Keeping a planning permission alive during the Coronavirus crisis - time limits, S106 agreements and CIL payments

Planning Law solicitor, Sarah Cook, discusses issues pertaining planning permission including time limits, S106 agreements and CIL payments.

Whilst the Government has acted fast with tackling some problems that have arisen within the planning and development sector, as a result of the coronavirus crisis, the time limit for implementing a planning permission and submitting a reserved matters application to the local planning authority remains the same.

Current situation

This is posing a real problem to developers and landowners who are nearing the time limits imposed by Sections 91 & 92 of the Town and Country Planning Act 1990 (‘TCPA’) to implement their permission. By way of reminder, these sections state:

Section 91 – development must begin no later than 3 years from the grant of planning permission (although an LPA can set a different time limit, at the time permission is granted, if they deem it appropriate).

Section 92 – for outline permission, applications for reserved matters approval must be made no later than 3 years from the grant of planning permission, and development must begin no later than 2 years from the final approval of reserved matters (although, as with S91, an LPA can set a different time limit, at the time permission is granted, if they deem it appropriate).

The time limits imposed by s.91 and s.92 are strict and there is no method in place to allow for an extension of time once planning permission has been issued.

Furthermore, it is not possible to amend a planning permission under Section 73 of the TCPA as subsection 5 of Section 73 explicitly excludes the extension of time limits. Moreover, it is not possible to amend the time limit of a permission under s.96A as a non-material amendment.

Problems arising

We are already seeing how coronavirus is impacting the commercial viability of sites. Many construction sites have shutdown to protect those working on-site, and also as a result of staff shortages.

Staff shortages are also having an impact on those in planning teams who are responsible for preparing reserved matters applications and seeking to discharge pre-commencement conditions.

Moreover, it is not only the developers who are experiencing problems but the local planning authorities themselves who are also facing staff shortages and the challenges of remote working. A reduced number of planning officers means that there is likely to be a delay in discharging pre-commencement conditions, which may mean that a permission cannot be implemented and may risk it lapsing.

Solutions

For now, there is very little that can be done in practice to prevent permissions lapsing. However, it may be possible to commence a ‘material operation’ as defined under Section 56 of the TCPA. The test under s.56 is not very high and, as some parts of the construction industry are still active, it may be feasible for such an operation to be carried out safely by construction workers.

Another option could be to rely on the deemed discharge of pre-commencement conditions by applying to the LPA to discharge pre-commencement conditions. In the absence of a reply from the LPA within a set period of time, the condition may be deemed to be automatically discharged. In this instance, a material operation could be carried out on-site to ensure the permission has been implemented without breach of the permission.

Furthermore, it is likely that the submission of a reserved matters application, before the expiry of 3 years from the date of grant, is sufficient to meet the requirement under s.92 and that validation from the LPA may not be required (Seivers v Bromley). So make sure you get your application to discharge a pre-commencement condition submitted before the expiry of the planning permission. 

Legislation

The only real solution to effect permissions lapsing is for new legislation to come into force to allow developers to extend the time period or for an automatic extension to be applied.

This was previously implemented in Oct 2009, in a response to the last recession.

The Scottish Government have recently passed new legislation, in response to coronavirus, to automatically extend all permissions that are due to expire within the next sixth months. Hopefully, it will not be too long until English planning permissions are similarly extended.

S106 Planning Obligations & Community Infrastructure Levy payments

Developers may experience further problems in the current climate, in connection with the payment of financial contributions secured under Section 106 of the TCPA. These problems are likely to be different to the issue of the expiry of permissions because the contributions are usually triggered by certain positive events such as the occupation of a certain number of dwellings. This means that if a developer is finding that their site’s commercial viability is negatively impacted as a result of the coronavirus crisis, it is possible to cease construction to ensure the payment of the S106 contribution is not triggered.

We are certainly likely to see that developments that require a viability review, upon a set trigger or anniversary as set out in a S106 Planning Obligation, may not be required to provide an affordable housing contribution or provide a reduced number of affordable units on site because the site’s viability has drastically reduced.

Solutions

A solution to combat reduced commercial viability is unlikely to arise by way of new legislation imminently, but guidance may follow from the Government as to how existing Section 106 Planning Obligations should be negotiated. In the last recession, the Government relaxed the requirements for the provision of affordable housing, and I think it is very probable that the Government will issue similar guidance in response to the coronavirus crisis.

In the meantime, it is possible to try to renegotiate an existing S106 Planning Obligation and for it to be varied by deed, subject to the agreement of the Local Planning Authority. However, if the S106 was completed less than 5 years ago (unless another period of time is specified) the LPA are not obligated to vary the S106; for older S106 Planning Obligations, an application can be made directly to the LPA to modify the Section 106 Planning Obligation.

Community Infrastructure Levy Liability

For developments that are within a district or borough that has a community infrastructure levy charging schedule, a notice of commencement must be issued (for all development) and, unless exempt, a CIL payment must be made to the local charging authority.

It is foreseeable that as a result of the current health crisis, notices may not be served in time and payments might be made late on account of a change in commercial viability and cash flow.

Solution

It may be possible to apply to the local charging authority for CIL relief. The PPG states that it can allow exceptional circumstances, relief from the levy ‘if it deems that the levy would have an unacceptable impact on the viability of a development’. However, exceptional circumstances relief is only applicable for developments that have not yet commenced and cannot be applied retrospectively.

For now, the best solution for developers impacted by CIL would be for the charging authority to agree not to use its enforcement powers to assist upon payment during the coronavirus crisis and/or to agree to alter when CIL payments (in full or by instalments) fall due. This would of course result in the LPA receiving fewer CIL payments and therefore detrimentally impacting the investment the LPA can make towards infrastructure in the short-term. Nevertheless, these changes would mean that many developments could still go ahead once the County is in a better financial situation rather than faced with the difficult decision to stop development and for the permission to lapse.

For now, new guidance is welcomed from the Government as to how developers can apply for CIL payments to be deferred.

Further changes

It is very likely that one of the next changes to the planning system, as a result of the coronavirus crisis, will be for the Government to legislate for a method allowing time limits imposed by s.91 and s.92 of the TCPA to be extended ensuring that planning permissions do not lapse.

Furthermore, new guidance concerning the commercial viability of developments is expected with a focus on renegotiating existing S106 Planning Obligations and deferring the payment of CIL, to ensure that houses are still delivered.

I have identified some potential solutions above, but the only realistic solutions are likely to become available following changes in guidance and legislation.