The most eye-catching aspect is a “time-limited, emergency measure intended to supportLPAs to exercise their ability to renegotiate planning obligations.” (Perhaps I would have preferred “strongly encourage” rather than “support”!).
Here’s what you need to know, by way of direct quotes from the document:
“LPAs are expected to consider re-negotiating S106 agreements when the following conditions are met:
Developers should have exhausted all reasonable endeavours to find an RP buyer based on the affordable housing marketing, and any other – relevant requirements set out in the original S106 agreement.
Developers should have uploaded any uncontracted S106 homes onto the Homes England Clearing Service by 1 June 2026 to give a final opportunity for RPs to bid to purchase these homes. Any homes not uploaded onto the Clearing Service by this point will be outside of this process.
Homes should be live on the Clearing Service for a period of six weeks from the date of the unit being uploaded (“the Clearing Service period”).
The S106 homes should be due for completion on or before 1 December 2027, to be eligible for this time-limited approach; completion defined as when a home is ready for occupation or when a completion certificate is issued. Expected completion dates should be registered on the Clearing Service to guide LPAs on whether all above conditions are met.
LPAs should seek to avoid tenure renegotiations for uncontracted s106 homes that have received reasonable offers from willing and suitable RP buyers, as is current practice, to avoid the loss of social and affordable housing to private sale.
As is currently expected, developers should inform LPAs of any, and all, bids they receive from RPs seeking to buy uncontracted S106 units. LPAs are actively encouraged to request that these details are provided.
Assessing the reasonableness of bids is ultimately a matter for individual LPAs but, where available, they are encouraged to consider the following evidential sources: site level viability evidence; published commuted sums policies; grant rates; surveyor data; and recent S106 purchases in the locality.
Given the Clearing Service will have provided an opportunity for RPs to identify and bid for unsold and uncontracted S106 units, LPAs are encouraged for this temporary period to take a pragmatic, time-limited, and light-touch approach to assessing bids, and any further information requests, for example evidence of marketing efforts or details of contact with prospective buyers in the locality.
In instances where there is a dispute between the LPA and developer over whether bids received are reasonable, they may also wish to seek a third-party view to support a resolution, as per an existing Alternative Dispute Resolution (“ADR”) procedure.”
“LPAs should confirm their decision on proceeding to re-negotiate the S106 agreement as quickly as possible – with a guideline of no more than twelve weeks from the end of the six week period, and consider the following in negotiating to alter the tenure of eligible homes:
LPAs are encouraged to take the following approach:
seek alternative affordable housing or discounted market tenures in the first instance where possible;
if there is no buyer for such tenures, proceed through to private market rent or sale (with equivalent form of affordable housing provided on an alternative site within the LPAs’ area or, where this is not feasible, a financial payment made in lieu of onsite affordable housing).
LPAs should include stipulations that make clear that if homes are not completed on time and by the deadline of 1 December 2027, schemes will revert to the tenure mix set out in the original S106 agreement. Renegotiated S106 agreements should provide for this without the need for a further deed of variation to be made.
When considering phased development, LPAs and developers should agree a tailored approach with regard to the circumstances of the specific phases i.e. if the first phase will be completed by 1 December 2027, then a deed of variation should be considered in line with the policy set out in this statement. However, where phases contain units that are not expected to complete by this point, the terms set out in the original s106 should continue to be expected to apply.”
If you are a developer unable to find a registered provider to take on homes which are capable of completion by 1 December 2027, this should provide a helpful intervention. Of course, the encouragement to local planning authorities has no real teeth in the face of opposition or delayed responses but one would hope that this government “emergency” announcement (backed indeed by a written ministerial statement) should carry significant practical weight.
What else was in (on?) this “roadmap”?
The second section sets out how MHCLG intends to “simplify and strengthen the process for agreeing developer contributions through S106 agreements at the application stage of new developments”. The approaches to be taken to viability appraisal at the plan-making and decision-making stage as set out in the proposed new NPPF, together with “good quality pre-application engagement between applicants and LPAs to identify and resolve key matters, including planning obligations for the development…will enable the head of terms for the S106 agreement to be agreed as quickly as possible once the application has been submitted”.
“Today, we are also confirming our intention to publish a standardised template S106 agreement to help speed up the process of drafting and agreeing new S106 agreements. Town Legal LLP have been formally awarded the contract following a successful procurement process conducted by the Planning Advisory Service. It is intended that a standardised S106 template for medium sites will be issued as a first priority. The template will set out the foundational elements and clauses expected in the majority of S106 agreements for sites below 50 units, and we will engage widely with all relevant parts of the sector to ensure it is as effective as possible. This will provide LPAs a solid starting point for new agreements, speeding up the drafting process and freeing up capacity. Sector-wide training opportunities will also be provided to authorities as part of this wider package.”
So, watch this space!
The third section promises guidance to set out clearer expectations for registered providers, developers and local planning authorities as to the standards that section 106 homes should meet; how the different elements of the sector should work together; standardisation as to pricing, and making the process more accessible for small housing providers.
The final section sets out measures the government is taking to strengthen and expand the market for affordable housing secured by section 106 agreements, including (although I’m straying a bit from my pigeonhole here): low-interest loans for private registered providers of affordable housing [£2.5bn over four years; 60% to be allocated to London; interest rate of 0.1% and a duration of 25 years; competitive bidding process; up to 10% for section 106 homes]; allowing councils to use “right to buy” receipts; exploring “bringing RPs together as consortia to be able to bid and purchase S106 homes together, pooling their capacity and purchasing power. This will be alongside leveraging the role of Established Mayoral Strategic Authorities more proactively in the S106 market” ; also exploring “how government can crowd in additional private investment to enable the purchase of unsold S106. This is with the aim of bringing them into use while retaining them as regulated affordable housing, for example through an affordable housing acquisition vehicle supported by debt guarantees which is able to buy Section 106 homes”, and adding military affordable housing to the definition of affordable housing.
All of this is alongside Matthew Pennycook’s separate written ministerial statement updating on progress in relation to its social and affordable housing renewal plan. I assume that registered providers will have welcomed the detail provided as to the convergence mechanism now arrived at by the government to enable registered providers to start to close the gap between the rents that could be charged if the home were let to a new tenant and what is payable by the existing tenant:
“Following consultation, I am today confirming that Registered Providers will be able to increase weekly rents for Social Rent homes that are below formula by up to an additional £1 on weekly rents each year over and above CPI+1% from 1 April 2027, and by up to an additional £2 on weekly rents each year over and above CPI+1% from 1 April 2028, until formula rent is reached.”
The statement also confirms details of a reformed Decent Homes Standard for social and privately rented homes.
On the following day, 29 January 2026, MHCLG announced a second phase of its “new homes accelerator” programme. The programme has now been expanded to include sites of fewer than 500 homes. “As part of Phase 2, operations will be expanded in London through the launch of ‘NHA LDN’ and a new planning support service for boroughs, ‘ATLAS LDN’, which will both be led by the Greater London Authority (GLA) on behalf of the Mayor of London.” If your scheme needs support in unblocking issues, for instance, in working with statutory consultees, there is a portal to apply for schemes nationally and a separate one for London.
It wasn’t all announcements coming from MHCLG this week. MHCLG also published two rather elderly but unfortunately still topical pieces of research that had been commissioned by the previous government and which then had presumably disappeared down the back of a Marsham Street sofa:
Delays and barriers experienced in the planning applications process (June 2022), a study by RSM, looking “at the planning applications process following an extensive assessment of 80 case studies for both minor and major development. In doing so, the research explored the different stages of the applications process, from pre-application to post-decision matters, highlighting where the most common and impactful delays occurred”.
There was an interesting planning appeal decision letter last week concerning a section 106B appeal against refusal of an application made under section 106A to amend a section 106 agreement on the basis that it no longer served a “useful purpose” (the statutory test in section 106A).
This post will look briefly at that decision but first I thought some legislative archaeology might assist.
Section 106 of the Town and Country Planning Act 1990 is of course the statutory successor of section 52 of the Town and Country Planning Act 1971. Under section 52, the commitments had no specific description but were treated effectively as covenants analogous to restrictive covenants given by a landowner to a neighbouring landowner but (unlike usual property law covenants) able to contain positive requirements enforceable against successors in title rather than just restrictions – and, as is the case under section 106, enforceable by the local planning authority.
The only statutory method for amending or removing commitments given within a section 52 agreement was to make an application to what was then the Lands Tribunal (now the Upper Tribunal (Lands Chamber)) under section 84 of the Law of Property Act 1925. In order for such an application to succeed, the Tribunal has to be satisfied (in summary – there are other tests which are less relevant for the purposes of this post) “that by reason of changes in the character of the property or the neighbourhood or other circumstances of the case which the Upper Tribunal may deem material, the restriction ought to be deemed obsolete”.
The section 84 process is slow, uncertain, outside the usual planning system and so on. When section 106 of the 1990 Act came into force on 24 August 1990 the only statutory process remained section 84 of the 1925 Act.
Then in the first of so many waves of amendments to the 1990 Act, along came the Planning and Compensation Act 1991, which came into force on 25 September 1991. The 1991 Act replaced section 106 with, basically, what we have now. Those commitments given by landowners on behalf of themselves and successors were the first time called “planning obligations”.
In those changes, the scope of what could be secured was expanded. Compare the original formulation of what could be secured via section 106 with what it became:
Original:
“(1) )A local planning authority may enter into an agreement with any person interested in land in their area for the purpose of restricting or regulating the development or use of the land, either permanently or during such period as may be prescribed by the agreement.
(2) Any such agreement may contain such incidental and consequential provisions (including financial ones) as appear to the local planning authority to be necessary or expedient for the purposes of the agreement.”
What it became:
“(1) Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation (referred to … as “ a planning obligation ”), enforceable to the extent mentioned in subsection (3)—
restricting the development or use of the land in any specified way;
requiring specified operations or activities to be carried out in, on, under or over the land;
requiring the land to be used in any specified way; or
requiring a sum or sums to be paid to the authority (or, in a case where section 2E applies, to the Greater London Authority) on a specified date or dates or periodically.”
[When we think about how the use of section 106 planning obligations to secure financial contributions has exploded over the last 30 or so years, it is worth comparing what is now section 106 (1) (d) above with what it replaced: section 106 (2) above. Was this intended at the time? An open question…]
Note also the reference to “by agreement or otherwise” in the first line of the changed version of section 106 (1). This opened up the possibility of the landowner entering into planning obligations by unilateral undertaking rather than just by agreement.
