The Scottish Government

Circular 12/1996

TOWN AND COUNTRY PLANNING (SCOTLAND) ACT 1972

PLANNING AGREEMENTS

This Circular supersedes Circular 22/1984
The Chief Executive
Local Authorities

Our ref: PGB/15/4
29 April 1996
(Supersedes version dated 24 April 1996)

Planning Series:

National Planning Policy Guidelines (NPPGs) provide statements of Government policy on nationally important land use and other planning matters, supported where appropriate by a locational framework.

Circulars, which also provide statements of Government policy, contain guidance on policy implementation through legislative or procedural change.

Planning Advice Notes (PANs) provide advice on good practice and other relevant information.

Statements of Government policy contained in NPPGs and Circulars may, so far as relevant, be material considerations to be taken into account in development plan preparation and development control.

INTRODUCTION

1. This Circular sets out Government policy with respect to the use of agreements made under Section 50 of the Town and Country Planning (Scotland) Act 1972 to restrict or regulate the development or use of land, provides guidance on the circumstances in which such agreements should be used and how they can be efficiently concluded; these are referred to in the Circular as planning agreements. The Circular draws on the findings of a research report commissioned by The Scottish Office Environment Department and published in August 1992; a summary of the findings is at Annex 1. In revising the guidance in Circular 22/1984 (which is now cancelled) account has also been taken of recent legal judgements, in particular Tesco Stores Limited v Secretary of State for the Environment and others (1995) 1 WLR 759; (1995) ALL ER 636.

LEGISLATIVE BACKGROUND

2. Section 50(1) of the 1972 Act (as amended) provides that "a planning authority may enter into an agreement with any person interested in land in their area (in so far as the interest of that person enables him to bind the land) for the purpose of restricting or regulating the development or use of that land, either permanently or during such period as may be prescribed by the agreement .....". Section 50(2) provides that if the agreement is recorded in the Register of Sasines or registered in the Land Register of Scotland, as appropriate, it will be enforceable by the planning authority against successors in title. Such agreements therefore offer advantages over other statutory agreements which are in the nature of personal contracts.

3. Local authorities have a general power to make agreements with developers under Section 69 of the Local Government (Scotland) Act 1973. This gives authorities the power "to do anything (whether or not involving the expenditure, borrowing or lending of money or the acquisition or disposal of any property or rights) which is calculated to facilitate, or is conducive or incidental to, the discharge of their functions". This provision would, for example, enable agreements to be made, which would not have to be limited in their purpose to restricting or regulating the development or use of land, but could include the payment of money or the transfer of assets to a local authority where this would facilitate the discharge of the functions of the authority. Unlike recorded or registered agreements under Section 50 of the 1972 Act, these agreements would normally be enforceable only against the person or body with whom they were made but not successors in title.

THE USE OF PLANNING AGREEMENTS: GENERAL POLICY

4. The Government believes that planning agreements have a limited but useful role to play in the development control process but they should only be sought where they are required to make a proposal acceptable in land use planning terms. Such agreements can be used to overcome obstacles to the grant of planning permission; in this way development can be allowed to proceed, the quality of development can be enhanced and potentially negative impacts on land use, the environment and infrastructure can be reduced, eliminated or compensated for.

5. A planning authority should not, however, treat an applicant' s need for planning permission as an opportunity to obtain a benefit, financial or environmental, which is unrelated in nature, scale or kind to the development proposed; planning authorities should only require planning agreements to be entered into if, in land use planning terms, it would be wrong to grant planning permission without them. The presence or absence of extraneous inducements or benefits should not influence the decision of a planning authority on an application for planning permission; unacceptable development should never be permitted because of the offer of unrelated benefits. Equally planning authorities should not be influenced by offers of inducements to refuse applications for planning permission.

