By Dr Edward Mitchell, Essex Law School
Picture a city with an acute housing shortage. Now, envision a plot of land formerly used for industrial purposes, now vacant following a fire that razed most of its buildings two decades ago. Next, imagine a property development initiative set to deliver 150 shiny new houses and 100 smart apartments on that very site. Finally, consider that the project also includes plans for landscaped stretches of open space and a dedicated area earmarked for on-site biodiversity protection.
In this fictional setting, 250 new homes sound great. The open space and the bio-diversity protection area sound good too. But let’s also imagine some potential adverse effects of the development. Perhaps there are many families in acute housing need in the local area who will be priced out of the development. Maybe local primary and secondary schools are already oversubscribed. Perhaps traffic crawls along local roads at the pace of a sedated snail.
Can a local authority compel the developer carrying out this type of development project to mitigate these adverse effects?
In a recent article published in the journal Current Legal Problems, I explore this complex issue.
My article develops ideas I discussed in a lecture I gave in December 2023 as part of UCL’s flagship Current Legal Problems lecture series and expands upon work I previously discussed in a blog on the role of contracts in contemporary town planning. In my lecture and blog post, I highlighted tensions in current planning practice that arise when local authorities rely on private developers to provide public goods that the local authority has identified as important.
I build on my earlier work in my latest article by investigating how local authorities and developers create ‘planning obligations’ to mitigate the potentially adverse effects of property development on local communities and on local infrastructure needs. The planning obligations that I discuss are made by local authorities and developers by agreement pursuant to section 106 of the Town and Country Planning Act 1990. The article asks important questions about the detailed and highly intricate framework of duties, rights and powers that these ‘section 106 agreements’ create.
I base my analysis in the article on two case study developments. Examining the section 106 agreements created for these developments enables me to provide rich insights into this complex area of legal and planning practice.
I summarise my findings below.
Finding 1: A limited role in ordering ‘private’ relations
In most property development projects, the developer will seek to obtain planning permission by applying to the planning part of a local authority. Before the local authority grants planning permission, the local authority and the developer will usually identify potential negative effects of the proposed development, and the two parties will negotiate planning obligations to be secured in a section 106 agreement. These obligations might aim to mitigate the development’s negative impacts through the provision, by the developer, of funding for local schools, affordable housing, and local amenities, amongst other things.
When a developer and a local authority enter into a section 106 agreement, the developer should perform the planning obligations and the local authority can enforce them.
The first key issue that my article considers is the nature of the ‘private’ bilateral contractual relations between a developer and a local authority that a section 106 agreement creates.
I ask an important question about this in my article: How do section 106 agreements contribute to a development culture in which private developers do not always perform their public policy obligations?
In the pursuit of answers to this question, I examine the content of the obligations in the section 106 agreements created for my case study developments, I scrutinise monitoring arrangements and I investigate enforcement powers.
In the article, I explain the first key insight from my case studies as follows:
My [case studies] show how these agreements consist of administrative clauses that appear to create an intricate framework of rights, responsibilities, duties and powers relating to the performance of planning obligations. But I also showed how the detail, complexity and apparent rigidity of the obligations in the agreements belies the one-sidedness and the haphazardness of these arrangements. This is important, and suggests that these agreements are ill-equipped to serve as effective instruments for ordering the ‘private’ relations between a [local authority] and a developer.
Finding 2: New questions about the ‘expressive force’ of section 106 agreements
A further crucial finding that my article presents relates to the public-facing work that section 106 agreements do.
My second case study involved a development proposed for a site where ownership of the land was divided amongst multiple unwilling sellers. The local authority had granted a developer planning permission for that development and, to enable that development to take place, had agreed to use its compulsory purchase powers to acquire the entire site.
The land acquisition context of this development enables me to analyse the operation of section 106 agreements as a justificatory device local authorities and developers deploy at planning inquiries convened to consider the use of compulsory purchase powers.
Alongside this, another striking aspect of my second case study development was the way that the section 106 agreement addressed local policies relating to affordable housing provision.
In my article, I ask a second important research question: How does the presence of ostensibly binding promises in section 106 agreements facilitate the exercise of regulatory decision-making in planning and property development processes?
By examining my second case study development, I conclude in my article as follows:
My discussion here presents new findings showing how these agreements can have a powerful expressive force in signalling a commitment to public policy interests that ‘de-risks’ these contentious land acquisition and affordable housing issues for developers and local authorities (Legacy and others 2023). But the crucial point in this section is that these agreements do this despite the emptiness of the commitments that they sometimes contain. These findings demonstrate how planning scholarship needs to look beyond the impression of binding force that a section 106 agreement creates to scrutinise the way that these agreements reinforce uneven outcomes and marginalise certain interests.
Finding 3: The need for greater transparency and community participation
My second case study provides an opportunity to examine a section 106 agreement containing developer obligations designed to discharge a local authority’s public sector equality duty.
The third research question that my article asks relates to this public sector equality duty. I ask: How do local authorities manage the implementation of novel developer obligations designed to shape broader community relations?
In my article, I describe my findings in response to this question as follows:
[Making] a section 106 agreement containing developer obligations designed to discharge a local authority’s public sector equalities duty … is an innovative and under-explored way of using a section 106 agreement, so this part of the paper provides a rare insight into the more unusual obligations in these agreements and into the practical challenges local authorities can face when monitoring the implementation of novel planning devices.
My findings also enable me to explain how equalities considerations created a focal point for opposition to an apparently settled development trajectory.
I argue that this highlights the need for greater transparency and public involvement in setting and implementing planning obligations.
Agenda for further research
Planning, public law and contract law scholars will find helpful insights in my article about the diverse and multilayered roles contractual arrangements play in current regulatory practices.
But while my article highlights various problems with the current use of section 106 agreements, understanding how local authorities might more effectively compel developers to mitigate the impacts of property development requires further research.
Here are some key areas where a greater understanding of section 106 agreements and their use might enable insights that would inform better practice:
- How might planning law and planning practice enable greater transparency and public involvement in setting and implementing planning obligations?
- How do planners and lawyers gather and use the monitoring information about developer behaviour theoretically made accessible through the section 106 agreements studied in my article?
- How do planners and lawyers use the enforcement powers contained in section 106 agreements, and could they use those powers differently?
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