Alongside the reformulation of section 106 was the introduction of section 106A and B (from 10 December 1992), providing a procedure to applying to “modify or discharge” planning obligations in place of using the Law of Property Act 1925 procedure. As I know you know, section 106A allows an application to be made once at least five years have passed since the obligation was entered into – with an available appeal route (although it is worth noting that the Secretary of State can prescribe – very easily in legislative terms, simply a ministerial direction would surely suffice – a period shorter or longer than five years). An application may be made before five years have passed, but in those circumstances there is no right of appeal. If an application is made, the local planning authority has to determine either:
that the planning obligation shall continue to have effect without modification;
if the obligation no longer serves a useful purpose, that it shall be discharged; or
if the obligation continues to serve a useful purpose, but would serve that purpose equally well if it had effect subject to the modifications specified in the application, that it shall have effect subject to those modifications.
Section 106B provides for appeals to be made to the Secretary of State. (Interestingly, sub-section 106 (5) requires that before determining the appeal “the Secretary of State shall, if either the applicant or the authority so wish, give each of them an opportunity of appearing before and being heard by a person appointed by the Secretary of State for the purpose”. I interpret that as the parties having a right for any appeal to be determined bother than by written representations, i.e. by a hearing or inquiry).
What is meant by “no longer serves a useful purpose”? What did Parliament intend to connote by the use of those words? Was this just intended as a modernisation and abbreviation of the test in section 84 of the Law of Property Act 1925? Should this be treated as a “useful planning purpose” or will any useful purpose do? Those words “No longer”: What if the obligation never served a useful purpose? And why five years? Of course, given the lack of any other statutory route to amend section 106 agreements and unilateral undertakings, all of this has come under increasing scrutiny both by inspectors on appeals and by the courts.
I have been looking back today at Hansard reports of debates in parliament that led to the Planning and Compensation Act 1990 to see whether legislators gave any of this specific thought. It would have been good if they had done but I can’t see that they did.
All this is particularly topical at the moment, at a time where many schemes are stalled through lack of viability and where development may be able to progress if planning obligations previously entered into are modified or discharged to the extent necessary to achieve viability. The government of course (a) missed any opportunity during the course of the Planning and Infrastructure Act 2025 to reintroduce the section 106BA and BC procedure that we had between April 2013 and April 2016 to allow developers to apply to modify or discharge affordable housing obligations in Section 106 agreements where those obligations made a development economically unviable and (b) is still not exactly welcoming section 73 applications with open arms that serve as a vehicle to achieve that outcome (see Matthew Pennycook’s 18 December 2025 letter to the Planning Inspectorate) so, if the local planning authority is not willing to engage in such a renegotiation of its own volition, section 106A and B are the only game in town.
Which now takes me to that recent appeal decision I mentioned. This is a decision letter dated 20 January 2026 dismissing appeals by Hodson Developments and Chilmington Green Developments against the non-determination by Ashford Borough Council and Kent County Council of applications made under section 106A to make a total of 122 modifications to a section 106 agreement dated 27 February 2017 in connection with planning permission which had been granted for a large development including 5,750 homes together with commercial and other uses. Central to the inspector’s decision was the question as to whether the viability or otherwise of the scheme and the effect of an obligation and other obligations on viability, is relevant to whether an obligation serves a useful purpose.
The appeals have a long history, which I suspect is far from concluded. The position is not wholly clear but it seems that an initial application to modify or discharge various obligations was submitted in 2022 before the expiry of five years when the local planning authority at that time would have had a broad discretion as to whether to agree to the application (given that an appeal would not lie under section 106B in relation to such an application). After an initial judicial review that was settled, the applicant commenced a second set of judicial review proceedings, alleging that Ashford Borough Council and Kent County Council were wrong to conclude that viability of the development was not a relevant consideration under section 106A and that in any event in their consideration of the issue they erred in law. Following a renewal hearing in March 2022, the claim was held by Lieven J to be unarguable. On the specific point as to whether viability is a material consideration, she “remain[ed] unconvinced that it is not a material consideration”. However she considered that the councils had properly taken it into account. “I am not going to consider whether or not viability was legally a material consideration because that is a somewhat complicated point of law and would involve considering a number of previous cases. It is sufficient for the purposes of ground 1 that the local authorities in this case did consider viability with some care and detail…”
There was then a further application, presumably by which time the five years had expired, which was the subject of the appeals considered by the inspector (two appeal references – one for obligations in the agreement enforceable by Ashford Borough Council, the other for obligations enforceable by Kent County Council). Some of the requests for modifications were withdrawn but there was still a long list.
After an eight day inquiry the inspector (solicitor Grahame Kean) disagreed that the effect of an obligation and other obligations on viability, may be relevant to whether an obligation serves a useful purpose (see paragraph 33). He goes on:
“34. An obligation must itself be soundly based on established criteria, ie it must be necessary to make a development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to the development. If, say an obligation fails these criteria but requires some act unconnected to or at odds with the development, the obligation would be liable to be struck down as invalid. However, in a s106A application the question is different from the legitimacy of the obligation itself. As counsel for the Appellant accepted, the obligation must have been entered into for a planning purpose in the first place.10 It would be rare for the useful purpose not to be a planning one but as noted, the question under s106A is whether the obligation serves any useful purpose, not just a useful planning purpose.
35. The Appellant’s counsel claims that “in the present case, frustrating the development goes to the planning purpose”. Counsel might not have intended to refer to a deliberate attempt to frustrate a development as much as an objectively assessed outcome due to acts or omissions of local planning authorities. At any rate there is no evidence of any deliberate attempt to frustrate the development and if there were, s106A would not be the appropriate way to deal that scenario.
36. Furthermore, if a planning obligation is duly completed, although it may have the effect of “frustrating” the development in the sense that it prevents progress in the eyes of a developer unless and until certain acts are performed, and although ultimately circumstances may obtain such that it is no longer regarded (by some at least) as a viable project, that seems to me a consequence, and not part of the original purpose or reason for exacting the obligation in the first place.
37. The existence of an obligation, in the context of a development scheme, is to make development acceptable in planning terms. That is its quintessential purpose. The statutory criteria are simple and do not refer to the viability of the development. The obligations have a contractual nature, albeit statutorily based, which it is in the interests of the parties to be able to enforce, the one against the other, and subject only to limited exceptions set out in s106 that allow discharge or modification. Since they are limited exceptions that derogate from the principle of contractual enforceability, it also seems arguable that exceptions should be strictly applied.
38. An obligation can have a useful purpose of preventing development or further development until performed. This may make it inherently impossible, for financially viability reasons, to carry out or complete a development, but that does not necessarily deny the usefulness of the purpose in preventing a development that would otherwise be unacceptable in planning terms. Circumstances may throw light on whether the purpose continues to be “useful” but viability issues would not transcend the basic question of whether the obligation continues to meet any useful purpose.”
Faced with such a spread of requested modifications (including, in relation to affordable housing, requested modifications as to tenure requirements and delivery triggers), the inspector considered that the “evidence is not so clear and unambiguous as to persuade me that unless the obligations in the s106 Agreement were discharged or modified all as requested, the scheme would in fact be rendered financially unviable and unable to proceed.”
This may all be justified on the particular facts, I don’t know. However, standing back, if the inspector’s approach is that an obligation relating to, say, the provision of a particular percentage of affordable housing, still serves a useful purpose if the evidence were to show that unless that percentage is reduced (or for instance the tenure mix altered or the trigger delayed) the development will not proceed, and that with the modification there is every prospect of the development proceeding, resulting in actual provision of affordable housing (albeit a lower percentage than was initially promised), is this approach correct? And if so, where is there any common sense in it – where really is the “useful purpose”? – and what can be done? In a situation like this, rather than defer progress on development indefinitely, is the developer really to go back to the very beginning, to prepare and submit a fresh application for planning permission, delaying any delivery for many years and at frankly massive cost? The lack of any proportionate mechanism to reflect current economic circumstances, with any necessary protections, would be surely a scandal?
I’m picking up that the conclusion is reluctant. Clearly, it is helpful that the drought of new housing activity in London has been recognised. Clearly, it is appreciated that MHCLG and the London Mayor have worked hard at a co-ordinated package as between them which moves significantly, and no doubt with much internal organisational pain, from the previous policy position in terms of affordable housing expectations, in terms of the usual approach to CIL and in terms of some aspects of housing standards. There is also a dilemma on the part of the industry: this is an emergency; measures are needed now; if this set of proposals has to be ditched and replaced with a more effective package, we are just losing more time, unless the industry can point with some unanimity towards practical, easily implemented, improvements to what is on offer.
But the reality is that the current package (1) will not be enough and (2) is too caveated and conditional to provide the crucial reassurance that is needed to those who hold the strings in terms of funding or financing. From what I hear I’m not at all sure that the Mayor’s new time-limited route is even likely to be used, as opposed to continued reliance on viability testing.
Should there be more focus on stalled sites that already have planning permission?
Of course!
Why ignore the lowest hanging fruit? The opportunity has now passed for primary legislation to reintroduce section 106BA (which could have been a late bolt-on to the Planning and Infrastructure Bill). But why not by ministerial direction reduce the minimum period of five years for the purpose of being able to make applications under section 106A, which are capable of appeal, to say two years – and introduce guidance as to MHCLG’s interpretation of “useful purpose” (of course the courts’ legal interpretation ultimately will be what counts but guidance will still be useful!)? And in any event introduce firm guidance to local planning authorities that they should approach requests for deeds of variation on viability grounds positively where the case has been made (and set out in the guidance what will be sufficient to make that case)?
Is late stage (as opposed to early stage) review necessary in relation to the proposed “time-limited planning route”?
No!
The uncertainties caused to funders by the mere existence of any review mechanism the application of which is outside their control has a deadening effect on developers’ ability to fund schemes, utterly disproportionate to the likelihood that any review mechanism will ever deliver any material amount of additional affordable housing, schemes are so underwater. And unnecessary uncertainty has been created because the time-limited route envisages a different set of mechanisms to those which currently exist.
The simple change would be for the Mayor’s LPG to specify that for a time-limited period the fast-track thresholds will be reduced from 35% and 50% to 20% and 35% with the structure remaining exactly the same as to when review mechanisms will be required and how they will operate. A bucketload of uncertainty would be immediately removed.
Are there unnecessary difficulties with introducing a viability test into the proposed CIL relief?
Yes!
In fact, this whole new intended structure for 50 to 80% relief from borough CIL is going to be disproportionately complex given that it will rarely make the difference between a project going ahead or not (and with the prospect of later clawback, funders will always assume the worst in any event so it just won’t help bring them over the line). What I’m being told is that where CIL is a killer is on cash flow. On viability – the overall go/stop on development – it is of only marginal influence.
