Planning agreements explained..

A planning agreement is a document that contains planning obligations, which bind land. It is usually entered into between a landowner and a local planning authority and takes one of two forms:

  • A unilateral agreement. This is a document within which the landowner covenants to comply with planning obligations in the event that planning is granted.
  • A “section 106 agreement”. This is a bilateral document entered into between a landowner and a local authority.

A planning agreement must always be entered into as a deed and any variation of it must be by way of deed.

Planning obligations are, essentially, obligations that the developer agrees to undertake or accept in return for the grant of planning consent. They can take various forms:

  • Restrictions on the use of the land. For example, a condition limiting use to within a specific use class.
  • Requiring operations to be carried out on the land. For example, requiring works to be carried out to a public highway in order to facilitate access.
  • Requiring payment of financial sums to be made to a third party. For example, a requirement to pay a contribution to the local authority for transport infrastructure costs within the town of which the development site forms part.

Planning agreements run with the land, which means that they will bind both the original covenanting parties and anyone who acquires an interest in the land subsequently. It’s important that this is borne in mind when acquiring property that comprises part of a larger development. Unless the planning agreement contains specific provision that it will not bind the purchaser of an individual unit within the wider development scheme, each purchaser will become liable for any existing liability under the planning agreement.

Care also needs to be taken when acting for landowners who have entered into conditional contracts or option agreements with developers. These agreements will usually make provision that the landowner will be required to enter into a planning agreement, if required to do so. The entering into of the planning agreement will precede the grant of planning permission, which is usually the trigger for any conditional contract or else the point at which an option is exercised. The landowner will therefore, if wisely advised, seek to ensure that planning obligations only come into effect when the planning permission to which they relate is implemented (i.e. when development is commenced) and that their liability ceases on their disposal of the land. They are therefore able to control risk by refusing to permit the implementation of development until post sale, when they have no further liability under the terms of the planning agreement.

RDP is a firm that specialises in advising landowners, developers and funders on the acquisition, disposal, development and promotion of land.

For more information contact Director and Head of Real Estate James Davies or call 01633 43500.