Section 106 and the introduction of the
planning gain system (PGS)

The Government is to overhaul the Planning Gain System in order to smooth the way for the introduction of proposals made in 2004 by Kate Barker. 

It will be the latest in a long line of changes made to the system that grants planning permission to developers in exchange for the inclusion of affordable housing within schemes.

 

Barker proposed this ‘tax’ on increased land values in March 2004 in her Report on Housing Supply.  She intended to run it alongside Section 106 agreements but realised that developers would clearly protest at having to comply with both systems without concessions.

 

Alongside these proposed reforms, the Government published consultation papers in which it outlined how its preferred option of a dual system of tariffs and Planning Gain System might work. 

 

Published in December 2005, the Planning Gain Supplement Consultation Paper inquired into, among other issues, the potential impact of PGS on Section 106 arrangements through the planning system in relation to England (as developer contribution regimes exist in Scotland, Northern Ireland and Wales, and the potential interaction of PGS with those systems will be considered with the devolved administrations).

 

The consultation paper announced that, ‘Based on Kate Barker’s recommendations to improve planning obligations (Section 106 Agreements) and implement PGS, the Government is considering a reduction in the scope of planning obligations (Section 106 Agreements) to those matters that relate specifically to the environment of the development site, and affordable housing.  Introducing PGS and using a part of its proceeds to finance elements of infrastructure currently secured through planning obligations (Section 106 Agreements) is considered a more efficient and transparent means of releasing value’, Planning Gain Supplement Consultation Paper, Section 5.2, p. 23

 

In August 2005, Housing Minister, Ms Yvette Cooper, strongly hinted that the Government plans to introduce PGS partly as a means of plugging the infrastructure-funding gap in the South-east and other regions.  English Partnerships is said to be “very interested” in the PGS proposals and the agency’s Milton Keynes Partnership has trialled a an infrastructure tariff as part of the planning consent granted to Gallagher Estates for the development of 1,400 homes at Broughton Gate, east of Milton Keynes.

 

In February 2006, Milton Keynes Council warned that the 'roof tax', which the Council is using as a form of Section 106 agreement, would be 'unworkable' in other Local Authority areas.  The ODPM is keen for Local Authorities to use a roof tax system based on the Milton Keynes model to raise funds for infrastructure before the likely introduction of a planning gain supplement.  Milton Keynes said that English Partnerships had footed the Council's early infrastructure costs, and will take back the funding out of the roof tax pot when developers pay up.  Milton Keynes said that Councils would need very flexible borrowing arrangements from the Government to enable it to be used outside Milton Keynes and to meet the remaining 25 per cent of infrastructure costs not covered by the tax.  Ashford Council is considering a roof tax tariff of £18,000 per house to fund off-site infrastructure.

 

Building Regulations Part L

In December 2005, the Government published its long awaited amendments to Part L of the Building Regulations (Conservation of Fuel and Power and Ventilation).  The regulations increase thermal efficiency standards for new homes and introduce air tightness testing requirements.  The published document has raised concerns in relation to the fact that it is another ‘draft’ version, causing uncertainty and the fact that associated documents and SAP calculation software is not yet available. 

 

Changes came into effect on 6th April 2006 with the SAP software, required to comply with Part L, still awaiting approval from the Building Research Establishment.  The BRE has confirmed that were several versions of the software that still needed to be tested and it could not give a definite date when all the software would be ready.

 

There are also fears that Building Control Bodies will not accept non-BRE approved SAP tested buildings.  The National Home Building Council (NHBC) building control manager, Mr Neil Cooper said, “Building control bodies will not have clear reference points to check against so they will have to make broad judgements about a building’s energy efficiency and that could lead to inconsistency of approach”.

 

The Government is expected to announce a six to twelve month “grace period” between the introduction of Part L regulations and the date of compliance so planning applications submitted before 6th April 2006 will have an extra year to meet the new standards.  At the beginning of March, an Office of the Deputy Prime Minister (ODPM), now the Department for Communities & Local Government (DCLG), spokesperson said that transitional arrangements would be announced very shortly.