Legal Briefing

Scottish planning obligations: modification and discharge – the story so far


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Public Sector | 01 December 2013

Planning obligations1 (formerly agreements), which restrict or regulate the use or development of land, perform a crucial function within the planning system. In Scotland in particular, where the community infrastructure levy has not been adopted, the planning obligation continues to be the primary mechanism for the delivery of much needed local and regional infrastructure through developer contributions, often involving very significant sums. 


We are now approaching the third anniversary of the reform of planning agreements in Scotland. One of the headline changes was the introduction of a statutory entitlement for affected parties (obligants) to apply to the local planning authority (LPA) for modification or discharge of a planning obligation2. Where the application is refused (or deemed refused), the applicant has a statutory right of appeal to the Scottish ministers3. Applications for modification or discharge may be made at any time, on any (relevant) planning grounds (at least in theory) and in respect of pre-reform obligations (agreements) as well as those concluded after the introduction of the new provisions in February 2011.

At the time this was seen by some as a game changer for the development industry. Existing agreements would be ripped up or re-negotiated in their droves. Excessive requirements would be put under the microscope, and the balance of power in planning gain negotiations would be altered forever.

So nearly three years into the new regime, what is the reality? Did the floodgates open, or has it been a damp squib for planners and developers alike?

This article looks at the story so far in Scotland and considers what lies ahead for planning obligations.

S75 V S1064

Before examining the statistics in this area, it is worth noting the different approach that has developed north and south of the border. The statutory entitlement to seek modification or discharge5of s106 obligations has existed for some time, and to that extent Scotland followed in England and Wales’ footsteps with its reform of 2011. However, on closer inspection, the two regimes, although similar, are not the same.

In England and Wales, until quite recently, the entitlement to seek modification or discharge could only be exercised after a period of five years from the date of the agreement in question, and where the obligation in question no longer serves a planning purpose. (The qualifying time requirement has been relaxed on a temporary basis for agreements entered into before 6 April 2010 in recognition of the economic situation6). It therefore may be said that the bar is set quite high south of the border for applicants seeking to avoid or renegotiate their s106 requirements. (Special rules also apply to obligations concerning affordable housing).

Another interesting distinction is that the 1990 Act expressly recognises the ability of parties to a planning obligation to modify or discharge that obligation by agreement7, presenting a distinct alternative to the formal procedure.

The lack of an equivalent provision in Scotland is a matter of some controversy. The wording of the 1997 Act suggests that the only way to modify or discharge a planning obligation post February 2011 is by way of the formal application route, irrespective of agreement between the parties. This can cause difficulty in urgent cases, usually related to the settlement requirements of a property transaction.

STATISTICS

Given the public nature of planning obligations (the majority of which will appear on the Land or Sasines Register) and the modification and discharge process itself, it is surprisingly difficult to obtain (in a user-friendly way) comprehensive statistics on the use made of the new provisions. The Scottish Government annual planning statistics do not include the number of applications for modification or discharge submitted, far less any record of their outcome.

Searching on the planning portals of the 34 Scottish LPAs (including national parks) gives mixed results. While it is possible in most (but not all cases) to search by application type, many of the planning portals which allow such searches have yet to amend their search function to include applications for modification or discharge of planning obligations.

However with that caveat, records were obtained for 19 LPAs, including a mix of urban and rural authorities, representing approximately 60% of Scottish LPAs.

Since February 2011, the picture across those 19 LPAs is outlined in the table below8.

Of the LPAs examined, City of Edinburgh Council (41), Scottish Borders Council (36) and the Highland Council (32) received the most applications, while North Ayrshire Council and West Dunbartonshire Council received the least (only one application each). Perhaps surprisingly, Glasgow City Council had, according to its planning portal, received only two applications during the period.

Accordingly, from the sample LPAs considered, the number of applications seems to have been relatively low, averaging 13 each, or fewer than one application every two months. Hardly the developer stampede which some anticipated. The statistics do however show that the applications have been granted in at least half of the cases considered, and that this represents a much higher proportion of the cases actually determined within that group (around 87%). Of the 19 LPAs considered, none had refused more than three applications for modification or discharge since the new regime came into effect.

The relatively low number of refusals coupled with a significant proportion of withdrawn applications tends to suggest that applicants are ‘testing the water’ with LPAs and either resubmitting applications with more realistic modifications in mind, or pulling applications altogether rather than risking an adverse decision. It would appear that some applicants aim high initially by seeking the discharge of a particular obligation (typically a payment obligation), and then resubmit a ‘scaled down’ application for modification instead if the LPA’s reaction is not favourable. Of course, these tactics would be unnecessary if pre-application discussions were used effectively or if applications could be amended during the process (something which is not currently provided for in the 1997 Act or the 2010 Regulations9).

The numbers alone don’t reveal anything about the nature of the applications submitted or the basis on which a particular modification or discharge was sought, however. To find out more about these issues requires a closer examination of individual applications. While not necessarily representative of Scotland as a whole, a review of the individual applications submitted to the City of Edinburgh Council gives a flavour of the issues being tackled under the new regime.

