Obligations plan the route ahead

A Planning Obligation is not a golden ticket, as it is for Charlie in Willie Wonkas chocolate factory. Picture: Kobal

As the bells ring out to mark the calendar clicking over into 2015, many of us working in the property development industry will be looking forward with some real enthusiasm to the year ahead.

We will all be hoping that the New Year will bring the letter confirming that our application, or our client’s application, for planning permission has been looked upon favourably by the planning committee, and they are “minded to grant” the application.

This is the terminology used to describe the situation where the planning application has effectively been approved – but it won’t be issued until the applicant has entered into a Section 75 Agreement, or Planning Obligation.

Now, a good lawyer knows that any reference to a section of an Act is enough to send his client running for the leftover Christmas sherry, with a glazed look in his eyes, so perhaps calling this very clever tool in the planning authority’s armoury by its newer terminology will help with the new year’s resolutions.

A Planning Obligation is an Agreement entered into between a planning authority and a landowner in the context of a planning application.

It restricts or regulates activities on the land, and it can also oblige the landowner or developer to do certain things, or pay certain sums of money.

For example, the Planning Obligation can say that the new house on a farm can only be occupied by someone working on the farm; or it might be used to secure payment of “contributions” towards facilities which will be affected by the proposed development – such as a payment towards new school classrooms that will be required for the children who will live in the new houses.

So far so good. But add to that an education contribution, the provision of affordable housing, and contributions towards transport and essential infrastructure, to name just two possibilities and that little agreement, so small that it can be covered by one section of one Act, is beginning to feel a lot more substantial.

And so it can be. As someone who spends the vast majority of my working life negotiating, drafting and amending Planning Obligations, I know only too well the complexities that often need to be covered by them.

They are not a golden ticket that can be exchanged for planning permission, but they can deliver benefit to both the landowner/developer, and the wider community. They are therefore important documents in the planning process, and have potentially long-lasting consequences.

I can understand that landowners and developers applying for planning permission focus their efforts on the planning committee meeting at which their application will be decided.

But any landowner or developer being asked to enter into a Planning Obligation will generally achieve the best outcome if he consults his solicitor before the Planning Authority determines his application.

Dialogue with the planners, up front, before the planning application goes to committee is by far the best way of negotiating terms that will deliver the required benefits for the community, but in a way that will not render the land unmarketable.

Often, just as important is ensuring that the Agreement is entered into as quickly as possible following the planning committee’s decision.

The legal teams within many planning authorities are often stretched, which can mean delays in the process of finalising the terms of the planning obligation, and thus the release of the planning permission. The landowner’s solicitor can assist by undertaking a lot of the drafting work.

I mentioned golden tickets. At this time of year many of us will be enjoying re-watching some of our favourite old movies. One of mine is Willy Wonka and the Chocolate Factory. Sam Beauregarde, the indulgent father of Violet, famously says: “Don’t talk to me about contracts, Wonka, I use them myself. They are strictly for suckers.”

Planning Obligations may not be golden tickets but nor are they for suckers. They are simply contracts that need to be carefully negotiated, like any others.

And, when they are, they can unlock planning permission, with benefit to both the landowner/developer and the wider community. • Caroline Docherty is a consultant with Morton Fraser: www.mortonfraser.com