Viability - aid or deterrent to regeneration?

Local authorities are able to benefit from the uplift in value (planning gain) from any site they grant planning permission on through Section 106 (S106) of the Town & Country Planning Act 1990.

A S106 is a legal agreement between an applicant seeking planning permission and the local planning authority, the monies from which are used to mitigate the impact of new development on the local community and infrastructure and contribute towards affordable housing, public open spaces, highways and education.

Viability studies are a method of testing whether policy compliant development schemes are viable in lower value areas. Local authorities who were seeking to regenerate their areas with much needed new housing have been receptive to developers who have utilised these studies to mitigate their S106 liabilities in lower value areas.

The strategies of local authorities have recently changed. With the strengthening of the residential property market local authorities have become stronger in their negotiations and evolved the way in which they calculate the planning gain contributions.

Historically, a S106 payment was a one off payment at an agreed point in the development.

Local authorities now seek to recover any further gains that have developed during the development or movement of the market by reviewing the profitability of the development at completion. This brings its own problems for developers with financiers being wary of open ended costs.

It is therefore imperative to plan and negotiate appropriately to establish a clear and accurate strategy for S106 contributions from site identification through to disposal.

Parkinson Real Estate act on behalf of both local authorities and developers to seek the fairest balance of contributions to the local authority whilst facilitating regeneration.

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