If there is going to be any tweaking of the Regulations:
Why not allow for payment at a later stage (you recall that when the infrastructure levy was touted by the previous government as replacement for CIL it was to be payable at upon completion of the development so would there be such a problem with it being paid, say, on occupation)? Boroughs don’t spend the monies upon receipt – timing isn’t critical to them! And Mayoral CIL is simply paying down long-term debt in relation to Crossrail.
Require all boroughs to switch on the potential for exceptional circumstances relief and see what can be done to simplify the process.
Ahead of any Regulations, just lean on the boroughs to switch on exceptional circumstances relief (if they refuse that is a warning sign in itself) and introduce advice as to the evidence that should normally be sufficient. Even that would help.
And incidentally this would actually also would help SMEs, currently shut out of the relief proposed in the consultation document by a combination of the £500,000 liability threshold and the proposed £25,000 application fee. And while we’re at it, extend this beyond residential C3 development.
Are the proposed additional powers to be given to the Mayor enough?
Probably, but…
It really would be useful if the Mayor could call in schemes of 50 units or more even before the borough is minded to refuse them, as long as the statutory determination period has passed – thereby reflecting the current arrangements in the Mayor of London Order 2008 for schemes of 150 units or more.
Final thoughts
Of course the proposed additional grant funding for affordable housing is welcome. But inevitably it isn’t enough.
Surely, we all agree that the thrust of all these measures is not good to the extent that, consistent with the operation of the existing system, it assumes that affordable housing, including social housing (for which there is such a desperate need in the capital) is what has to give in order to enable development to proceed. How can we move to a system where the delivery of social housing is not reliant on, effectively, an affordable housing tax imposed on residential development, given that the current model is not working?
To end on a positive note, I was really cheered to hear about Homes For People We Need campaign and to read their report Making Social Rent Homes Viable. Whilst it identifies that £18.83 billion is required to develop 90,000 social rent homes per year, there is a strong investment case for substantial government subsidy, given that temporary accommodation costs of £2.8 billion annually could in theory service index-linked bonds worth circa £160 billion. “In theory an investment by HM Treasury to build c.130,000 Social Rent homes for those families currently in temporary accommodation, assuming £209,000 subsidy per home and thus a total subsidy of £27.2bn, could reduce the current bill for Temporary Accommodation to zero”.
There are a number of strategic recommendations and suggested policy reforms in the report:
“• Social Housing Tax Credits represent a promising approach, enabling private capital deployment now in exchange for future tax relief.
• Section 106 Agreements should fix affordable housing values at the planning stage to improve market efficiency.
• Right to Buy should be further reformed to preserve the affordable housing stock.
• ‘Flex Rent’ approaches linking rents to household income should be considered to optimise revenue generation whilst maintaining affordability.
• The Housing Association sector desperately needs recapitalisation in addition to the recent 10-year rent settlement.”
In summary I hope that what is arrived at is fast, simple, measures to help meet the current housing and affordable housing emergency. But then I hope that there is a proper longer-term solution along the lines promoted by this report to help meet the underlying and remaining (national not just London) housing and affordable housing crisis. The current section 106 model is not working!
tl;dr summary: positive direction but concerns about potential complexities, uncertainties and as to whether it will all be in place speedily enough.
We’re all now waiting for the consultation to start “over six weeks from November” (fair play, at least no “by the end of Autumn” fudge).
There are plenty of detailed issues arising, and differing interests will want to re-prioritise the measures in different ways, but I thought I would set out four key asks that I have, which in my view should be specifically addressed in the consultation documents:
Should there be more focus on stalled sites that already have planning permission?
This is the lowest hanging fruit. And yet all we have (in paragraphs 33 and 34) is a reference to the potential for renegotiating previously agreed arrangements by way of deed of variation and discouragement as to the use of section 73.
This isn’t enough. I set out the current procedural constraints in my 18 October 2025 blog post London Stalling.
Procedurally, bar reintroducing section 106BA or, for a temporary period, amending section 106A to reduce the 5 years’ requirement, at the very least we need:
Specific encouragement for local planning authorities to accept developers’ requests to engage with the process of varying existing agreements where specific criteria (consistent with the direction of the policy note) are met, linked to some sort of oversight, monitoring and/or route for complaint where authorities refuse to engage (given that unless your section 106 agreement is at least five years’ old, or unless this is in the context of a section 73 application (of which more in a moment) there is no right of appeal on the part of the developer)
Not the current suggestion that the section 73 process “should no longer be used as an alternative means of reconsidering fundamental questions of scheme viability or planning obligations” but rather a proper recognition of the real challenge of keeping planning permissions, and associated planning obligations packages, up to date as against changing circumstances and the important role that section 73 plays in this. Attempts to make currently unviable schemes viable invariably involve an intertwined mix of scheme changes and changes to planning obligations. Section 73B, introduced by the Levelling-up and Regeneration Act 2023, is less useful as only the implications of the proposed changes are to be taken into account rather than considering the amended proposal holistically against the current development plan and other material considerations. This all needs to be connected up with the continuing problem that Hillside creates for amendments to projects (I was pleased to see Baroness Taylor confirm this week, on behalf of the government, in response to Lord Banner’s tabled amendment to the Planning and Infrastructure Bill, that the government will “explore with the sector” a “statutory role for drop-in permissions to deal with change to large-scale developments”. This is so important!).
Is late stage (as opposed to early stage) review necessary in relation to the proposed “time-limited planning route”?
In basic summary, this route is where a residential scheme can commit to at least 20% affordable housing with a 60/40 social rent/intermediate tenure split with planning permission issued by the end of March 2028. If the first floor of the scheme has not been built by 31 March 2030 (in the case of larger phased schemes, in the case of any phase where the first floor of buildings providing at least 200 dwellings has not been built by that date), “a late review will be undertaken once 75 per cent of homes within the scheme or the final phase are occupied to determine whether a higher contribution for affordable housing can be made”.
Why the late stage review mechanism in these circumstances, rather than the early stage review that is currently the case with fast track schemes that don’t achieve substantial implantation by the specified deadline under London Plan policy H5? Late stage reviews unnecessarily spook funders and lenders, leaving the eventual outcome too late in the process – and also having the public policy disbenefit of being too late to allow for any further affordable housing, that can be unlocked via the review, to be accommodated within the scheme. There is also inconsistency with paragraph 30 which suggests another approach for multi-phase schemes: “For multi-phase schemes, a review of the scheme will apply prior to the start of each phase for which the milestone in paragraph 27 has not been reached, to determine whether additional affordable housing can be provided in subsequent phases.”
Isn’t it better to keep things simple and follow, where possible, the existing mechanisms within policy H5, just with the thresholds temporarily reduced?
Are there unnecessary difficulties with introducing a viability test into the proposed CIL relief?
Permissions which are secured via the new time-limited planning route that commence after the relief is in place and but before December 2028 will qualify for at least 50% relief from borough CIL (NB is this 50% after reliefs and exemptions have been applied and what will be the calibration to work out the higher level of relief where the scheme is delivering more than 20% affordable housing?), but the relief would be “contingent upon meeting proportionate qualifying criteria to ensure relief is targeted at schemes which would otherwise remain stalled or fail to come forwards, with a lower relief applicable where the full available amount is shown not to be warranted.” This sounds complicated. With this hurdle in place, not only would the developer not know whether they will qualify for the relief until planning permission is granted and they receive their liability notice, but it means that the purported advantage with the time-limited planning route of not having to undertake viability assessment is illusory, because the work will be needed in any event to secure the CIL relief – and the requirement will surely be very hard to turn into workable legislative drafting – we know how difficult exceptional circumstances relief is to secure due to the various criteria and requirements built into that particular mechanism.
Are the proposed additional powers to be given to the Mayor enough?
Boroughs would be required to “refer planning schemes of 50 units or more where the borough is minded to refuse the application – this would be a more streamlined process operating alongside the existing referral threshold of 150 units which applies regardless of a borough’s intended decision, and would ensure that the Mayor was able to review whether the right decision had been reached in the context of the housing crisis.”
But there may well be cases where schemes are being held up at borough level, either pre-resolution or post resolution whilst for instance the section 106 agreement is being negotiated, and where securing planning permission by the end of March 2028 will be critical under this package of measures. Here, speedy intervention, or threatened intervention, by the Mayor could really help. So, for this time limited period at least, why not allow the Mayor to intervene at any time after the end of the statutory determination period in relation to any scheme comprising at least 50 dwellings? Otherwise, that absolute cut of the end of March 2028 for grant of planning permission will need to some flex built in to allow for the possibility of appeal etc.
I’ll confine myself to those four although I have others, and I know that you do too…
NB none of this is to be churlish as to the scale of the task that MHCLG and the GLA have before them. It is of course by no means easy to get this package right and to avoid unintended consequences.
Today’s Commons Housing Communities and Local Government Committee’s report Delivering 1.5 million new homes: Land Value Capture (28 October 2025) contains recommendations which are more wide-ranging than the report’s title would suggest: some practical and, one would hope, uncontroversial; others touching on some raw political nerves at MHCLG no doubt.
Starting with the latter, do turn to the “epilogue” which comments directly on what were at that stage just media reports as to the “package of support for housebuilding in the capital” announcement which the government and the Mayor of London issued on 23 October 2025. The Committee expresses itself to be “seriously concerned by media reports that London’s affordable housing target could be cut” and “the Secretary of State may be considering suspending local authorities’ powers to charge the Community Infrastructure Levy to address concerns about development viability. None of the evidence to our inquiry—including from representatives of developers—advocated abolishing CIL entirely as a means of addressing viability concerns. On the contrary, we heard that the Government should reform CIL to extend its coverage where it is viable.”
“The Ministry must continue its work with the Greater London Authority to deliver an acceleration package, so that London boroughs are delivering housing in line with their local housing need targets. In response to this Report, the Ministry must provide its assessment of how changes to London’s affordable housing target may deliver more affordable housing units, by increasing the number of new homes built overall. Any reduction to London’s affordable housing target must be accompanied by a clawback mechanism to ensure developers return a portion of their profits to the local authority, ringfenced for affordable housing delivery, if a development surpasses an agreed benchmark profit. If London’s affordable housing target is reduced and the number of affordable housing units delivered declines, the Ministry and the Greater London Authority must commit to reinstating the 35% target.”
Perhaps this epilogue is slightly premature, given the actual announcement proved only to be a prologue to a consultation process that will run “from November” (late November is my guess). Perhaps the Committee should hear further evidence on that back of the consultation material to be published – it is slightly odd to be responding just to a newspaper report, particularly given that the actual announcement has been made.
