Monitoring fees in section 106 agreements - are they lawful?

Monitoring fees in section 106 agreements - are they lawful?

Published:

Author: Kara Bruce

Applies to: England and Wales

Monitoring fees are the administrative costs charged by a local planning authority (LPA) in ensuring that planning obligations set out in a section 106 agreement are complied with by a landowner or developer.

Most LPAs normally require a fixed monitoring fee, which is then included in the section 106 agreement itself as a separate planning obligation.

Regulation 122 of the Community Infrastructure Levy Regulations 2010 (as amended), does however place limitations on the use of planning obligations. One of the legal requirements is that such obligations are 'necessary to make the development acceptable in planning terms'.

This test of 'necessity' was examined further in the recent high court case of Oxfordshire County Council v Secretary of State for Communities and Local Government and others [2015].

Facts:

  • Cherwell District Council refused an application for a residential development of 26 units
  • at a subsequent appeal against refusal, a planning inspector determined that the monitoring fee for both the district and county council failed the regulation 122 'necessity' test
  • the LPA appealed to the high court but the court upheld the decision to strike out the obligation to pay the monitoring fee on the grounds that it was part of the council's functions as LPA to administer, monitor and enforce planning obligations in section 106 agreements

The relevant factors in the court's decision included:

  • there is nothing in the wording of relevant planning legislation, policy or guidance which suggests that LPAs could or should claim administration and monitoring fees as part of planning obligations
  • the limitation placed on the use of planning obligations in regulation 122 is similar to limitations previously contained in policy and guidance - the key difference is that the regulations are a statutory requirement which must be adhered to
  • the test sets a high threshold - the obligation must concern the development, the use of the land and be necessary not just desirable
  • section 106 of the TCPA 1990 provides for enforcement action to be taken by the LPA where planning obligations are not complied with. The LPA is entitled to recoup the costs incurred in taking this enforcement action from the developer
  • the monitoring fee in this case was standardised and payable in advance of commencement of the development and therefore did not reflect any assessment of the amount of work which the council may have to carry out to administer, monitor and enforce the obligations for this particular development

Comments

This is a significant judgment for both developers and LPAs, although the court did not go as far as stating that monitoring fees would be unlawful in all instances.

In the Oxfordshire case the planning obligations that were deemed to be lawful were one-off payments to be paid before commencement of the development. Therefore no ongoing management or maintenance was required which justified an additional 'monitoring' fee. The court was also mindful of the enforcement action available to the LPA should the developer not comply with the obligations.

For this reason it is important to note that an assessment of the factual context will be required in each case to establish whether the regulation 122 necessity test has indeed been satisfied.

Disclaimer

This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

About the Author

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Kara Bruce

Solicitor

03700 86 8308

Kara is a solicitor in the Shoosmiths' planning team. She has experience in all aspects of local authority, property and planning practice, and advises developers and local authorities.

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