CITY OF EDINBURGH COUNCIL (CEC)

This sample reveals a fairly mixed picture and should not be taken as capturing any reliable trend. The largest category relates to the discharge or deferral of payments (excluding those cases seeking discharge on the basis of payment made). This might be seen as a reflection of the current economic climate, but in fact only around one third of the applications within this category related to scheme viability, despite the fact that all but five of the applications that were considered related to pre-2011 obligations. A similar number of the ‘payment’ applications (around five) sought discharge or modification on the basis of altered tram routes or other changed circumstances (ie unrelated to financial circumstances). Nonetheless, CEC has shown a willingness to look favourably on applications concerning viability where robust evidence is presented.

In fact, a significant number of the CEC applications related to entirely uncontentious matters (such as the expiry of the related planning permission), which would have been agreed easily pre-reform without the need for any formal process. For some applicants therefore, the new system will have introduced additional complexity and delay without any real benefit.

APPEALS

The statistics from the sample LPAs (averaging one refusal each) would suggest that the new right of appeal will have been little used to date. Examination of appeal cases handled by the Directorate of Planning and Environmental Appeals (DPEA) proves this to be correct. Since the new regime was introduced, only 25 appeal cases have been submitted to the DPEA. These cases break down as in the tables below.

Of the cases determined to date, the results are fairly evenly balanced, albeit with the appellants marginally on top. As with the applications at first instance, it is useful to consider the breakdown of the subject matter across these appeal cases. Of the 17 cases determined so far, the subject matter may be categorised as below.

It is notable that the largest category within the appeal cases relates to occupancy restrictions imposed on houses, often coupled with a prohibition on the sale of the house independently from an associated business. To some extent this is unsurprising given the significant number of historic agreements containing this type of restriction. Despite a clear steer from the Scottish Government that restrictions of this nature are undesirable and unlikely to accord with the Scottish Government Circular 3/2012 on ‘Planning Obligations and Good Neighbour Agreements’, a number of LPAs in rural areas still view them as a necessary and justified protection.

However, it is interesting to note that, even in the context of a small number of appeals, the cases of developers seeking to renegotiate payment plans are once again relatively thin on the ground. Why is this? If the CEC applications are at all representative, this is not due to a flood of payment cases having been granted at first instance by the LPAs (and so avoiding the need for appeal). Rather, it seems that developers are reluctant to make such applications in the first place, or that the need has been overstated. Both explanations may be true to some extent.

Aside from the type of cases being brought, the appeal cases are useful in setting out the approach of reporters to modification and discharge, as this should form the template for LPAs in dealing with cases at first instance. The appeal cases to date establish beyond doubt that the five tests set out in Circular 3/201212, which must be met when entering into a planning obligation in the first place, are equally relevant at the modification or discharge stage, albeit that other matters such as viability may also be relevant. An application for modification or discharge should be granted if any one of the five tests is not met, and an LPA risks an award of expenses against it on appeal if it has not taken this approach in determining the application at first instance. The five tests require that the planning obligation:

  • is necessary to make the proposed development acceptable in planning terms;
  • serves a planning purpose;
  • is related to the proposed development directly or indirectly;
  • is fairly and reasonably related to the proposed development in scale and kind; and
  • is reasonable in all other respects.

CONCLUSIONS

From the statistics available, it would appear that the new regime for modification and discharge of planning obligations in Scotland has led to a steady trickle of applications rather than a flood. Despite the ability of applicants (in theory) to revisit planning obligations while the ink is still wet, this is not happening in practice to any significant extent. This may signal nervousness on the part of developers to risk ruining relations with their local LPA, or it may just reflect the fact that LPAs are scaling back their expectations on planning gain in recognition of the current climate.

Landowners and developers have had nearly three years to dust down their old agreements, identify any candidates worthy of challenge and submit those applications. This being the case, can we expect the number of applications for modification or discharge to decline over time? Arguably yes, and appeal cases may become even less frequent. For LPAs that currently can’t charge a fee for handling such applications, this may be a matter of some relief.

Regardless of how the numbers vary over time, the statutory entitlement to seek modification or discharge of planning obligations must be recognised as a good thing. However rarely the provisions are used, it is the ability of developers to take their case to the Scottish ministers on appeal, rather than the exercise of the right, which may be the most important aspect.

By Karen Hamilton, partner, Brodies LLP.

E-mail: karen.hamilton@brodies.com.

NOTES

  1. s75 Town and Country Planning (Scotland) Act 1997 (the 1997 Act).
  2. s75A, the 1997 Act and the Town and Country Planning (Modification and Discharge of Planning Obligations) (Scotland) Regulations 2010, SSI 2010/432.
  3. s75B, the 1997 Act.
  4. s106 Town and Country Planning Act 1990.
  5. s106A, the 1990 Act.
  6. This relaxation applies in England only. See the Town and Country Planning (Modification and Discharge of Planning Obligations) (Amendment) (England) Regulations 2013, SI 2013 No 147, Regulation 3.
  7. s106A(1)(a), the 1990 Act.
  8. The data was collected as at 2 November 2013.
  9. Town and Country Planning (Modification and Discharge of Planning Obligations) (Scotland) Regulations 2010, SSI 2010/432.
  10. This category relates to technical requirements for modification or discharge, such as consolidation of a series of planning obligations, or the grant of a subsequent planning permission subject to a new planning obligation.
  11. For example, amendment of a retail floor space cap.
  12. Scottish Government Circular 3/2013, paragraph 14.