6. When deciding to grant planning permission, planning authorities should wherever possible rely on planning conditions including, where appropriate, suspensive conditions, rather than using a planning agreement. Planning conditions must, however, satisfy the normal legal tests; further guidance is contained in Circular 18/1986 which should now be read in the light of the recent House of Lords' decision in British Railways Board against the Secretary of State for the Environment and Hounslow London Borough Council [1994] JPL 32; [1993]3 PLR 135. 1 The use of conditions rather than planning agreements should help reduce delays in the development control process although many authorities feel that agreements provide an alternative and more effective means of enforcement without the risk of having a condition overturned or modified at appeal. The Secretary of State's view is that the right of appeal should not be frustrated in this way.

7. The general principles to be applied by planning authorities in seeking agreements are set out in paragraphs 8-13 below.

USE OF PLANNING AGREEMENTS: GENERAL PRINCIPLES

8. It is not possible to indicate all the circumstances in which planning agreements can be appropriately used. Planning applications should be considered on their merits and determined in accordance with the provisions of the development plan unless material considerations indicate otherwise. As a general rule planning applications should be refused only where a clear planning purpose is served and the use of a condition or planning agreement should arise only where it would not be appropriate to grant permission without some restriction or limitation. It is, however, possible to identify a number of criteria which, in the Secretary of State's view, a planning agreement should meet.

9. Planning purpose. Planning authorities should satisfy themselves that an agreement serves a planning purpose. The scope of planning purposes is fairly wide but is generally taken to encompass any purpose related to the use and development of land.

10. Relationship to proposed development. In the first instance planning agreements must be related to the development being proposed. In other words, where a proposed development would create a need for particular facilities or have a damaging impact on the environment or local amenity and this cannot be satisfactorily dealt with through the use of planning conditions, a planning agreement could be used to overcome such difficulties. The Secretary of State is, however, firmly opposed to attempts by planning authorities to extract advantages or benefits or payments from landowners or developers which are unconnected with a proposed development. He is also of the view that, in reaching decisions on applications for planning permission, planning authorities should not attach any weight to or be influenced by offers made to undertake works, donate monies or provide other incentives if these are not related to the proposed development; nor should planning authorities be influenced by the absence of such offers. Authorities should bear in mind that their decision may be challenged in the Courts if the decision is suspected of having been improperly influenced.

11. Scale and kind. Planning agreements should be related in scale and kind to the proposed development. Developers may, for example, reasonably be expected to pay for or contribute to the cost of infrastructure which would not have been necessary but for the development. The effect of such infrastructure investment may be to confer some wider benefit but payments should be consistent with the scale of the proposed development. Attempts to extract excessive contributions to infrastructure costs from developers or obtain extraneous benefits are, therefore, to be strongly discouraged. For example, developers should not be asked to fund local road improvements unless the need for these improvements arises wholly or substantially from the proposed development. In addition, situations may arise where an infrastructure problem exists prior to the submission of an application for planning permission. Although the need to improve, upgrade or replace that infrastructure does not arise directly from the proposed development it would clearly be inappropriate to grant planning permission for a development which would exacerbate a situation which is already unsatisfactory. The Secretary of State accepts that planning agreements have a role to play in removing obstacles to the grant of planning permission and, subject to the general guidance set out in this Circular, can be used as a means of enabling them to proceed. Planning authorities should, however, be aware of the financial consequences for developers of entering into an agreement. For example, an agreement which requires the payment of substantial sums of money before the development gets underway or at an early stage in construction may create cash flow problems and could prejudice the viability and success of a project. In such circumstances phasing of payments in relation to the phasing of development should be considered.

12. Reasonableness. A planning agreement should also be subject to the test of reasonableness which will depend on the circumstances of the particular case but the following questions could be posed:-

• Is an agreement needed to enable a development to go ahead?

• In the case of financial payments, will these contribute to the cost of providing necessary facilities required as a consequence of or in connection with the development in the near future?

• Is the requirement in the agreement so directly related to the regulation of the proposed development that it should not be permitted without it?

• Will the agreement offset the loss of, or impact on, any amenity or resource which is present on the site prior to the development?

In other words, where a proposed development would, if implemented, create a need for particular facilities or would have a damaging impact on the environment or local amenity and these matters cannot be resolved through the use of planning conditions it will generally be reasonable for planning authorities to seek a planning agreement to overcome these difficulties.

