Releasing stalled housing sites

A primary objective of the replacement NPPF (Dec. 2025), specifically stated on page 30 of the consultation draft, is to “support the delivery of a substantial increase in the supply of homes”. Indeed, the Secretary of State, Steve Reed, has said that he remains committed to leaving ‘no stone unturned’ in the Government’s quest to build 1.5 million homes. That includes “stalled sites” where there are existing consents, linked to Section 106 agreements, which remain unviable to develop. However, there remains a significant tension between governmental delivery aspirations and developer realities; for the current legislative framework does not sensibly permit pragmatic and holistic consideration of development viability. This issue has been highlighted by the recent appeal decisions letter dated 20th January 2026 concerning land at Chilmington Green, Ashford.[1]

The current position

Pending that anticipated “full reset” in Spring 2026, the Government’s current stance on modifying existing consents has been explained in a suite of three letters issued by MHCLG on 18 December 2025 to coincide with the publication of the consultation draft NPPF. That included a letter from the Housing Minister, Matthew Pennycook MP, to the PINS Chief Executive, released into the public domain in mid January. Though specifically titled “Modifying Planning Obligations” it was the same message; and I quote the following extracts from the PINS letter:

“ ….. the proper process for modifying or discharging planning obligations is set out in section 106A of the Town & Country Planning Act 1990. The government expects local planning authorities to adopt a pragmatic approach when responding to requests to renegotiate Section 106 planning obligations, in order to facilitate timely decisions.

 We also recognise the practical constraints associated with the existing, statutory route to modify or discharge planning obligations via section 106A (effected by a ‘deed of variation’), and the limits that any policy or guidance reforms can achieve. The consultation on the draft National Planning Policy Framework … therefore seeks views on the efficacy and use of existing statutory routes, to inform ongoing work to ensure there is an appropriate mechanism to modify or discharge existing planning obligations that provides confidence to both authorities and developers.

….  as a general rule, attempts to revisit fundamental issues of viability or planning obligations through Section 73 applications should be scrutinised carefully, and the applicant should provide a robust justification for any changes proposed for planning obligations associated with the original permission beyond those linked to the specific variation of condition being sought.

Where developers submit a Section 73 application that seeks to reduce affordable housing provision based on a new viability assessment, the decision maker should have regard to the harm that such a reduction may cause and give this appropriate weight in the overall planning balance, alongside the wider merits of the scheme.

Each of the letters goes on to refer to the Government’s commitment to implement Section 73B (legislated by the Levelling-up and Regeneration Act 2023) through secondary legislation which “ should become the key mechanism for dealing with legitimate variations in a pragmatic way in response to changing circumstances over time, but it is not intended to allow developers more easily to reduce planning obligations already entered into, including for affordable housing, and Section 73B(5) will affect the extent to which that can be done”.

In the context of this article, it needs to be borne in mind that Section 73B is intended to allow both the description of development and the conditions to be varied in a single process, but the amended development cannot be “substantially different” from the existing development. That also still leaves the related section 106 obligations and how those should be addressed.

An indicator of the direction of travel is also to be found in MHCLG’s release on 28 January 2026 of its Policy Statement: a roadmap for Section 106 delivery in England.[2] This sets out a new framework within which LPAs will be expected to consider and agree deeds of variations for sites which have stalled due to a lack of interest in the Section 106 secured affordable housing stock. It contains a policy expectation that LPAs should be open to renegotiating affordable housing provisions in existing agreements, if certain prescribed conditions have been met including: (a) that the uncontracted S106 homes have been uploaded onto the Homes England Clearing Service by 1 June 2026;  (b) that they  have been live on the Clearing Service for a period of six weeks from the date of the unit being uploaded (“the Clearing Service period”) without attracting any reasonable offers; and (c) that they are due for completion on or before 1 December 2027, with completion defined as being when a home is ready for occupation or when a completion certificate is issued. Where these conditions are met, LPAs are encouraged to negotiate any deeds of variation quickly, within twelve weeks of the end of the Clearing Service period. Such deeds should include a requirement that if the affordable housing units are not completed by 1 December 2027 then the units will automatically revert to the original tenure mix set out in the original Section 106 agreement, including for phased developments.

