Section 106 Frequently Asked Questions

Under S106 of the Town and Country Planning Act 1990, as amended, contributions can be sought from developers towards the costs of providing community and social infrastructure, the need for which has arisen as a result of a new development taking place. This funding is commonly known as ‘Section 106’

What is the Community Infrastructure Levy (CIL)?

How is a S106 Negotiated?  

Does the Council have a s106 Supplementary Planning Document (SPD)?

What is the Planning Contribution Overview Panel (PCOP)?

What happens after the Planning Committee determine an application?

How do I make a Payment to the Council?

When are S106 Monies Paid?

Does S106 Money earn interest?

How is S106 Money Allocated once it is received?

Does the process involve public consultation?

Who is responsible for S106 obligations?

What is the Community Infrastructure Levy (CIL)?

The Community Infrastructure Levy (CIL) is a new charge which local authorities will be empowered, but not required, to levy on most types of new development. The proceeds of the levy will provide new local and sub-regional infrastructure to support the development of an area in line with local authorities’ development plans. CIL will be levied in pounds per square metre of the net additional increase in floorspace of any given development.

From 6 April 2010 it became unlawful for a planning obligation to be taken into account when determining a planning application if the obligation does not meet all of the following tests:

(a) necessary to make the development acceptable in planning terms

(b) directly related to the development; and

(c) fairly and reasonably related in scale and kind to the development.

 

This will apply to applications for developments that are capable of being charged CIL, whether there is a local CIL in operation or not.

Once adopted by the authority, CIL will not replace S106 in its entirety and S106 could still legitimately be used for site specific mitigation measures.

LBTH will be pursuing a CIL. Further information will be available on this site in due course.

For further detailed information, please refer to the Communities and Local Government website which contains an overview and a short explanation of the CIL

regulations. http://www.communities.gov.uk/documents/planningandbuilding/pdf/communityinfrastructurelevy.pdf

How is a S106 Negotiated?

The negotiation of a S106 legal agreement is led by an allocated Planning Officer in discussion with the Developer and other colleagues both within and outside the Council. On smaller applications the s106 may only require the proposed development to be simply car-free for example, however larger schemes may require a number of financial and non-financial contributions to mitigate the impact of the proposal upon the surrounding area. In such circumstances, the Planning Officer, in conjunction with a number of internal and external consultees, will seek to agree the themes of contributions (known as ‘Heads of Terms’), the contribution sums and the triggers for payment through discussion and negotiation. The specific heads of terms will depend on the nature, scale and location of a development and its associated impacts. This is in line with the three tests as set out in Community Infrastructure Regulations (2010). (http://www.opsi.gov.uk/si/si2010/draft/ukdsi_9780111492390_en_1) which state that any s106 planning obligations must be:

(a) Necessary to make the development acceptable in planning terms;

(b) Directly related to the development; and

(c) Fairly and reasonably related in scale and kind to the development

Applicants are advised to utilise the Council’s pre-application services (http://www.towerhamlets.gov.uk/lgsl/601-650/608_development_control/pre-application_advice.aspx) in order to ascertain the scale and nature of the likely s106 contributions associated with a development proposal.

Applicants should initially consult LBTH’s Planning Obligations SPD which provides guidance on the use and scale of planning obligations in Tower Hamlets. Applicants should use this SPD alongside an analysis of their proposed works to consider the impacts of the proposed scheme and any planning obligations likely to be required to mitigate the impacts of development. These details should be submitted as a draft ‘Heads of Terms’ document alongside the pre-application submission documentation,to allow officers sufficient time to consider the details contained within the draft ‘Heads of Terms’.

What is the Planning Obligations Supplementary Planning Document (SPD)?

The Planning Obligations SPD is based on the principles established across a range of planning policies enshrined in legislation as well as national, regional and local planning guidance. Along side the Core Strategy the SPD forms a part of LBTH’s Local Development Framework and reflects the Mayor of Tower Hamlets’ Priorities for the borough. The document clarifies the current process and provides formulae for negotiating both financial and non-financial planning obligations. The SPD also provides certainty to applicants on when planning obligations will be sought and constitutes an important document to inform local residents about planning obligations.

Please contact the Strategic Planning Team (planning@towerhamlets.gov.uk) for more information with regard to the progression of the SPD.

What is the Planning Contribution Overview Panel (PCOP)?

In order to agree and if necessary prioritise the Council’s S106 requests, a Planning Officer will prepare a Development Report (prior to Committee) which outlines the proposed S106 package. This is presented to the Council’s ‘Planning Contribution Overview Panel’ (PCOP). PCOP is an internal, cross directorate officer-led panel set up by Cabinet in 2004 that has the authority, under delegated powers, to monitor the implementation and expenditure of S106 agreements and monies, and ensure delivery in accordance with the terms of the relevant agreement. The PCOP panel consists of Officers across a number of Directorates including: Development & Renewal, Communities, Localities & Culture, Chief Executive’s, Children, Schools & Families.

The PCOP panel considers the balance of the s106 package and whether it has appropriately represented Council priorities, as relevant for the specific proposal. It also ensures that the recommendation in the development report conforms to legal requirements and is valid in all other respects, e.g. the correct contribution amount, suitable trigger points for payment and that the obligation is deliverable. PCOP supports or rejects the s106 package and will suggest amendments to rejected reports.