13. Planning agreements can relate to land, roads or buildings other than those covered by the planning permission provided there is a direct relationship between the two. In some cases the provision of contributions towards public transport or community facilities may be acceptable provided the requirements are directly related to the development proposal and the need for them arises from its implementation. Agreements should not, however, be sought where this connection does not exist or is too remote to be considered reasonable.

DEVELOPMENT PLANNING

14. Bearing in mind his general policy on the use of planning agreements the Secretary of State considers that development plans should give guidance on the particular circumstances in which planning authorities will seek to use agreements; some plans already do this. It is important that the policies in structure and local plans are as precise as possible because general statements of intent to use planning or other forms of agreement are unhelpful. By including policies in development plans on the circumstances in which planning agreements would be sought there is an opportunity for the local community and the development industry to comment. In addition, developers may be able to anticipate the financial implications for development projects, for example in relation to land values. It is clearly preferable, in order to avoid abortive costs, for the funding base of projects to be identified at the outset of the development process rather than at the planning application stage. The Secretary of State does, however, recognise that structure and local plans cannot anticipate every situation where the need for a planning agreement will arise.

15. Planning authorities, in drawing up development briefs, as well as highlighting constraints and indicating the planning, design and environmental considerations they wish to see addressed in a submission should draw attention to the likelihood of a requirement for the developer to enter into a planning agreement and the likely scope/content of this agreement. In considering whether a planning agreement is required, planning authorities should have regard to the Secretary of State's general policy and principles set out in paragraphs 4-13 above.

PLANNING AGREEMENTS AND THE DEVELOPMENT CONTROL PROCESS

16. Recorded or registered planning agreements are legal documents binding against successors in title and the process of securing an agreement between the parties, checking titles, drafting, etc inevitably takes time. Negotiating and completing a planning agreement can add several months to processing a planning application. If this results in approval of planning permission and a subsequent appeal being avoided, this may be regarded as time well spent. But the Secretary of State attaches considerable importance to minimising delay in the processing of planning applications; slow or inefficient service undermines the planning system and may reduce the potential benefits arising from a new development. Negotiations to conclude a planning agreement can, of course, be conducted at the same time as the processing of a related planning application. While a developer runs the risk of planning permission ultimately being refused he may wish to balance this with the potential time savings should planning permission be granted. In any event, applicants should be advised as soon as possible that, if the planning authority is minded to grant planning permission, a planning agreement would be required. The views of the applicant should be sought on whether, in principle, they would be willing to enter into such an agreement and on the likely content of the agreement. Where delays are likely to impact adversely on other aspects of a proposed development, such as securing funding, the parties should act swiftly to resolve the situation.

17. Delays associated with the preparation of planning agreements can be reduced in a number of ways. Firstly authorities should give serious consideration to whether an agreement is actually necessary and, in particular, to whether their objectives could be achieved by means of a condition. Carefully drafted conditions will usually be preferable to a planning agreements, saving time and money for all concerned.

18. Agreements made under Section 50 of the Town and Country Planning (Scotland) Act 1972 do not have to be recorded in the Register of Sasines or registered in the Land Register of Scotland; it is only where planning authorities wish the provisions of an agreement to be enforced against successors in title that recording or registration is necessary. In some cases, however, the obligations of a landowner or developer can be implemented, for example, by a one-off payment towards the cost of infrastructure provision or the maintenance of open space. In these circumstances an agreement could be entered into without the need to have the agreement recorded or registered. Alternatively, an agreement could be made under a different statute, such as the Local Government (Scotland) Act 1973, the Countryside (Scotland) Act 1967, Sewage (Scotland) Act 1986, etc; this is a matter for the judgement of the planning authority. The point is that, in some circumstances, it may not be necessary to bind the land, thus avoiding the need for recording or registration, which would enable a planning permission to be more timeously issued.

