate street lighting" to ensure that the site is suitable for planning purposes.

Vacant Building Credit

The Government has also included an incentive to redevelop buildings that are currently vacant. The Vacant Building Credit (VBC) provides for a financial credit for any developer who brings back into "any lawful use or is demolished to be replaced by a new building."

The financial credit being offered is linked to the existing gross floorspace of the vacant building that is to be brought back into use or demolished when the local authority calculates the affordable housing contribution for the development. However, any increase in the floorspace will elicit an affordable housing contribution.

The sole caveat to the VBC is that it does not apply to buildings that have been abandoned.

Best practice

The VBC initiative clearly follows the Government's policy aim to encourage development on brownfield sites in order to avoid development on the green belt and the VBC provides a financial incentive for developers to use unused property.

Further, the results of the consultation found that such contributions were limiting the appetite of potential developers in building small scale housing developments. The upfront cost of such contributions was a restricting factor in some cases and these amendments have sought to rectify these complaints with the intention of increasing the housing supply, which is urgently needed to keep up with housing demand.

This change to the affordable housing contribution is still only present in guidance and does not have the statutory force of an adopted local plan. As a result many councils are considering how to implement this initiative.

Some councils have been concerned with the impact that this policy would have on local infrastructure. In particular, West Berkshire Council and Reading Borough Council have sought to challenge this policy through Judicial Review proceedings. This challenge is still outstanding and the outcome of these proceedings will determine whether this policy is lawful and thus whether it will be implemented.

This email address is being protected from spambots. You need JavaScript enabled to view it. is a Senior Associate at Veale Wasbrough Vizards. She can be contacted on 0117 314 5276 or This email address is being protected from spambots. You need JavaScript enabled to view it..