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DCLG floats dispute resolution mechanism for s.106 agreement negotiations

The Department for Communities and Local Government is to consult on the introduction of a dispute resolution process for situations where negotiations over section 106 agreements have stalled and prevented development.

The measure is part of plans to speed up the planning system and cut the extended negotiations that can surround section 106 agreements, the DCLG said.

The consultation also says revised guidance would:

  • confirm that section 106 negotiations should be concluded within statutory timescales;
  • set expectations of earlier engagement at the pre-application stage by all parties to front-load discussions about the scope of the section 106 “ask”;
  • encourage greater use of standardised clauses to minimise the need to draft agreements from scratch;
  • set expectations for greater transparency about what has been raised through section 106 and what it has been spent on.

However the consultation goes on to say: “Although guidance has a role to play, we consider that the current statutory framework provides neither sufficient incentives to conclude section 106 negotiations promptly, nor effective sanctions where delays and/or disputes occur.

“Delivering real change requires primary legislation. We therefore propose to consider primary powers to tackle these shortcomings in the next Parliament, with the aim of significantly streamlining the process.”

In relation to the need for a dispute resolution mechanism, the consultation paper suggests that the current appeal routes “provide too blunt an instrument to deal effectively with delays or disputes related solely to the section 106 agreement".

It argues that the creation of a much more focussed mechanism may be required to bring resolution where: parties to the section 106 agreement cannot agree on the scale and scope of mitigation necessary to make the development acceptable in planning terms; or parties agree on the section 106 “ask” but the process of completing the necessary agreement drags on beyond statutory or agreed timeframes.

The consultation paper suggests that there are a number of possible options for this dispute resolution mechanism and asks for stakeholders' views. However, the DCLG set out what it considers to be the broad parameters of any such mechanism:

  • It should be available where statutory or agreed timeframes (such as in a planning performance agreement) have elapsed;
  • The submission of a draft section 106 agreement or unilateral undertaking during the course of negotiations could be a requirement of being able to refer the case to ‘external’ dispute resolution in the event that set timescales are not met. This might also help to encourage early engagement between parties, the paper says. A deemed or automatic agreement after set timescales is considered unlikely to be workable in practice by the DCLG;
  • An earlier trial of mediation in the context of renegotiating section 106 agreements on stalled sites had only limited uptake. The resolution process might “therefore need to involve an external body or suitably qualified individual, who would help determine what was necessary to make a proposed development acceptable, and their judgement would need to be binding on the parties to the section 106 agreement”;
  • The service should be a fast track one and self funding through an appropriate level of fees;
  • It may be the case that the mechanism should be restricted to certain types of application, such as those for major development;
  • If the dispute resolution mechanism created a binding section 106 agreement, then the question arose as to whether it would also need to determine the related planning application. However, the DCLG said it was keen to ensure that any dispute resolution mechanism was focused on instances where there was an issue with the section 106 agreement specifically.

The consultation can be viewed here. It runs until 19 March 2015. The consultation also seeks views on removing the need to contribute to affordable housing where a developer is building student accommodation. 

Housing and Planning Minister Brandon Lewis said: “Section 106 planning agreements can bring great benefits to local communities but too often they drag out planning applications for months.

“That’s why I’m proposing measures that will speed up the process, get planning permissions granted quicker and workers on site earlier, all the while keeping the community benefits that these agreements can bring.”