19. There is a tendency on the part of some authorities to include, for the sake of convenience, a range of matters in an agreement including, for example, all the conditions attached to a planning consent. In the Secretary of State's view this is unnecessary as it would entail unnecessary duplication and frustrate the right of appeal. Authorities should limit agreements to quite specific purposes which may lead to some time savings.

20. While some delays in concluding planning agreements can be attributed to developers, delays also occur within planning authorities. There are a number of possible reasons for this, for example the legal department may have other priorities, the drafting instructions may be unclear or the agreement may be a complex one. Planning authorities should, therefore, look at their internal procedures for drafting and finalising agreements and see what scope exists for improvement: internal procedure notes, desk instructions and standard clauses for inclusion in an agreement can prove particularly useful. Other possibilities may be for authorities to use a firm of private solicitors with experience in planning and environmental law or to ask the developer to provide the first draft of an agreement.

21. Concern has been expressed about the length of time which can elapse, often several weeks, between finalising an agreement and the issue of planning permission. This period is generally occupied by sending the agreement for recording. While there are risks for planning authorities in issuing a planning consent prior to an acknowledgement of receipt of the agreement from the Keeper of the Registers of Scotland (Sasines and Land Registers) they should consider issuing permission immediately on receipt of the acknowledgement. This is because the provisions of the agreement run from the date on which the Keeper acknowledgements receipt and, while there is a small risk that an agreement might be returned because of a technical defect, there are situations where the timeous issue of planning permission can be crucial to the development process.

NEGOTIATING AND COMPLETING A PLANNING AGREEMENT

22. Advice on negotiating and completing a planning agreement is set out in Annex 2.

MANPOWER AND FINANCIAL CONSIDERATIONS

23. The guidance in this Circular is not expected to have expenditure or manpower implications for local authorities.

FURTHER COPIES AND ENQUIRIES

24. Any enquiries about this Circular should be addressed to Stephen Bruce, The Scottish Office Development Department, Planning Division, Room 2-H41, Victoria Quay, Edinburgh, EH6 6QQ (Telephone 0131-244-7065). Further copies and a list of current planning Circulars may be obtained from Miss Kelly Wood at the same address (Telephone 0131-244-7066).

RESEARCH FINDINGS

1. The research carried out for The Scottish Office Environment Department provided a valuable insight into the use of planning agreements. It indicated that while agreements are being used more frequently the rate of increase has slowed down. However, they play a limited role in the development control process with, on average, less than 0.5 per cent of all planning applications linked to agreements.

2. It is not only large, complex, planning applications which are likely to involve planning agreements; small, apparently uncomplicated, proposals may also generate issues which some planning authorities feel are best dealt with by means of an agreement rather than a planning condition, for example tying occupation of a new house in the countryside to a particular farm unit.

3. There is a wide variation between planning authorities in the use made of planning agreements. This appears to be largely a reflection of the general attitude of planning officers and elected members in different areas to agreements rather than any simple relationship to number or type of planning applications. The main reasons identified in the research for using agreements are:-

• to impose obligations beyond the scope of planning conditions, for example in relation to the provision of off-site infrastructure; and
• to provide an alternative means of enforcement.

In addition, some authorities have resorted to an agreement where they are uncertain about the scope of planning conditions or to circumvent central government policy (restrictions, for example, on permitted development have been included in agreements to avoid being overturned on appeal).

4. The research identified a number of specific purposes for which planning agreements are used:

• for duplication of planning conditions to provide an alternative to enforcement action or to avoid uncertainty;

• to secure the provisions of infrastructure;

• to restrict/extinguish an existing, usually bad neighbour, use or revoke unimplemented planning consent (without compensation) in return for permission for a new/revised development;

• to limit or specify the scope of a proposed use, for example in relation to the type of goods sold in new retail developments;

• to restrict occupancy, particularly of new houses in the countryside;

• to regulate (eg phasing) or manage development (eg reinstatement of land).