But that epilogue does point to the fundamental policy tension in the current economic environment: what matters most – affordable housing delivery by percentage, or by absolute numbers? See for instance its recommendation that the government’s “forthcoming reforms to its guidance on viability assessments must ensure developers reliably deliver on their agreed affordable housing commitments, with viability assessments only used to alter these commitments retrospectively in the most exceptional circumstances. To support this, we recommend that all local authorities in England must be encouraged to set a minimum percentage target for affordable housing in their local plan [NB what don’t?], with a ‘fast-track’ route planning route for developments which meet this local target.”
“Too often, site-specific viability assessments are used by developers to negotiate down affordable housing requirements in circumstances where this is completely unjustifiable. Affordable housing contributions are frequently the first provision to be cut following a viability assessment, even where a developer may be making other significant contributions through Section 106 agreements and CIL. In areas with high land values, viability assessments should only be used in this way in very exceptional circumstances. Currently, not all local authorities have their affordable housing requirements clearly set out in local policy. Greater clarity from local authorities would provide developers with the right incentives to avoid lengthy viability negotiations, and ensure more applications are meeting local affordable housing requirements from the outset.
As part of its ongoing review of the viability planning practice guidance, the Government must consider how different types of developer contribution could be re-negotiated following a viability assessment, to protect affordable housing contributions. The Government must also update national policy to encourage all local authorities to set a minimum percentage target for affordable housing in their Local Plan for all major developments that include housing. This figure should be based on a local need assessment for affordable housing in each local authority, with particular regard for the local need for Social Rent homes. Local authorities should be encouraged to offer a ‘fast-track route’ for developments which meet the local affordable housing target, by making those developments exempt from detailed viability assessments and re-assessments later in the development process. This would encourage developments with a high percentage of affordable housing and speed up the delivery of housing of all tenures.
The Government must continue to develop its proposal to publish indicative benchmark land values to inform viability assessments on Green Belt land across England. The Government must publish different benchmark land values for each region of England, to reflect variation in land values. The Government must also ensure that the viability planning practice guidance contains clear advice on the “local material considerations” that would warrant local adjustments. The Government should continually review the effectiveness of the policy and consider how it may be extended to development on land that is not in the Green Belt.”
On land value capture itself:
“There is scope to reform the current system of developer contributions in England to capture a greater proportion of land value uplifts from development to deliver affordable housing and public infrastructure. There is a compelling case for such reforms—especially in the context of a deepening housing crisis and with public finances currently under strain. However, a radical departure from the Section 106/Community Infrastructure Levy (CIL) regime, which currently constitute the existing mechanisms of land value capture in England, would risk a detrimental impact on the supply of land in the short-term. We recognise that this would be disruptive to the Government’s housebuilding agenda.
Reforms to land value capture should be iterative, starting with improvements to existing mechanisms. Therefore, the Government must immediately pursue the reforms to Section 106 and CIL outlined in the chapters below. These reforms must optimise the system’s capacity to capture land value uplifts and deliver infrastructure and affordable housing—particularly homes for Social Rent—in line with the Government’s wider policy ambitions. The Government must also trial additional mechanisms of land value capture in areas where there are significant uplifts in land value which current mechanisms may not capture effectively. Specifically, the New Towns programme discussed in Chapter 5 presents a vital opportunity to test new ways of financing infrastructure delivery on large developments and learn lessons for future reforms.
Any reforms to land value capture should also be considerate of the wider tax system, to balance public needs and equitable charges on development. To support this work, the Government should publish updated land value estimates, which were last published in August 2020. If the Government does not intend to do so, it must explain why it no longer publishes this data.”
In essence, the Committee sees any radical change as likely to be disruptive to the government’s current agenda. Instead, it is recommending a number of changes which in my view are “no brainers”, for instance better resources for local planning authorities and looking to simplify the approach to section 106 agreements and to CIL:
Reforms to section 106 agreements
“There is a strong case for the introduction of template clauses for aspects of Section 106 agreements across England, as was recommended by the National Audit Office and others. Templates would allow local authorities to focus negotiations on site-specific factors rather than legal wordings. Template clauses would also allow for greater standardisation and clarity of requirements across all local authorities, and in turn reduce the workload of local authorities and Small and Medium-sized Enterprise developers.
As part of the site thresholds consultation that will take place later this year, the Ministry must seek views on how standardised Section 106 templates could most effectively streamline the negotiation process across sites of all sizes. Based on the consultation responses, the Ministry must work with the Planning Advisory Service to develop a suite of Section 106 template clauses and publish these within six months of the consultation closing. Alongside their publication, the Ministry must also update its guidance to local authorities on Planning Obligations to encourage local authorities to adopt these template clauses.”
I covered the same ground in my 14 June 2025 blog post Why Does Negotiating Section 106 Agreements Have To Be Such A Drag? Not only that, but my firm has also been working on an actual template draft for small and medium sized schemes and a specific set of proposals for ironing out the pinch points that currently exist at every step of the sway from arriving at heads of terms through to agreement completion. This was there to be grasped – it is a national embarrassment. We held a workshop on 30 September 2025, attended by a selection of thirty or so lawyers and planners from the public and private sectors, developers and representatives of industry bodies with MHCLG present in an observer capacity. If you weren’t invited I apologise but we were limited by the size of our meeting room! The draft output from the workshop will be released next month. If there is an organisation out there which is willing to make a larger space available in late November for a launch event please let me know.
Section 106 dispute resolution scheme
This may be why I write blog posts…. The Committee picked up on a reference I made in the blog post mentioned above to section 158 of the Housing and Planning Act 2016 which has never been switched on, allowing for a dispute resolution procedure to be able to be invoked where necessary during the course of negotiations.
“Local planning authorities across England have expressed concern that protracted Section 106 negotiations are causing delays to housing delivery. Drawn out negotiations do not benefit public outcomes and cause undue delays to development, which may impede the Government’s housebuilding ambitions. Whilst we recognise the Minister for Housing and Planning’s concerns that introducing a dispute resolution scheme may add complexity to the system, we believe the potential benefits to affordable housing delivery and unlocking stalled development outweigh this risk.
The Government should introduce a statutory Section 106 dispute resolution scheme, under the provisions of the Housing and Planning Act 2016. If the Government does not intend to pursue this, it should set out a detailed explanation as to why the Ministry has chosen not to implement the provision legislated for by Parliament in the 2016 Act. This should include setting out any specific technical or legal barriers to implementation which the Ministry has identified.”
Community Infrastructure Levy
Again, nothing earth-shattering. Rather, calls for more transparency as to which authorities are charging CIL and at what rates; widening opportunities for authorities to pool receipts (and recognising the opportunity that the reintroduction of strategic planning will bring) and greater focus on infrastructure funding statements.
On new towns:
The Committee calls on the government to set out where the funding is to come from (“The Government’s New Towns programme is likely to require billions of pounds of public and private investment over several decades, including millions from HM Treasury to establish development corporations during this Parliament”); greater use should be enabled of tax increment funding to fund infrastructure in cities and new towns. Specifically on the role that land value capture might play:
“There is significant potential to use land value capture as part of funding the proposed New Towns, especially on green field sites. However, we are concerned that the Government has announced substantial detail of the 12 potential sites without a planning policy to protect land value, contrary to the recommendation of the New Towns Taskforce. It appears that the Government has not yet established any delivery body to purchase land or enter agreements with landowners, which risks allowing developers considerable time to acquire sites for speculative development and immediately push up land values. The Taskforce said that, in the worst-case scenario, this could “jeopardise New Town plans”.
The Government must immediately conduct an analysis of Existing Use Values (EUV) on each of the 12 sites to maximise the capture of future land value uplifts, and develop plans for using appropriate mechanisms for land value capture on each site. This must include the option of development corporations using Compulsory Purchase Orders to assemble land where ownership is fragmented or negotiations stall. The Government must ensure arrangements for the purchase of land on New Towns sites are in place before it announces its final decision on locations by spring 2026.”
“The Ministry is right to prioritise New Towns which have the greatest potential to boost housing supply in the short-term, but its plan to “get spades in the ground on at least three new towns in this Parliament” does not match the scale of the Government’s housebuilding ambition. The New Towns programme can and must make a contribution towards increasing housing supply during this Parliament.
The Government must immediately clarify how housing delivery in New Towns will interact with local authority housing need targets. In its final response in spring 2026, the Government must include a roadmap for the New Towns programme, to show when each development corporation will be established, when development will commence on each site, and the estimated development timeline for each New Town.”
So will the government meet its 1.5m homes target?
“The housing sector is eagerly awaiting the Government’s Long-Term Housing Strategy, which it first announced in July 2024. Originally, this was to be published alongside the Spending Review in spring 2025. The continuing lack of a cohesive plan to deliver 1.5 million new homes has left the sector in the dark. We are also deeply disappointed that the Government has been unwilling to engage with us on the development of the Strategy, or provide any updates on its delayed publication, other than to tell us that it will be published “later this year”.”
“The Government can only begin to make significant progress towards its 1.5 million target once the sum of local housing need targets in Local Plans add up to that figure. Whilst the Government’s reforms to the National Planning Policy Framework seek to plan for approximately 370,000 new homes per year, local authorities will take several years to transition to this national annual target, as the currently Local Plans take seven years to produce and adopt on average. The Government has stated its ambition to introduce a 30-month plan-making timeline, but the relevant provisions in the Levelling-up and Regeneration Act 2023 to speed up plan-making have still not been implemented.
The Government must immediately bring forward its Long-Term Housing Strategy without further delay. It must set out an ambitious, comprehensive, and achievable set of policies that will deliver 1.5 million new homes by July 2029. The Strategy must prioritise implementing reforms to the plan-making system to move towards a 30-month timeline. The Strategy document must include an annex to provide the Ministry’s assessment of how many net additional dwellings each policy change will contribute towards annual housing supply, adding up to 1.5 million new homes over the five-year Parliament. If the Ministry is unable to supply this, the Government must make an oral statement to the House to confirm how many new homes it will deliver by the end this Parliament.”
There we have it. If nothing else, that will all spur us on with the work on the template section 106 agreements work and, related to that, I’m very keen to discuss how section 158 of the Housing and Planning Act 2016 might provide an effective, light touch, procedure.
This one is about the current position with London (non) development and some thoughts about what procedural steps may be open to you if you are a London (non) developer with a planning permission for a scheme that is no longer viable to build out.
On 14 October 2025, Molior published figures for Q3 2025 construction starts and sales in relation to schemes in London with 25+ homes for private sale or rent. Apologies for the extensive quoting but their summary is clearer than anything I can write:
“Between 2015 and 2020, there were 60-65,000 homes for private sale or rent under construction in London at any given time.
Today, that number has fallen to 40,000 … and 5,300 of those are halted part-built.
With a surge of completions expected in 2026, Molior forecasts that just 15-20,000 new homes will be actively under construction on 1st January 2027.”