The Policy Statement further advises: “In instances where there is a dispute between the LPA and developer over whether bids received are reasonable, they may also wish to seek a third-party view to support a resolution, as per an existing Alternative Dispute Resolution (“ADR”) procedure.” While, like the Civil Procedure Rules, the words “ADR” are not defined, I anticipate that, contextually, that chosen process will either be mediation, neutral evaluation/opinion. 

Such recognition, at this stage, is welcome albeit in the context of “a time-limited, emergency intervention” with the “full (S106] re-set being in force in Spring 2026”.[3] Again, it is to be hoped that similar, hopefully more forceful,  advice will be included; for the challenge remains that without a degree of ADR compulsion an LPA can continue to hold its position without independent determination or practical resolution. This is because of the way in which Section 106A is currently framed; for section 106A provides, in effect, that within the first five years, a planning obligation may not be modified or discharged except by agreement with the LPA. While susceptible to judicial review the LPA’s discretion is broad and essentially unchallengeable. [4]  Thereafter, the application can only be successfully appealed if the applicant can demonstrate that the obligation no longer serves a “useful purpose” or the purpose would be served equally well through the modification. This is where the Chilmington appeals foundered.

The Chilmington appeals

These Section 106B appeals concerned obligations entered into with Ashford Borough Council and Kent County Council by Hodson Developments and others in a Section 106 agreement dated 27 February 2017. The 122 requests were in connection with an outline planning permission for a large development of up to 5,750 homes together with industrial, retail, education and other and other uses. Preceding the appealed Section 106A application, made on 20 October 2022, there had been earlier attempts by Hodson to discharge or modify the obligations, including unsuccessful judicial review .

After a nine-day inquiry and two site visits, the Inspector essentially dismissed both appeals, disagreeing with the Appellants’ main contention that if the effect of an obligation (whether alone or in combination with other obligations) renders a development incapable of being carried out or completed (because it is not viable) then the decision maker may conclude that it does not serve a useful purpose.  

The Decision Letter is a useful articulation of the relevant Section 106A legal principles and their outworking in the Section 106B appeal context. It is a salutary reminder as to how restricted is the statutory ability under this provision. I draw attention to the following:

37. The existence of an obligation, in the context of a development scheme, is to make development acceptable in planning terms. That is its quintessential purpose. The statutory criteria are simple and do not refer to the viability of the development. The obligations have a contractual nature, albeit statutorily based, which it is in the interests of the parties to be able to enforce, the one against the other, and subject only to limited exceptions set out in s106 that allow discharge or modification. Since they are limited exceptions that derogate from the principle of contractual enforceability, it also seems arguable that exceptions should be strictly applied.

38. An obligation can have a useful purpose of preventing development or further development until performed. This may make it inherently impossible, for financially viability reasons, to carry out or complete a development, but that does not necessarily deny the usefulness of the purpose in preventing a development that would otherwise be unacceptable in planning terms. Circumstances may throw light on whether the purpose continues to be “useful” but viability issues would not transcend the basic question of whether the obligation continues to meet any useful purpose.”

43. … The tests do not involve a merits-based approach based on the benefits or otherwise of the development. That would introduce an over-arching planning balance within the process. Appraisal of planning benefits and balance should not override the s106A process.

45. Therefore, as to financial viability, I do not find that it can be an overriding factor when considering the tests to be applied …

53. …  I agree with ABC’s counsel that if the public interest (in the form of agreed planning obligations), has to yield in favour of development viability, “the extent of flexibility granted should be no more than is necessary to facilitate delivery”  which suggests to me that the fulcrum point of change required in the s106 Agreement needs to be identified and related to the financial appraisal, which has not been demonstrated.

59. I do not therefore see how I could find viability to be a relevant factor, even if I agreed with the Appellant, and still assess it in a meaningful way that enabled me to give it appropriate weight to the issue of usefulness of a given obligation. Scheme-wide financial considerations, certainly where it cannot be shown that the sum total of the changes sought will turn a project currently financially unviable into a project that would clearly be financially viable, cannot justify the discharge or modification of an individual obligation as this would make the statutory criteria meaningless.

These findings may all have been justified on the particular material before that Inspector; but it makes depressing reading. However, none of the court cases referenced by him deals with whether viability is relevant to whether there is a useful purpose, or restrict the ability to say that an obligation which alone or in combination hinders the ability to carry out the development through cost or delay reasons does not serve a useful purpose. So the High Court or another Inspector could disagree with the Chilmington decision.

