How S106 can benefit your commercial property plans

Sclerotic planning application processes can sometimes leave commercial property professionals feeling as if they are trapped in the numerological nightmare of Room 101.

Those seeking salvation should head five doors down and knock at number 106, for Section 106 of the Town and Country Planning Act 1990 could well be their saviour

When considering commercial property proposals, local authorities increasingly want to see evidence of a commitment to improve existing infrastructure, to offset any impact arising from the development.

In the current age of corporate social responsibility, this is where S106 comes in.

S106 can be used as a negotiating tool by those seeking to build or expand commercial property, by offering compensation to local authorities in return for favourable planning outcomes.

For example, in return for being granted permission to build a retail park, the commercial property developer agrees to build a new school. Once agreed under S106, obligations are legally binding and amendments can usually only be made by the local authority.

Councillor David Hughes of Malvern, West Midlands, is a strong advocate, having received cash via S106 to transform Malvern’s transport infrastructure.

“It really is a credit to our planners, and the relationship that we as a council build with developers, to have had so many positive projects put in place as a result of this funding arrangement.”

But caution is advised; developers have reported unfairness and a lack of transparency in S106 negotiations. However, the Government appears keen to encourage those with commercial property aspirations. George Osborne’s Plan for Growth document states:

“Where developments are stalled due to extensive planning obligations, negotiated in more buoyant property market conditions, local authorities will be asked to reconsider these in light of new circumstances and planning policy tests, and, where possible, to modify obligations to allow development to proceed.”

In light of that, and the Government’s Enterprise Zones initiative, where relaxed planning laws and tax breaks are offered to businesses in return for investing in deprived areas across the UK, S106 should be seen as a positive tool to aid commercial property professionals.

Sources:

• BUDGET 2011: Councils to retrospectively cut section 106 payments | Online | Property Week. 2011. BUDGET 2011: Councils to retrospectively cut section 106 payments | Online | Property Week. [ONLINE] Available at:http://www.propertyweek.com/news/budget-2011-councils-to-retrospectively-cut-section-106-payments/5015499.article. [Accessed 30 March 2011].
• Section 106 Agreements. 2011. Section 106 Agreements. [ONLINE] Available at:http://www.walsall.gov.uk/index/environment/planning/section_106_agreements.htm. [Accessed 30 March 2011].
• Mayor wants to create two more enterprise zones like Canary Wharf | News. [ONLINE] Available at:http://www.thisislondon.co.uk/standard/article-23935069-mayor-wants-to-create-two-more-enterprise-zones-like-canary-wharf.do. [Accessed 30 March 2011].

 

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