“London had just 5,933 new home sales in Q1-Q3 2025.
Sales rates are weak across all local markets and at every price point.
At prices up to £600 psf – the level at which most London owner-occupiers can buy – sales to individuals are virtually non-existent.”
“Build-to-rent completions are about to plunge.
Interest rates rose during 2022, then the Liz Truss budget pushed them higher.
This stopped new money from funding London multifamily development.
Completions are set to disappear after 2027 because construction starts fell in 2023 / 2024.”
“There were 3,248 private starts in Q1-Q3 2025.
London is now on track for fewer than 5,000 private construction starts in 2025.”
“Starts have been falling for a decade because sales rates and profitability have been falling for a decade.
Building Safety Regulator delays have made things worse in 2025.”
“Development is unviable across half of London.
Development costs are high, so it is unviable to build profitably in half of London – areas under £650 psf.
This is even if the land is provided free and there are no planning obligations like CIL and affordable housing.”
“London has 281,000 unbuilt permissions.
These numbers are private + affordable C3 permissions.
The numbers include outline consents, detailed consents and unbuilt phases of schemes partly under way.
Also included are projects successful at committee but still waiting S106 sign-off.”
Whilst I try not to wear out my two typing-fingers commenting on press speculation about forthcoming announcements, I think we can assume that the government and the Mayor of London will soon be announcing various measures to try to turn this around or at least provide some sort of jump-start (note to government press team, I suggest that we are in “jump-start” rather than “turbo-charge” territory). See for example the Guardian’s 17 October 2025 piece London developers to be allowed to reduce percentage of affordable homes.
The spectre in the press pieces of some temporary reduction in developers’ threshold for qualifying for the Mayor’s fast-track (i.e. basically avoiding the need for formal viability appraisal and a late stage viability review mechanism if they can commit to a level of affordable housing which is usually 35%, with a policy-compliant split of affordable housing tenure types within that – see policy H5 of the London Plan for more detail) down to perhaps 20% is being seen by some as amounting to an actual reduction in the amount of affordable (and particularly socially rented) housing that will be developed. But this analysis is unfortunately wrong: very few schemes are currently proceeding with 35% or more affordable housing. Viability appraisals either agreed or accepted after scrutiny on appeal (this is not developers cooking the books) are already coming out at way less than 20%, let alone 35% (which is why simply reducing the threshold alone wouldn’t be enough). See for instance the inspector’s decision in relation to the Stag Brewery appeal (summarised in my 4 May 2025 blog post (7.5% affordable housing) and the 29 May 2025 decision letter in relation to a proposed tower block in Cuba Street (16.6% affordable housing). Nor is this a purely London phenomenon, if you recall last month’s Brighton Gasworks decision (summarised in my 27 September 2025 blog post) (zero affordable housing).
20%, plus the other measures being whispered about such as increasing subsidies for socially rented housing and/or allowing councils not to charge CIL, may tip the balance so as to turn some non-developers back into being developers again and thereby deliver more affordable housing (including socially rented housing) in absolute numbers (which is what counts after all) than is currently the case.
If we look to amend existing, unviable, section 106 agreements, no longer do we have the benefit of section 106BA, a provision introduced in April 2013 via the Growth and Infrastructure Act 2013, to allow developers to apply to modify or discharge affordable housing obligations in Section 106 agreements where those obligations made a development economically unviable, and then repealed three years later in April 2016. That provision unlocked various stalled permissions at the time. Is it too late, or too unpalatable, for an amendment to the Planning and Infrastructure Bill simply to reintroduce it?
Instead, the main routes are:
If the section 106 planning obligation is at least five years’ old, a formal application to the local planning authority can be made under section 106 A of the Town and Country Planning Act 1990 on the basis that the relevant obligation, unless modified, “no longer serves a useful purpose”. The test is expressed very generally which is unhelpful but the case would be that if the obligation is causing development, otherwise beneficial, not to proceed, it cannot be serving a “useful purpose”. There is the right of appeal to the Planning Inspectorate.
Seeking variation of section 106 planning obligations in the slip-stream of an application made under section 73 of the Town and Country Planning Act 1990 (an application, of course, for planning permission for the development of land without complying with conditions subject to which a previous planning permission was granted – and which is to be assessed against the current development plan and other material considerations). This was the route taken in the Cuba Street appeal I mentioned above. Full planning permission had been granted in December 2022. A section 73 application was made to amend the approved floor plans set out in the schedule referenced in condition 2 of that permission, to “provide an increase in the residential units from 421 to 434, and a reduction in the affordable housing (AH) provision from 100 (71/29 affordable rented to intermediate split as a ratio) to 58 (66/44 affordable rented to intermediate split as a ratio). In percentage terms the change in AH would be from 30.15 % to 16.6%. A consequence of these changes would be amendments to conditions 24 and 29, with respect to wheelchair accessible homes and cycle storage, given that they relate to the quantum of development subject to the original permission.”
Negotiating a deed of variation to the section 106 planning obligation, outside these formal procedures, without any recourse to appeal if the authority is resistant.
A fresh application for planning permission – utterly the nuclear option in times of cost, time and risk.
If there is indeed some form of announcement from MHCLG and the Mayor of London, I will be interested to see:
What is said about existing stalled permissions and any advice that is to be given to boroughs as to the approach they should take when approached by way of any of these procedural routes.
More generally, how will any announced (presumably temporary) relaxations with regard to the London Plan policy H5 threshold approach or any other policy requirements sit as regards section 38 (6) of the Planning and Compulsory Purchase Act 2004 (“If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise”)? Where there’s a will there’s a way but this is all another reminder, as if we needed it, that the process for reviewing and updating the London is so slow as not to be fit for purpose.
Oh and we still await MHCLG’s updated planning practice guidance on viability.
The election for the first London Mayor took place 25 years today, 4 May 2000. I learned this via a piece by Nick Bowes in LCA’s latest LDN newsletter.
It is a topical weekend to think back as to the influence of the three very different political figures who have been London Mayor: Ken Livingstone, Boris Johnson and Sadiq Khan. Even without the extent of devolved powers available to their counterparts in other world cities, they have been able to exert significant influence over the shape and operation of our capital city, particularly in relation to transportation and in relation to strategic planning, including in relation to individual development projects of “potential significant importance”.
As Labour rolls out its vision for Mayoral strategic authorities across the country, what are going to be the political consequences over time and for the shaping of those areas? My 18 January 2025 blog post Viva La Devolution sought to summarise what lies ahead in terms of devolution and the introduction of strategic planning, modelled (in legislative form at least) on the spatial development strategy (aka London Plan) model, with equivalent intervention powers to the London Mayor in relation to applications of potential strategic importance (the power to direct refusal or to take over as decision maker).
For example, Greater Lincolnshire is now of course a combined county authority, covering the Lincolnshire County Council, North East Lincolnshire Council and North Lincolnshire Council’s areas. On 1 May 2025, Reform party politician Dame Andrea Jenkyns was elected Mayor and will lead the authority, the other members being:
Constituent members: Six members appointed by the constituent councils. Agreed at the first GLCCA meeting on 6 March, these are:
Councillor Martin Hill OBE – Leader of Lincolnshire County Council
Councillor Patricia Bradwell OBE – Lincolnshire County Council Councillor
Philip Jackson – Leader of North East Lincolnshire Council
Councillor Stan Shreeve – North East Lincolnshire Council
Councillor Rob Waltham MBE – Leader of North Lincolnshire Council
Councillor Richard Hannigan – North Lincolnshire Council
Non-constituent members: Four people nominated by the district councils within the area. Agreed at the first GLCCA meeting on 6 March, these are:
Councillor Richard Wright – Leader of North Kesteven District Council
Naomi Tweddle – Leader of City of Lincoln Council
Craig Leyland – Leader of East Lindsey District Council
Nick Worth – Leader of South Holland District Council
Additional non-constituent or associate members: Up to two further members, including one of the police and crime commissioners for the area and another from a business background. Agreed at the first GLCCA meeting on 6 March, these are:
Marc Jones – Police and Crime Commissioner for Lincolnshire
Aside from a whole page on scrapping the government’s net zero policies, this is all there is on planning, on housing:
“Review the Planning System
Fast-track planning and tax incentives for development of brownfield sites. ‘Loose fit planning’ policy for large residential developments with pre-approved guidelines and developer requirements.
Reform Social Housing Law
Prioritise local people and those who have paid into the system . Foreign nationals must go to the back of the queue. Not the front”.
It will be interesting to see how the new authority engages with the process of preparing a spatial development strategy in due course and the extent to which the process will be used a wider political platform. Social media posts from Reform’s deputy leader and MP for Boston and Skegness (Lincolnshire of course) and from Dame Andrea Jenkyns perhaps give a flavour of what is in store:
Conflict with the government on national policy issues:
Influence in relation to wider political/cultural issues:
Of course it must be said that each of our London Mayors have used their role from time to time in equivalent ways!
Turning back to London, one long-running east-west scar across the centre of the capital has been Oxford Street. I wrote in my 21 September 2024 blog post Street Robbery about the Mayor’s 17 September 2024 announcement that he is to create a Mayoral Development Corporation to “transform Oxford Street, including turning the road into a traffic-free pedestrianised avenue” so that it can “once again become the leading retail destination in the world”. Since then a public consultation process was launched on 28 February 2025 which closed on 2 May 2025. For a detailed, authoritative account of the last hundred years of managing transport on Oxford Street, which puts the current proposals into context, I strongly recommend you read an On London blog post published today, 4 May 2025, by Paul Dimoldenberg, long serving Westminster City Council member. How much progress will be made towards at least partial pedestrianisation before the end in 2028 of Sadiq Khan’s current term? One to watch.
We are also watching and waiting for the Mayor’s high level Towards a London Plan consultation document, initially expected last month but now delayed to May. Adoption is not expected of the final document until 2027, a year from the next Mayoral election. These slow time periods are crazy.
As we wait for those documents, the inspector’s decision letter dated 2 May 2025 in relation to the Stag Brewery proposed development in Mortlake, Richmond-on-Thames, makes for interesting reading – and a reminder of how financially challenging it is to bring forward large-scale brownfield development. I need to declare an interest in that my Town Legal colleagues Elizabeth Christie and Aline Hyde acted for the successful appellant, Reselton Properties Limited. The proposals entail the redevelopment of the site for residential and mixed use purposes (including up to 1,075 new homes), together a new secondary school. The decision letter follows a lengthy saga, with a previous scheme on the site having been the subject of refusal by the Mayor in May 2021 following resolution to grant by the London Borough of Richmond-on-Thames in January 2020. The local planning authority had similarly resolved to approve this latest scheme; the main issue, again, was with the Mayor, primarily in relation to viability and the approach to affordable housing.