Nonetheless, as part of MHCLG’s “full re-set”, a specific Governmental policy statement that viable delivery can be a “useful purpose” would help achieve swifter and more pragmatic outcomes. It could also give added bite to the Section 106A appeal process, including potential costs awards for refusing to engage in meaningful ADR.

It also needs to be borne in mind that a Section 73 application brings with it additional risks and further costs  and contributions. More fundamentally, it can only be granted if a condition should be changed. There is also the issue whether the LPA can consider whether the planning obligations should be modified or changed. In any event, some obligations will be automatically carried over to Section 73 permissions by their wording. While it is to be hoped that the implementation of Section 73B might make life easier, the same constraints could still apply to the related planning obligations because of the “substantially different” requirement.

The role of ADR

Therefore, how can sensible re-negotiation be achieved? Here, realistic ADR deployment, embraced at a much earlier stage, could become a game-changer. This might be by way of, solely or in combination, neutral chairing, formal mediation, neutral evaluation or even independent determination. The scope might be in respect of the totality or relevant parts of the dispute. Professional expertise would be crucial, drawing not only from valuation surveyors but also planning lawyers and other relevant disciplines. Support from co/assistant mediators, technical assessors and advisers are all common features now of a maturing ADR world. Equally, early independent assessment of the best form of ADR is increasingly common and to be recommended. Formalisation of the process would be through the inter-parties ADR agreement linked, perhaps, to a planning performance agreement.

Indeed, this Government’s tentative embrace in January’s Re-set Policy Statement follows a route trodden by a previous administration. Because of the continuing effects of the early 2000s  economic recession, the then Secretary of State for Communities and Local Government, (Lord) Eric Pickles, perhaps on the advice of his then Planning Minister, (Sir) Bob Neill[5],  introduced  a “Section 106 Brokers” service to unlock “stalled sites” in August 2012. Administered by the Homes & Communities Agency it operated a panel of “planning professionals” including lawyers and surveyors, including myself, over a period of 12 months. They dealt with referrals in both formal and informal “mediation” sessions concerning residential, commercial and mixed-use schemes, and, with a fair degree of success despite the scheme’s effective operation being hampered by Central Government funding restrictions and cumbersome “triaging” procedures. 

In short, a pragmatic and potentially self-funding method can be provided without the need for legislative or policy changes and without delay.

Nevertheless, selling the deployment of Section 106 ADR, and, more effectively, will require the formal backing of MHCLG and its articulation in Ministerial Statements. Despite this Government’s growing recognition of the role of ADR this initiative will require specific articulation. Experience within the civil justice system shows that it will, almost certainly, be necessary to adopt the incentivisation model, namely, the use (or threat) of cost sanctions for parties that unreasonably refuse ADR. Indeed, even a small and swift change to the PPG advice on “appeal costs” (including Section 106B appeals)  would, in itself, be an easy solution as well as considerably  help change current mindsets.

It will also require education, such as training run by experienced ADR practitioners through webinars and seminars.  

Finally, so as to ensure the delivery of high-quality ADR, a public list of qualified, experienced mediators with planning law experience will need to be maintained by, say, PEBA, the RICS or The Law Society.

Concluding remarks

As a practising planning and ADR professional it has been my experience that the deployment of ADR, particularly mediation to facilitate better dialogue, can achieve positive outcomes in even the most protracted and ill-tempered disputes. Without a fresh approach the build-out of those stalled sites will remain. So, why not become an active supporter and participant?

John Pugh-Smith FCIArb is a recognised specialist in the field of planning law with related disciplines acting for both the private and public sectors. He is also an experienced mediator, arbitrator and dispute ‘neutral’. He is on the panel of the RICS President’s appointments for non-rent review references, a committee member of the Bar Council’s Alternative Dispute Resolution Panel and has served on various ADR working groups for the Planning and Environment Bar Association. Although his 39 Essex Chambers colleagues, Richard Harwood OBE KC and Jonathan Darby, represented the Appellants in the Chilmington appeals the views expressed in this article are the author’s own.

^[1] Appeal decision 3333923 and 3334094.pdf

^[2] Policy statement: a roadmap for Section 106 delivery in England - GOV.UK

^[3] Written statements - Written questions, answers and statements - UK Parliament

^[4] R (Millgate Developments Ltd) v Wokingham BC  [2011] EWCA Civ 1062

[5] See (Sir) Bob Neill’s Foreword to “Mediation in Planning: A Short Guide” (June 2011)