Closure of the Window?

Since the downturn in the economy many housing projects and other commercial ventures have stalled. One measure taken by the Government to kick start the economy has been to enable the early renegotiation, modification or discharge of the affordable housing elements of Section 106 planning gain agreements to make developments viable

The Growth and Infrastructure Act 2013

The Act came into force on 25 April 2013 and amended the Town and Country Planning Act by introducing Section 106BA which allows an application to be made to the relevant local planning authority ("LPA") in England to vary or remove "an affordable housing requirement" contained in a planning obligation where such requirements mean that development is not economically viable

The LPA has the ability to modify, replace, remove or discharge the affordable housing obligation. If the LPA does not modify the planning obligation as requested, or fails to make a determination, within a specified time, there is a right of appeal under Section 106BB and BC to the Secretary of State.

At the report stage of the Growth and Infrastructure Act in the House of Lords, Communities minister Baroness Hanham said that operation of the clause would cease on 30 April 2016

Hanham said: "The clause already contains a power for the Secretary of State to switch it off by order, reflecting our underlying thinking that this is about addressing current uncertainties. However, we have listened carefully to the arguments that we should define this more precisely.

"Arguments have been made that the clause should reflect the current uncertainty in the property market and that we should insert a date when the operation of the clause will cease. We have therefore set the sunset date for 30 April 2016. That is based on the forecast from the Office for Budget Responsibility that shows that investment in housing is expected to stabilise in 2016."

The ability to modify Section 106 agreements under Section 106BA, BB and BC (ie in relation to affordable housing) were automatically repealed on 30 April 2016. Whilst there was a nod in the November Spending Review to suggest an extension of time, and the Growth and Infrastructure Act itself has a provision to allow the Secretary of State to substitute a later date, this has not happened.

Indeed in an announcement recently the Government confirmed that it will not be extending the application of the provisions beyond the 30th April 2016 cut off date.

An application under the provisions of Section106BA could be submitted up to the end of 30 April 2016. Whilst we have not seen any transitional provisions it should follow that such an application can be determined after 30th April 2016 by the LPA or appealed if left undetermined or refused. It could be argued that this is not the case.

Baroness Hanham was advised in 2013 that investment in housing would have stabilised by 2016 thus negating the need for these provisions. It appears that the Government consider this to be the case as the only options now for renegotiating S106 agreements is by agreement with the LPA; or an application under Section 106A but only in the event that the agreement is over 5 years old; or by submitting a new application with a new viability assessment.