Clawback in S106 Agreements - Public forum - Planning Advisory Service (PAS)

We have introduced a protocol for deferred contributions (claw-back) and have now completed 2 agreements. We reported to our Planning Committee in February to agree the principles and now have a standardised approach to the agreements. The details can be found as follows Principles report – www.ashford.gov.uk – planning committee- 10 February 2009 – principles report or try https://secure.ashford.gov.uk/cgi-bin/committee/index.cfm?fuseaction=DocTrack.getPlanningDoc&PlanningID=842 Completed Agreement – search for 05/01798/AS on our web site and open the S106 agreement in the plans and details drop down. Or try http://www.ukplanning.com/ukp/doc/Decision-7404637.pdf?extension=.pdf&id=7404637&location=VOLUME6&contentType=application/pdf&pageCount=1

Aren't clawbacks contrary to para B7 of the circular (betterment), and I note that the Ashford 'principle' statement doesnt even refer to that para the risk you run in seeking such provision is that banks may not agree to lend on that basis, as they are assuming the majority of the risk, whilst the LPA only seeks to enhance its position in a rising market. For instance, if the market continued to deteriotate would the LPA voluntarily hand back some of the S106 moneys to guarantee a certain level of profit for the developer. some of the difficulties seen in recent times are due to developers providing too much by way of S106, and relying upon ever increasing prices to pay for the contributions - we all know that business plan was unsustainable. Further diminishing of profit levels for developers will increase borrowing costs for them - and they will pass the price onto consumers - see the second Barker Review

Clawback in S.106 agreements is allowed as long as you are genuinely seeking to re-gain a planning benefit that has been omitted to make the scheme viable initially. Such mechanisms cannot be used just to share developer's profits, which is outlawed in Circular 5/05. The latest guidance from the HCA issued in August this year is a good starting point for Good Practice. Also consider deferral of S.106 benefits if timing of payment is an issue. My company is co-author of the HCA Economic Assement tool and can help with negotiating S.106 agreements that contain such arrangements.