The appellant and local planning authority agreed that viability testing had demonstrated that the viable position would be zero affordable housing, and that, against this technical position, the offer of 7.5% affordable housing (split 80% social rented, 20% intermediate), with viability review mechanism to capture future uplifts in viability, was a benefit. The Mayor disagreed that this represented the maximum viable provision required by policy, questioning some of the viability inputs, namely on private residential sales values, developer return (appellant’s and council’s position: 17.2%, Mayor’s position 15%) and growth and review potential. However, the inspector accepted the appellant’s and council’s position, indeed rejecting an alternative offer by the appellant of 12% affordable housing if the inspector were to have found against the appellant and council on elements of the viability case. In the context of the council having marginally less than five years’ housing land supply; the additional presumption to be given to brownfield development, and other benefits including the opportunity for delivery of a new secondary school as required by the local plan allocation and wider economic benefits flowing from the development, planning permission was granted.
Congratulations Sir Sadiq Khan, Mayor of London, and Christopher Katkowski CBE KC on your respective new year’s honours.
CK CBE KC of course led work on a report published in January 2024 for the last government which considered any changes to the London Plan which might facilitate housing delivery on brownfield sites in London. The report lays bare the undersupply of new homes in London, which has not kept pace with increases in jobs, population and housing demand.
Sir SK’s Greater London Authority published on 19 December 2024 Accelerating Housing Delivery: Planning and Housing Practice Note. I summarise the document later in this post and would welcome reactions as to whether the document – non-statutory, intended as practical guidance and a material consideration in the determination of planning applications and, in part, renegotiation of existing section 106 agreements – really goes far enough, given where we currently are.
The need for additional housing in London, at all price points, both subsidised (“affordable”) housing and general market housing, has never been more acute. It is in fact much worse now than when CK CBE KC wrote that report. The statistics back that up, with planning approvals and housing starts both down sharply last year.
Annual housing completions have been falling short of the policy target in the 2021 London Plan of 522,870 net housing completions from (2019/20 -2028/29). Everyone knows that the viability position for developers is increasingly difficult, faced with build cost inflation, high interest rates and the costs and uncertainty of, for example, additional building safety requirements. Similarly everyone knows that there is an absence of registered providers willing to take on the affordable housing, leading to stalled schemes (a national problem – see the HBF’s December 2024 press statement 17,000 Affordable Homes stalled by lack of bids from Housing Associations and accompanying report).
We have the London Plan’s 50% affordable housing requirement – and with a relatively rigid and formulaic system of early stage and late stage viability review mechanisms where that cannot be met (the late stage review not being required where the “fast track” applies, i.e. if the developer commits to at least 35% affordable housing – 50% on industrial or public sector land), all in accordance with London Plan Guidance on affordable housing and on development viability which have remained in draft since May 2023.
“London is home to both the fastest and slowest-growing local housing stocks in England. The number of homes in Kensington and Chelsea grew by 2% over the last decade, compared to 26% in Tower Hamlets (chart 2.1). Using data on new Energy Performance Certificates to track completions of new homes, it looks like new supply in 2024 is following the trend of 2022 and 2023, two of the lowest years in the last five years (chart 2.2).
The quarterly number of planning approvals is falling, and they are concentrated on fewer, larger sites (chart 2.4). Increasing construction on small sites might be key to increasing overall delivery, with 65,000 new build homes completed on small sites between 2012/ 13 and 2021/ 22 (chart 2.3). Sales of new market homes in London peaked in 2022 and then fell considerably, partly due to lower demand from Build to Rent (BTR) providers and the end of Help to Buy (chart 2.6). The BTR sector, which completed 44,585 new homes in London between 2009 and 2023 is nevertheless still growing (chart 2.7).
38% of homes and 46% of habitable rooms recommended for approval by the Mayor in 2023 were affordable, with both of these figures a record high (chart 2.5). Affordable housing starts funded by the GLA fell sharply between 2022/ 23 and 2023/ 24 (charts 2.8 and 2.9), as registered providers and local authorities have diverted resources away from new supply in response to increased remediation and refurbishment costs and the costs of adapting to changing regulations. Completions are also down, but not as much. Of the affordable homes started with GLA support in 2023/ 24, 72% were for social rent. Affordable completions from all funding sources also rose to a recent high of 15,768 in 2022/ 23 (chart 2.10), with data for 2023/ 24 not yet available.
Social housing landlords in London owned just under 800,000 affordable homes for rent in 2023, the highest total since 2002 (chart 2.12). Sales of council homes through the Right to Buy (RTB) scheme have been on a downward trend since their peak in the 1980s, totalling 1,080 in 2023/ 24 (chart 2.11).
Council tax data showed that 2.3% of homes in London were empty in 2023, with only 1% empty longer than 6 months (chart 2.13). These are much lower levels than in the 1980s and 90s, when around 5% of homes used to be empty.
1.34 million homes in London, or 36% of its stock were leasehold homes in 2022/ 23, over half of which were privately rented (chart 2.15). In 2023, there were 22,770 homes in multiple occupation (HMOs) with mandatory licences in London. This is the highest of any region (chart 2.14).”
This is chart 2.8 referred to in that text:
This is an extract from chart 2.4, showing the annualised trend per quarter in the number of new homes approved, and the number of projects:
Ahead of the awaited review of the London Plan, what can be done? The sorts of specific, practical, issues that currently come up again and again relate to the operation of the viability review mechanisms in particular. Since the new Building Safety Act regime came into force on 1 October 2023 the early stage review mechanism, kicking in if substantial implementation (usually defined as construction of the foundations and ground or first floor) hasn’t taken place within two years of permission, is increasingly unworkable for higher-risk buildings given how long the gateway two stage is taking in practice. The contingent liability that the late stage review mechanism represents is unattractive in principle to funders, which is a big challenge in a weak market.
For measures that could have had an immediate positive impact, what about, for instance, introducing suitable flexibility into the triggering of the early stage review? Potentially a temporary “holiday” from the late stage review for schemes that committed to proceed to completion within an agreed timescale? A willingness to accept renegotiation of section 106 agreements on schemes which are now unviable? Some pragmatism as to commuted payments towards off-site delivery where a registered provider cannot be found?
Whilst the document does include some measures which may help at the margins, there’s certainly no “big bang” of that nature. It is in fact curious how little fanfare the practice note has been given. I can’t even find it on the GLA website, let alone any press release. Nor was any formal consultation or indeed feedback invited.
Anthony Lee at BNP Paribas did this good summary on LinkedIn before Christmas but I have seen little else.
I draw out some of the measures as follows:
Allowing the fast track threshold to be reduced, both for new and current applications and also for consented schemes, where the tenure split provides proportionately more social rent than the policy requirement, in accordance with a formula that appears to seek to avoid any financial advantage to the developer in so doing – the only advantage being if that unlocks more GLA funding and/or more willingness on the part of registered providers.
Estate regeneration schemes will be able to qualify for the “fast track” if at least 50% of the additional housing will be delivered as affordable.
The GLA will consider accepting supported housing and accommodation for homeless households, with nomination rights for the relevant borough, as a like for like alternative for intermediate housing, again both for new and current applications and also for consented schemes.
The cost of any meanwhile accommodation for homeless households, with nomination rights given to the relevant borough, may be taken into account in the operation of viability review mechanisms.
With the late stage review, the developer currently retains 40% of any surplus profit. In certain circumstances this can now increase to 70%. However, the criteria are tight. “To qualify for this, the application must provide at least 25 per cent onsite affordable housing by habitable room for schemes with a 35 per cent threshold, and 35 per cent onsite for schemes with a 50 per cent threshold, at the relevant local plan tenure split, and be certified as reaching practical completion within three years of the date of this document.” “For larger phased schemes that provide at least 25 per cent affordable housing across the scheme as a whole that are granted planning permission after the date of this practice note, if the initial or a subsequent phase is certified as reaching practical completion within three years of the date of this document, the GLA will consider allowing the applicant to retain 70 per cent of any surplus profit identified in that phase when the late review is undertaken. The relevant phase must include at least 100 residential units.”
There is this enigmatic sentence: “The GLA will also work with boroughs to identify sites that have been allocated for development or that have been granted consent but that have not come forward for development for many years, or where limited progress has been made, and will assess the nature of interventions required to facilitate this.”
Great flexibility is announced as to the permissible inputs into review mechanisms. The formulae currently focus on changes in gross development value and build costs. “However, in some cases it may be more appropriate to allow for a full viability review to be undertaken which reconsiders all development values and a greater scope of development costs, including professional fees and finance costs.”
The Mayor’s housing design guidance should not be applied mechanistically, in relation to, for instance, the reference to the need to submit “fully furnished internal floorplans” and the objective that new homes should be dual aspect.
Various grant funding measures but I’ll look to others to comment as to the extent they will move the dial.
The Valentine Brothers original version obviously, rather than Simply Red.
In fact, pardon me if this post feels a little like the extended 12” remix, but I wanted to work out for myself some of the long-running arguments that are out there as to the role of financial viability testing in planning.
The subject has been made topical by the “viability in relation to green belt release” annex to the consultation draft revised National Planning Policy Framework, as well as Labour’s proposals in relation to “no hope value” CPOs (mentioned in my 21 July 2024 blog post Hope/No Hope). But the discussion is vital anyway in present circumstances where, in order to deliver and/or fund necessary housing development (and indeed many other forms of development), the state largely relies on the private sector, which is inevitably motivated by profit.
It’s difficult to have a sensible discussion without trying to establish some basic principles. So here goes…
We want an acceptable environment around us: sufficient social housing for those who need it, health and education facilities, biodiversity and open space, good public transport, footpaths and cycleways.
We no longer seem prepared to pay for this fully through direct taxation or indeed charitable benevolence.
Instead, over the last 25 years or so of my career, Government policy has increasingly supported the indirect taxation of development activity (primarily by way of section 106 agreement planning obligations and the community infrastructure levy) to help pay for all these good things, even where it is not the development itself that is leading to the need for the particular infrastructure or facilities (and before you raise it, regulation 122 of the Community Infrastructure Levy Regulations only provides cover against the most egregious of LPA “asks”).
Affordable housing is the classic example of what I mean by indirect taxation. As I set out in my 28 May 2017 blog post Affordable Housing Tax:
“In requiring the developers of private housing schemes to contribute to the provision of affordable housing, the planning system has become a tax collection system, and an inefficient, opaque one at that.
[…]
“The provision of market housing does not in any way increase the need for affordable housing, indeed over time by increasing supply if anything it should decrease it. It may be said that mixed use communities can only be achieved by requiring the inclusion of affordable housing within market residential schemes, but that in itself does not justify the state putting the cost of the affordable housing at the door of the developer.”
