Researchers from the University of Sheffield found that in 2007-08 private developers agreed to fund £5 billion of England’s local capital infrastructure, including roads and schools and new affordable housing in England. The research, which was commissioned by the Department of Communities & Local Government (CLG) and published today by CLG, shows planning obligations have led to these very substantial contributions by developers.
Planning obligations, known as S106 agreements, are negotiated by local planning authorities when granting planning permission for new developments. The obligations ensure that the necessary infrastructure to support new developments is in place and also that developers of private housing schemes create mixed communities by providing an element of affordable housing on new private estates.
The researchers, from a joint team at the University’s Department of Town and Regional Planning and the Department of Land Economy at the University of Cambridge, found that nearly two thirds of new affordable homes are now provided through S106 agreements. In principle many of these contributions are funded by developers from the increase in land value brought about by the granting of planning permission.
Until recently little was known about the extent and value of these obligations. The study published today is a third in a series commissioned by Communities & Local Government and show just how substantial these contributions are. They have risen from £2bn in 2003-03 to £4bn in 2005-06 and to £5bn 2005-06, of which half in each year was for new affordable housing. This increase reflects both the greater capability of planning authorities when negotiating contributions and the rise in development values over that period providing the funds for developers to make their contributions.
The most recent research showed that, whilst planning authorities continued to focus their efforts on the largest sites, they were also negotiating more contributions from smaller sites than in earlier years. It further showed that there were still large variations in the extent to which planning authorities negotiated agreements and in the value of the contributions secured. This was partly due to the variations in demand for development and land values but also to significant variations in local authority policy and practice.
An important new finding from the latest research is that developers have been delivering a very large proportion of the agreed obligations. Allowing for changes to the timing of delivery obligations were fully delivered on four in five of the sites where obligations were agreed in 2003-04 and 2005-06. Later agreements have been affected by the property downturn as sites have been developed much more slowly but planning authorities will requires all obligations to be delivered once the market improves.