Knowledge

Commercial Property and Planning and Environment - The Future of Planning Agreements - Scott Logan

Developer contributions, through planning agreements, have become a well recognised and accepted means of overcoming obstacles to the grant of planning permission.  They allow developments to proceed by reducing or compensating for the negative impacts on land use, the environment and infrastructure and provide valuable community services.

A recent government publication[1] estimated the total value of planning contributions secured throughout Scotland in the three years 2004 to 2007 to be £159 million.

Planning agreements are currently dealt with under s.75 of the Town and Country Planning (Scotland) Act 1997.

The planning system in Scotland is undergoing significant reform with the phased implementation of The Planning Etc. (Scotland) Act 2006.  This modernisation will have an important effect on planning agreements.  The 2006 Act[2] replaces section 75 of the 1997 Act with four new sections (75-75C), under the banner “planning obligations”.  There is considerably more detail in the new provisions than existed before, and a number of important changes have been introduced.

A planning obligation is an obligation restricting or regulating the development or use of land.  A planning obligation may be permanent or for a specified period; unconditional or subject to conditions; require a one-off or periodical payment of money; or be postponed in its effect either by reference to a fixed date or the occurrence of an event.

Planning obligations will continue to appear in agreements between the owner, developer and relevant planning authority, however, the 2006 Act also introduces unilateral undertakings, that can be given by the owner or developer.  This is intended to address the situation where a planning authority refuses to enter into a planning agreement, where planning permission has been refused and is subject to appeal.  If the planning authority is uncooperative, the developer can offer a unilateral undertaking which may be enough to sway the appeal in its favour.

The 2006 Act allows for the modification and discharge of planning obligations.  Any party subject to a planning obligation may apply to the planning authority for its agreement to modify or discharge the obligation.  If the planning authority rejects the application, the applicant can appeal to the Scottish Ministers.

In a significant departure from the current law, the 2006 Act provides that owners will continue to be liable for planning obligations after ownership has passed on, unless the agreement specifically provides otherwise.  The new owner will be severally liable with the former owner, unless the agreement provides otherwise, and the new owner may recover any expenditure in the performance of the obligation from the former owner.  Under the existing regime, obligations in planning agreements normally run with the land relieving former owners of liability once the land has been sold.  Owners will not normally wish to retain liability for obligations once they have sold the land but, unless the agreement specifically excludes this, they will remain liable.

The implementation of these changes would appear to be some way off.  The First Minister announced in August last year that the review of developer contributions would be postponed during the current period of economic uncertainty.  Rather than drafting regulations to deal with the implementation of the new system of planning obligations, the Scottish Government is focusing on the existing regime and, in December, it issued a consultation paper on the proposed revision of Circular 12/1996, which sets out the Scottish Government policy for the use of planning agreements under the existing regime.