In considering the purposes to which a planning agreement has been put, concern has been expressed at the practice of some planning authorities negotiating benefits which are unrelated in nature, scale or location to the development which is being proposed. This practice according to the research report, proved to be uncommon in Scotland although some minor cases were identified. In general, any benefits have been related to the development proposed. However, there is some evidence, according to the authors of the research report, that, in relation to infrastructure provision, authorities have, on occasion, sought more from developers than was strictly necessary to allow a development to proceed.

NEGOTIATING AND COMPLETING A PLANNING AGREEMENT

1. Procedures for negotiating, drawing up and concluding a planning agreement vary between authorities but the following guidance should assist authorities, particularly those with limited experience of agreements, in the efficient management of the development control process.

GENERAL LEGAL ASPECTS

2. Although the interpretation of statute remains a matter for the Courts, the following points should be borne in mind when preparing planning agreements:-

• it is believed that generally only a person whose name appears on the Register of Sasines or the Land Register of Scotland as the owner of lessee under a recorded lease may enter into a planning agreement. A person whose only interest is that of a developer on prospective purchaser may not enter into such agreements, although they may be joined as a third party;

• planning agreements do not have to be associated with a specific grant of planning permission but they may, in appropriate cases, modify the conditions or limitations in an existing permission;

• the wording of Section 50(1) indicates that agreements are "for the purposes of restricting or regulating the development or use of the land". While these words have a negative connotation the Secretary of State's view is that an agreement incorporate positive obligations provided the overall purpose of the agreement is to restrict or regulate the development. For example, an obligation to provide car parking or open space/landscaping could be regarded as an integral part of a development. Incidental or consequential provisions, including those of a financial nature, which are required in connection with a development may also be included on this basis.

ON RECEIPT OF A PLANNING APPLICATION

3. Following receipt of an application for planning permission the planning officer should consider whether, in the light of development plan policies and the particular circumstances of the proposal, a planning agreement is likely to be necessary. In many cases, however, the need for an agreement will only become evident as processing of the application progresses, for example in response to comments made by consultees, local representations or as the land use and environmental implications of the proposal become clearer. If the planning officer, following discussion with the authority's solicitors, is of the opinion that particular issues are best dealt with by a planning agreement, the applicant or his agent should be contacted and provided with an indication of the possible scope of the agreement. At the same time the name and address of the applicant's solicitor, together with the solicitor acting for other parties who might have to be a signatory to the agreement, should be requested. It should be made clear to the applicant/agent that entering in to discussions on a planning agreement is no guarantee of planning permission being granted; it should, instead, be regarded as an attempt by the planning authority to minimise the time taken to issue a decision on the planning application should they decide to grant permission. It may, of course, be necessary for officials to seek the approval of elected representatives before beginning negotiations on an agreement.

4. On receipt of confirmation that the applicant is willing to negotiate an agreement, the planning officer should take the lead in getting the parties together to reach provisional accord on the general content of the agreement. The legal officer should be notified accordingly and provided with a copy of a plan of the area which is to be the subject of the agreement.

5. If the matters for including in an agreement seem relatively straightforward, the legal officer should consider making contact at this stage with the applicant's solicitor informing him of the likely requirement for an agreement and with a request to examine the title deeds of the land involved. The applicant's solicitor should be advised that the planning authority still has to approve the application but that contact is being made at this stage to save time. It should also be made clear to the applicant's solicitor that the agreement will require to be finalised and signed by the various parties prior to the issue of planning permission. If the proposal is likely to be controversial, the legal officer will probably wish to leave the legal formalities until such time as the planning committee has approved the proposal in principle.

6. Where it is being recommended to the planning committee that permission should be granted subject to completion of a planning agreement, delegated authority to conclude the agreement should be sought rather than having it referred back to the committee. The local authority planning and legal officer should immediately be notified of the committee's decision. If the legal officer has not already done so, the applicant's solicitor should be notified of the need for and general content of an agreement and a request made to examine title deeds.

