Developers are now in the box seat on controversial infrastructure payments, according to a property expert.
It follows the introduction of the Community Infrastructure Levy which, the Government hopes, brings in a fairer system.
The CIL means local authorities in England and Wales are empowered, but not required, to charge on most types of new development in their area. It is based on formulae which relate the size of the charge to the size and character of the development paying it.
The proceeds of the levy will be spent on the likes of improvements to roads and schools to cope with the expansion.
And, while the Government has made it clear it wants to see councils opt into the CIL, the existing 106 system has been re-vamped and will run in parallel.
Specifically excluded from CIL, affordable housing will be one of the main matters to be delivered by the new-look Section 106 agreements.
Birmingham-based Graeme Bradley, head of the construction and engineering group in the UK for DLA Piper, said: “Guidance issued alongside the new regulations makes it clear that the Government sees CIL as the proper way to seek contributions from developers to fund local infrastructure requirements. The Government has, therefore, acted to limit the scope of planning obligations in order to encourage its take up.
“Most importantly, the new regulations now put the Government’s policy test for the use of Section 106 obligations on a statutory footing, thereby removing the discretion of local planning authorities as to whether or not the test is strictly applied.”
The test now requires that a planning obligation should be necessary to make the development acceptable in planning terms; be directly related to the development; and fairly and reasonably related in scale and kind.
Mr Bradley continued: “What this means is that the wide interpretation of Section 106, which has long been supported by the courts, and, to date, allowed local planning authorities to seek a range of benefits which were not necessarily directly related or proportionate to the development in question, will no longer be lawful.
“Developers will now be in a stronger position when negotiating the level and type of contribution required from them to secure a planning permission.”
Measures have been introduced to prevent a planning authority from double charging developers.
And, by April 2014, even where a planning authority has chosen not to adopt CIL, they will only be able to pool Section 106 contributions from up to a maximum of five separate planning deals in order to fund infrastructure works.
Mr Bradley went on: “Local planning authorities will either have to implement CIL or face a possible shortfall in infrastructure funding.
“As a result, planning obligations will be restricted to matters which mitigate the direct impacts of the development proposals to which they relate, so as to make the development acceptable in planning terms.”