[Think how odd it would be for car makers to be required to sell a large proportion of their product at below market rate, in fact at a loss – or indeed for supermarket chains to be so required – nice as that thought might be. Why is housing so different?]
Add to this the much-reduced availability of grant funding.
You see the same indirect taxation in the case, for instance, of schools: whether or not a particular housing scheme is built, children need schooling somewhere in the country. And yet the cost of delivery of new schools is regularly met in large part by way of contributions and obligations extracted via the planning system.
Most recently, the 10% biodiversity net gain requirement. Laudable – but another indirect tax on development via the planning system.
All of this appears to be implicitly accepted as in the public interest, presumably on the basis that:
It’s a victimless crime – assumed to be paid for out of (a) the receipts the land-owner receives for sale of the land, as long as the requirements are flagged sufficiently far in advance that they can be built into the contractual arrangements between the land owner and developer and can generally manage the land-owner’s expectations; and/or (2) the developer’s profit (for whom the return needs to outweigh the risk).
It sugars the pill for local communities, which is important given the general antipathy towards development (or maybe that’s just my village’s Facebook group….).
It would be politically impractical to meet these costs via the national public purse.
This is all fine if the numbers work out – if the contributions required by policy can be paid for, whilst leaving enough money in the project to ensure that it will still proceed i.e. that between them:
The land-owner receives enough money to persuade them to sell the land, rather than hold onto it or sell it for other purposes
The developer concludes that there is a sufficient slice of profit left to make it worthwhile as a business proposition to proceed to carry out the development, having regard to the availability, and likely cost over time, of development finance and/or of funding partners, and the range of development risks such as the costs of construction, other regulatory costs and uncertainties over time, unforeseen problems along the way and as to the financial return likely to be achieved at the end of it all
The purchaser or renter of the home is protected by operation of market forces against the cost simply being passed onto them.
What happens when the contributions requested in return for planning permission don’t work out? That is where the viability appraisal process comes in.
The Planning Practice Guidance https://www.gov.uk/guidance/viability advises that local plans “should set out the contributions expected from development. This should include setting out the levels and types of affordable housing provision required, along with other infrastructure (such as that needed for education, health, transport, flood and water management, green and digital infrastructure).
These policy requirements should be informed by evidence of infrastructure and affordable housing need, and a proportionate assessment of viability that takes into account all relevant policies, and local and national standards, including the cost implications of the Community Infrastructure Levy (CIL) and section 106. Policy requirements should be clear so that they can be accurately accounted for in the price paid for land.”
Obviously, it is sensible for local plans to give as much certainty as possible as to what contributions will be sought from developers and thereby to serve to dampen the expectations of land-owners. But the reality is that viability assessments at the local plan making stage are inevitably broad-brush, often based on typical development typologies. They become out of date. There is often insufficient push-back from developers – either because they do not yet have a relevant project in mind at the time the plan is being consulted upon and examined, or because they are nervous about losing the potential allocation of their site for development. And so policy aspirations are set high.
When an application for planning permission comes forward for development which is in accordance with the local plan or otherwise in the public interest, save that the full range of policy requirements cannot be met without rendering the project unachievable, what happens then?
To quote paragraph 58 of the current NPPF (which paragraph is not proposed to be amended in the consultation draft):
“Where up-to-date policies have set out the contributions expected from development, planning applications that comply with them should be assumed to be viable. It is up to the applicant to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage. The weight to be given to a viability assessment is a matter for the decision maker, having regard to all the circumstances in the case, including whether the plan and the viability evidence underpinning it is up to date, and any change in site circumstances since the plan was brought into force. All viability assessments, including any undertaken at the plan-making stage, should reflect the recommended approach in national planning guidance, including standardised inputs, and should be made publicly available.”
A decision-maker can decide to grant planning permission without commitments on the part of the developer to all of the contributions normally required by policy, if the developer has justified that the development would otherwise be unviable demonstrating that by way of a viability assessment carried out in accordance with the methodology set out in the Government’s Planning Practice Guidance.
The guidance these days is tighter than it was, although there is still much room for debate and disagreement as between the developer’s surveyor and the surveyor engaged by the local planning authority (invariably at the developer’s cost). There is much public discussion about “benchmark land value” in this exercise, i.e. in estimating the costs of carrying out the development, what cost should be assumed for the land itself? But that is by no means the only factor when it comes to viability. In many situations, development may be unviable even assuming little or no land value, simply because of, for instance, the large infrastructure costs which would need to be met by the developer, financing costs and/or low value of the completed development – and this is all made more complicated in relation to longer-term projects, where an internal rate of return model may be more appropriate. But for I’m going to focus here on the land value issue.
It’s been clear for many years that the benchmark land value to be plugged into the viability appraisal is not the price that the developer has actually paid for the land – see for example Parkhurst Road Limited v Secretary of State (Holgate J, 27 April 2018). Instead, the usual approach, according to the Planning Practice Guidance, should be EUV+, i.e. to take the existing use value (ignoring, for example, any development potential) and then to apply a premium. Oh dear, one of the big questions is how big should that premium be? The guidance says this:
“The premium should provide a reasonable incentive for a land owner to bring forward land for development while allowing a sufficient contribution to fully comply with policy requirements.
Plan makers should establish a reasonable premium to the landowner for the purpose of assessing the viability of their plan. This will be an iterative process informed by professional judgement and must be based upon the best available evidence informed by cross sector collaboration. Market evidence can include benchmark land values from other viability assessments. Land transactions can be used but only as a cross check to the other evidence. Any data used should reasonably identify any adjustments necessary to reflect the cost of policy compliance (including for affordable housing), or differences in the quality of land, site scale, market performance of different building use types and reasonable expectations of local landowners. Policy compliance means that the development complies fully with up to date plan policies including any policy requirements for contributions towards affordable housing requirements at the relevant levels set out in the plan. A decision maker can give appropriate weight to emerging policies. Local authorities can request data on the price paid for land (or the price expected to be paid through an option or promotion agreement).”
There are some examples of where a premium of many times the EUV has been found to be appropriate. For example:
Long Marston, Pebworth (APP/H1840/S/16/3158916, 16 May 2017): In the particular circumstances there, the inspector found that a premium of around 15 times the EUV was appropriate. (The appeal pre-dated the PPG but turned on a similar earlier concept of EUV+).
Parkhurst Road, Islington (APP/V5570/W/16/3151698, 19 June 2017): The appeal site was a former Territorial Army barracks in north London. The inspector found that the EUV was £2.4m but EUV+ was £6.75m (still less than the developer had paid for the site) . In the subsequent High Court challenge I refer to above, Holgate J the judge said this about EUV+: “Some adherents appear to be promoting a formulaic application of ‘EUV plus.’ But as the RICS advised its members in its 2012 Guidance Note, an uplift of between 10 and 40% on existing use value is an arbitrary number and the method does not reflect the workings of the market…”.
Old Oak and Park Royal local plan examination in public, Inspector’s Interim Finding on Viability (10 September 2019) : In relation to the Car Giant site forming most of the plan area, a very large brownfield site in north London, the inspector found the EUV to be £5.3m. The Old Oak and Park Royal Development Corporation’s surveyors suggested a premium of 20% would be appropriate. The inspector found that the characteristics of the site, including in particular Car Giant’s significant relocation costs, would justify a far larger premium, concluding that EUV+ was “clearly in excess of £240m”.
On the one hand, this sort of exercise may be seen as sensible in that it is seeking to get to the number that can be taken to be the tipping point at which a land-owner might rationally choose to sell rather than stay put. But of course, on the other, the potential range is so wide that the outcome of the process can be very unpredictable and result in high numbers – true but what is the alternative that enables or persuades land-owners (who are often in fact reluctant to sell in any event – their heads only turned by a financial offer they can’t refuse) actually to make their land available, unless there is a market intervention such as compulsory purchase (but (1) that obviously needs careful justification and (2) a careful look is needed at how the compulsory purchase compensation principles work), some targeted form of tax credits or in fact (never thought I’d say this and I still only think this works in theory rather than reality) community land auctions?
I’ll throw in another complication here: the figures in a viability appraisal are in part theoretical. We know that the actual price paid for the land isn’t plugged into the equation. The actual price may have been far higher, meaning that the developer is always going to be struggling to get the project off the ground. It may have been lower – the land may have been held for generations, with a very low current book value, or be held by a body that is prepared to make the land available at an under-value. Similarly as to the efficiencies in construction or financing that a particular developer may be able to bring to the process (versus the greater challenges in this respect an SME may have than a national housebuilder), or preparedness to take a reduced profit, or even a loss with this development, given wider objectives. If we want an objective scrutiny of the financial position, not tied to a particular developer who may of course in any event sell on, this is probably right. But it does mean that there may be two processes underway: (1) what is the objective agreed assessment as to the viability of the project and (2) is this developer for some reason prepared to offer more than what is objectively viable on the basis of that agreed assessment?
Can we at least agree that this subject is not easy, either in macro policy terms or in its detailed application? And that whilst it may be tempting for some to say “get rid of viability testing, development must simply meet all policy requirements”, can we agree that this is unrealistic without (1) up to date realistic local plan policies (unlikely) or (2) an acknowledgement that effect would less development coming forward, particularly in the areas where it is most needed?
At which point I turn to the Government’s proposals.
A new annex is included in its draft revised NPPF, headed “viability in relation to green belt release”, but one of the only two new elements of the proposed approach set out in that annex is what I have put in bold in the following paragraph:
“To determine land value for a viability assessment, a benchmark land value should be established on the basis of the existing use value (EUV) of the land, plus a reasonable and proportionate premium for the landowner. For the purposes of plan-making and decision- taking, it is considered that a benchmark land value of [xxxx] allows an appropriate premium for landowners. Local planning authorities should set benchmark land values informed by this, and by local material considerations.“
These are the key associated paragraphs in the consultation document which explain the “[xxxx]“:
“29. Approaches that government could take to ensure the appropriate use of viability include the following options.
a. Government sets benchmark land values to be used in viability assessments. When assessing whether a scheme is viable, it is necessary to make an allowance for the amount of money to be paid to the landowner. This should currently be set by the local planning authority. Government could set indicative benchmark land values for land released from the Green Belt through national policy, to inform the policies developed on benchmark land value by local planning authorities. These should be set at a fair level, allowing for a premium above the existing use, but reflecting the need for policy delivery against the golden rules. Different approaches to benchmark land value are likely to be appropriate for agricultural land, and for previously developed land.
b. Government sets policy parameters so that where land transacts at a price above benchmark land value, policy requirements should be assumed to be viable. As part of this approach, Government sets out that if land has been sold (or optioned) at a price which exceeds the nationally set benchmark land value, viability negotiation should not be undertaken. Under this approach, the planning authority should not be seeking higher contributions (e.g. 60 per cent affordable housing), but equally the developer should not be seeking lower contributions (e.g. 40 per cent affordable housing), as this would represent a transfer of value from the public to private landholders. Therefore, planning permissions would not generally be granted for proposed developments where land transacts above benchmark land value, and cannot comply with policy.
c. Government sets out that where development proposals comply with benchmark land value requirements, and a viability negotiation to reduce policy delivery occurs, a late-stage review should be undertaken. This would build on the approach to be taken by the Greater London Authority, and tests actual costs and revenues against the assumptions made in the initial viability assessment. If, for example, the development is more viable than initially assumed, due to a rise in house prices, then additional contributions can be secured, to bring the development closer to or up to policy compliance.
