As any RSL who has had to negotiate a section 106 planning agreement knows, the process can be difficult at the best of times! However the current adverse economic climate has caused a particular issue to dominate the section 106 agreement arena; the need to vary existing section 106 agreements.

In essence, RSLs have found themselves having to go back to the local planning authority and ask that their obligations in existing agreements (some of which may have been negotiated some time ago) are altered or even removed. For example a tenure requirement to provide shared ownership housing may need to be varied so that social rented housing is provided instead. Another example may that payment of a financial contribution needs to be postponed.

So, how to deal with this issue? Well the key point is that both RSLs and the local planning authority need to be as flexible as possible. This applies both at the variation stage but also, importantly, at the stage of the initial negotiation of a new section 106 agreement. Therefore, in a new section 106 agreement the RSL should try not to be tied to a rigid tenure mix. They should also think about how the timing of obligations will work and- crucially- factors such as cashflow and phases of a proposed development. It does appear that local planning authorities  are showing an understanding of the RSLs’ position and a willingness to discuss. Whilst variation by agreement between the local planning authority and the RSL is the practical way forward, there is also a statutory mechanism that allows for variation. Under section 106 (Town and Country Planning Act 1990) an application can be made to modify or discharge an existing section 106 agreement, however as the application can only be made after 5 years from the date of the section 106 agreement this mechanism is likely to be of little practical use (other than for older section 106 agreements). 

Basically, allowing for flexibility at the initial negotiation stage may well avoid the need to go back later to the local planning authority asking for a variation. It will also have the advantage of avoiding additional legal fees in dealing with a variation; a client’s optimum position!

For more information on these issues please contact

Paula Ghosh

or your usual Lewis Silkin contact