ADVICE TO SOLICITORS ON DRAFTING AGREEMENTS

7. Solicitors may wish to bear in mind the following general points when drafting an agreement:

• the parties: the agreement should be with the infeft proprietor determined from an examination of the title deeds or exceptionally with any party who is in a position to complete title and is prepared to do so prior to becoming a party to the agreement. Otherwise if the applicant is not infeft, a decision will need to be made whether he should be joined as a party. Lessees under a lease which is not recorded may also be joined in the agreement. In appropriate cases, a heritable creditor, the superior, or the person having the benefit of a servitude may need to be joined to consent to the terms of the agreement. In some cases, parties such as Scottish Natural Heritage (in the case of agreements relating to the conservation, management or monitoring the effects of development on the natural heritage) may need to be joined;

• taking effect: the planning authority will wish to ensure that the agreement takes effect no later than the date on which planning permission is to be granted. The agreement can, however, be drafted in such a way that obligations imposed on the developer would not be enforceable unless the planning permission is to be implemented;

• arbitration: provisions for arbitration in respect of disputes over the meaning of the content of the agreement and over compliance with its terms should be considered;

• interpretation: with complex agreements it may be helpful to incorporate an interpretation clause defining key words or terms used. In addition, it may be important to establish clear boundaries on the land to which the agreements relates;

• review of variation: consideration should be given to including a provision for review and variation of the agreement in defined circumstances;

• subdivision: if future subdivision of the subject land or property seems likely it may be appropriate to incorporate a provision dealing with the allocation of obligations;

• enforcement: an action of interdict would be available to any of the parties in the event of one of the other parties carrying out some action which was in breach of the agreement. It is not necessary to mention this in the agreement. Consideration should be given to specific provisions which would apply in the event of any of the parties being in breach of the terms of the agreement and also in respect of entry and inspection of the land which is subject to the agreement, for direct action to implement obligations in the agreement in the event of default and for the recovery of costs;

• completion and discharge: where appropriate, agreement should be reached with the applicant's solicitors on the manner in which satisfactory completion of obligations in the agreement is to be acknowledged by the planning authority. Provision should be made for the discharge, in whole or in part, of the agreement in specified circumstances, for example, the satisfactory completion of all obligations in the agreement or the discontinuance of the use which is the subject of the related planning permission;

• sale on: the planning authority may wish to include a provision prohibiting the disposal of the subjects prior to recording or registration of the agreement.

With complex proposals the legal officer may need to discuss the wording of the draft agreement with the planning officer and, where appropriate, external consultees and other specialist advisers. The draft should then be forwarded to the applicant's solicitor.

FINALISING THE AGREEMENT

8. The legal officer should arrange for the appropriate search to ascertain that there has been no transmission of an interest in the land to be included in the agreement from the last infeft proprietor disclosed in the title deeds with whom it is intended that the planning authority enter into the planning agreement.

9. Upon receipt of the revised draft from the applicant's solicitor, it may be necessary to discuss any proposed changes with the planning officer. Revisions and adjustments may then need to be the subject of further correspondence with the applicant's solicitor.

10. Once the terms of the draft are settled, the agreement should be finalised by the legal officer and sent to the applicant's solicitor (and to solicitors acting for any other parties) for signature.

11. On receipt of the duly executed agreement, arrangements should be made for it to be signed on behalf of the planning authority.

12. If the planning agreement is to be recorded or registered it should immediately be forwarded for entry in the Register of Sasines or in the Land Register for Scotland as appropriate. Copies should be sent to the applicant's solicitors and to the planning authority for retention by them.

13. On receipt of an acknowledgement from the Keeper, the decision notice on the planning application (which will have been prepared in advance) should immediately be dated and issued. In particularly urgent cases, the planning authority may consider issuing the planning consent on receipt of the executed agreement from the applicant's solicitor. There is a risk in such cases that the land will be sold on prior to the recording or registration of the agreement and the purchaser could acquire title free from the burden of the agreement. The extent of this risk will be a matter for the judgement of the authority.

Footnote

1 In this case the House of Lords held that the mere fact that a desirable condition, worded in a negative form, appears to have no reasonable prospects of fulfilment does not mean that planning permission must necessarily be refused as a matter of law.