30. Benchmark land values are generally set as a multiple of agricultural use values, which are typically in the region of £20,000 – £25,000 per hectare, and as a percentage uplift on non-agricultural brownfield use values. We also note that views of appropriate premia above existing use values vary: for agricultural land, a recent academic paper[footnote 6 ] suggested BLVs of three times existing use value; the Letwin Review of Build Out [footnote 7] suggested ten times existing use value; Lichfields found that local planning authorities set BLVs of between 10- and 40-times existing use value [footnote 8 ]. These BLVs do not necessarily relate to Green Belt land, which is subject to severe restrictions on development, and Government is particularly interested in the impact of setting BLV at the lower end of this spectrum.
31. The Government considers that limited Green Belt release, prioritising grey belt, will provide an excellent opportunity for landowners to sell their land at a fair price, while supporting the development of affordable housing, infrastructure and access to nature. Where such land is not brought forward for development on a voluntary basis, the Government is considering how bodies such as local planning authorities, combined authorities, and Homes England could take a proactive role in the assembly of the land to help bring forward policy compliant schemes, supported where necessary by compulsory purchase powers, with compensation being assessed under the statutory no-scheme principle rules set out in Part 2 of the Land Compensation Act 1961.
32. In such cases, these rules would operate to exclude any increases or decreases in value of land caused by the compulsory purchase scheme, or by the prospect of it, and valuation of the prospect of planning permission (‘hope value’) for alternative development would reflect the golden rules outlined in the NPPF. Use of compulsory purchase powers may also include use of directions to secure ‘no hope value’ compensation where appropriate and justified in the public interest. A comprehensive justification for a no hope value direction (e.g., which includes a high proportion of vital affordable housing being delivered) will strengthen the argument that a direction is in the public interest. This would align with the Government’s aspiration for high levels of affordable housing to be delivered on these sites.”
That emboldening is in the document itself. So, we are looking at a potential approach where, for the purposes of viability appraisals on green belt sites (where there will be the policy requirement of “at least 50% affordable housing, with an appropriate proportion being Social Rent”) the Government caps the potential premium on existing use value more towards 3x than between 10 and 40x. That would provide some clarity, and would in the long term (beyond the gestation of current promotion agreements, option agreements and the like which will have baked in potentially higher figures) dampen land-owner expectations. However, the outcome may be that some potential sites are not released by land-owners because the resultant return is simply not worth it for them – they would prefer to hold the land for its current purposes, or make it available for non-residential development which may result in a higher premium, or wait for a more liberal policy climate to open up in future decades – and in the meantime battle against any threat of compulsory purchase. This is particularly the case at the moment where, as another risk to factor in, there is a dearth of registered providers even willing to build-out or take on the affordable housing element in some areas. The impacts of the approach will also particularly be felt in areas with weaker housing markets, where 50% affordable housing (including, importantly, an as yet unknown proportion of socially rented housing) will be a big drag on viability – and those areas are often the same areas where housing targets will be going up most steeply under the proposed revised standard method.
This proposal to set a blanket cap on existing use values really does need to be stress-tested during the current consultation period. I would particularly urge those with market knowledge to review those papers referred to in paragraph 30 quoted above – I have included the links. For instance, I couldn’t immediately see the workings for 3x EUV in that first paper.
The other change which that annex proposes is in its last line:
“Where a viability negotiation to reduce policy delivery has been undertaken, a late-stage review should be conducted to assess whether further contributions are required.”
Remember, this annex only relates to development in the green belt, but its effect is to advise that where policy compliant development (eg 50% affordable housing), cannot be delivered due to lack of viability, a provision should be included in the section 106 agreement, providing for a review at a later stage, or at later stages, of the development to see whether that is still the position or whether the project is now able to afford to meet those policy commitments, in full or at least in part. Obviously, in London, this has been relatively standard for some time (see eg the Mayor’s May 2023 draft development viability London Plan Guidance), and is often used in negotiations across the country. But the negotiation is never straight-forward, even in London where the provisions are so standardised. What should be the triggers; what is opened up on the review (and is it just a review of what has been developed so far or is it also an updated estimate of what has not yet been built); what proportion of the surplus should be retained by the developer so as to provide any incentive; what should be the cap on what can be secured on review (vital, as all of this is very sensitive to funders and lenders); what should any surplus be applied towards and what say does the developer has in this?
The threat of compulsory purchase in the case of recalcitrant landowners? That takes us back to the issues I covered in that Hope/No Hope blog post. In some cases, perhaps so, but of course as I have mentioned above, even acquisition of land at existing use value (which obviously would lead to protracted wrangling in many cases) does not always guarantee project viability.
I know, it’s the hope that kills you. We still await any real detail as to the new government’s proposed reforms of the planning system, despite the King’s Speech and background briefing paper (17 July 2024) and despite newspaper headlines, TV news vox pops and much earnest speculation from many of us. But it’s early days and we should be patient.
In this post I just want to focus on the proposed reforms to compulsory purchase compensation which would in some cases remove the ability of landowners to recover “hope value”.
We know that there will be a Planning and Infrastructure Bill. We do not know anything more as to its likely contents than is set out on pages 17 to 19 of the background briefing document. It is intended to “accelerate housebuilding and infrastructure delivery” by:
streamlining the delivery process for critical infrastructure including accelerating upgrades to the national grid and boosting renewable energy, which will benefit local communities, unlock delivery of our 2030 clean power mission and net zero obligations, and secure domestic energy security. We will simplify the consenting process for major infrastructure projects and enable relevant, new and improved National Policy Statements to come forward, establishing a review process that provides the opportunity for them to be updated every five years, giving increased certainty to developers and communities.
further reforming compulsory purchase compensation rules to ensure that compensation paid to landowners is fair but not excessive where important social and physical infrastructure and affordable housing are being delivered. The reforms will help unlock more sites for development, enabling more effective land assembly, and in doing so speeding up housebuilding and delivering more affordable housing, supporting the public interest.
improving local planning decision making by modernising planning committees.
increasing local planning authorities’ capacity, to improve performance and decision making, providing a more predictable service to developers and investors.
using development to fund nature recovery where currently both are stalled, unlocking a win-win outcome for the economy and for nature, because we know we can do better than the status quo. Our commitment to the environment is unwavering, which is why the Government will work with nature delivery organisations, stakeholders and the sector over the summer to determine the best way forward. We will only act in legislation where we can confirm to Parliament that the steps we are taking will deliver positive environmental outcomes. Where we can demonstrate this, the Bill will deliver any necessary changes.”
All we are told so far about reform of compulsory purchase compensation is in that second bullet point. But of course, the Levelling-up and Regeneration Act 2023 already goes some way in this direction. Section 190 (“power to require prospects of planning permission to be ignored”) amended the Land Compensation Act 1961 to enable an acquiring authority, when submitting a compulsory purchase order for confirmation, to include a direction that the prospect of planning permission is to be ignored where the underlying project will deliver the provision of a specified number of affordable housing units. If the acquiring authority does not deliver the scheme it promised (including the provision of specific numbers of affordable housing units) within 10 years of the issuing of the original direction, or earlier where there is no realistic prospect that the scheme can be delivered within 10 years, affected landowners may ask the Secretary of State (or the Welsh Ministers for CPOs in Wales) to issue a direction that additional compensation may be paid to them by the local authority. The Act also provides for an equivalent mechanism in relation to some CPOs for NHS purposes or educational purposes. These provisions all came into force on 30 April 2024. (How did a Conservative government arrive at this incursion into the traditional compulsory purchase principle of “equivalence”? See eg my 11 June 2022 blog post Land Value Capture Via CPO which tracks the proposal back to at least the Conservative May 2017 manifesto and for a deeper historical dive into the vexed issue of land value capture I recommend Richard Harwood KC’s brilliant paper delivered to the Compulsory Purchase Association in April 2018, Land Value Capture).
So how might the new government go further? The Labour manifesto simply said “We will take steps to ensure that for specific types of development schemes, landowners are awarded fair compensation rather than inflated prices based on the prospect of planning permission”. It seems to me that the government has deliberately left itself the scope to widen the categories of CPO for which compensation can exclude any element of land value attributable to the prospect of “no scheme world” development. The Planning and Infrastructure Bill would be a straight-forward vehicle to achieve this, by amendment of section 190 of the 2023 Act.
“Fairness” is of course a loaded word, going to the heart of the political as well as practical issues which land value capture inevitably gives rise to. To what extent should the state be able to take land without paying the owner what that land is worth in the open market? The nuanced answer to that question probably lies in the wording of the European Convention on Human Rights. The right to respect for private and family life and our home is qualified: “except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.” The right not to be deprived of our possessions is similarly qualified: “except in the public interest and subject to the conditions provided for by law and by the general principles of international law.” And the state has the right to “enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
I can see that the “public interest” argument can be made in relation to affordable housing, the NHS and schools (although of course it is still at root a political decision to fund these projects in part via land value capture rather than by way of public spending paid for by other taxation measures). It will be interesting to see how much further the new government looks to go. New towns? Green Belt? Shrugged shoulders emoji.
Aside from the politics (which are beyond my pay grade), there are the practical issues (which are well within it). How will the spectre of compulsory acquisition of land, for less than what in the real world it is worth, influence the strategies of the participants? Will developers look to work pro-actively with local authorities to explore the potential for using the mechanism to achieve viable projects? Will land owners and promoters be discouraged from early land promotion activity for fear that the value gains they achieve will not be realised by them? Will processes become even more contentious given even higher stakes, particularly where land owners can show that they can bring forward development without the need for exercise for exercise by the local authority of its compulsory purchase powers?
All should be clearer before too long – at least, here’s hoping.
Simon Ricketts, 21 July 2024
Personal views, et cetera
Extract, courtesy Wikipedia, from Shepard Fairey’s Barack Obama 2008 electoral campaign poster, featuring the word “hope“.
SIMONICITY 