Following agreement of PCOP, the proposed contributions will be included within a relevant Committee Report which is considered by Members as part of their assessment of the planning application. These Committee meetings are open to the public.

Elected Members then make the final decision as to whether to permit a development scheme and accept the S106 package which is detailed in the Committee report. Applications are sometimes refused if the s106 offer is considered as insufficient mitigation of the development.

What happens after the planning committee determine an application?

Reports considered by the Committee which recommend the grant of permission (as well as strategic applications which the Mayor has allowed the approval of, see below) will normally contain recommended Heads of Terms for a s106 Agreement. If these terms are agreed by the Committee, the applicant’s lawyers can then finalise the S106 Agreement in conjunction with our legal team. This is usually undertaken within a fixed time frame. Upon completion of the s106 Agreement, the planning permission is formally issued.

Large-scale and complex applications which are heard by the Strategic Applications Committee are normally referable to the Mayor of London. Once the Committee has resolved to determine the application, it is required to refer it back to the Mayor to allow him to decide whether to direct refusal, take over the application for his own determination or allow the planning authority’s decision to stand.

How do I make S106 payments to the Council?

It is the applicant’s responsibility to make payments when they are due and to ensure that they are on time. Payments can be by cheque made payable to the “London Borough of Tower Hamlets” and sent to a Planning Obligations Officer or through the BACS transfer system. Payments must specify both the S106 agreement Planning

Application number and site address in order to identify the relevant legal agreement and site.

When are S106 monies paid?

S106 monies are usually paid in installments at key stages during the construction of a development. The stages at which payments are due are known as ‘Trigger Points’. For example S106 contributions could be payable by installments with 50% paid upon commencement of development and the remaining 50% paid upon completion of a development. As developers have three years to commence a development once planning permission is granted, it can therefore take a number of years before S106 contributions are received by the Council from the time permission was originally granted. Where a development does not commence at all, the S106 will most likely expire.

Does s106 money earn interest?

Whilst schemes are waiting to be programmed and delivered, the Council is legally obliged to hold the S106 contributions it has received in an interest bearing account in accordance with the specifications in the agreement.

The accruing of interest is necessary to ensure that the contribution does not lose value from the date it is paid; and as most accruing sums are restricted through a S106 agreement, the interest will accrue against the specific contribution. It is then used as part of the budget to deliver a specific improvement.

How is S106 money allocated once it is received?

Until monies are received by the Council they are not formally allocated to specific projects in accordance with the S106 agreement. This is because money secured in a s106 agreement is not a guaranteed funding stream. Implementation can take up to three years from the granting of the permission. In some cases a development may not happen at all and the s106 money related to such developments will not be received.

These triggers are also specific and vary from agreement to agreement. The actual receipt of these amounts will be staggered across a number of years in accordance with specific trigger points (see previous section 6). For example, a payment could be due upon commencement of the development and another payment not due until the first occupation of a residential unit.

When s106 money is available, i.e. in the accounts, and that money is required for a project, a Project Initiation Document is prepared by the assigned LBTH Project Manager which details the project, its s106 justification, responsibilities for governance, programming, any match-funding, risks, other partners etc. This is to ensure monies are spent in accordance with the specific legal agreements in a controlled project management environment.

Officers programme these resources, in detail, to projects that are relevant at the time the money is received. These projects will reflect current Council priorities across a broad range of topics. The individual Directorates who cover the specific improvement area take the lead on identifying and managing projects. All decisions to finally allocate resources are then approved for expenditure through the Council’s Planning Contribution Overview Panel.

It is important to recognise that S106 money is already either largely allocated to a range of projects or ring-fenced to specific programmes which will deliver improvements in accordance with the specific terms negotiated through legal agreements. The legal agreement identifies, as tightly as possible, exactly what the money secured is for and/or how it is to be prioritised in the future when it is paid.

Does the process involve public consultation?

Public consultation is essential to successful Planning. The Council want to hear what residents’ and other stakeholders’ have to say so that their views shape the way local areas change. All key Council policy documents which inform the Council’s approach to S106, such as Corporate Strategies Development Plans and Local Area Partnership Action Plans, are publicly consulted on. In particular, the Core Strategy, which sets out priorities for infrastructure across the Borough has been subject to extensive public consultation. These priorities are used to inform s106 negotiations by planning officers.

Who is responsible for S106 obligations?

Planning obligations contained in S106 agreements run with the land to which they relate. Because Planning Obligations run with the land, any outstanding obligations will be transferred with the land if it is sold. Planning Obligations can therefore effect the value of land. This information is registered as a ‘Local Land Charge’ on the Land Charges Register (http://www.towerhamlets.gov.uk/lgsl/601-650/610_local_land_charges_person.aspx) and will be revealed in searches submitted on behalf of a potential purchaser of an individual unit or entire development site.

Any outstanding planning obligations are legally enforceable against the registered owner, this applies to successors in title, of the land to which the obligation relates. This will be cited in the land registry search of the plot of land.

Planning obligations will not be enforceable against individual units within the development site. This is not to say that s106 obligations will not impact upon your property. Where “car free” obligations apply, for example, you will not be eligible to apply for a permit for on-street parking.

The Council will enforce against non-payment of a S106 contribution if a developer is found to have reached a ‘trigger point’ without paying the Council within the required timescales as set out in the agreement

 

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