All planning obligations are necessary, but some are more necessary than others. (a nod to George Orwell)
The latest cost to hit developers is Biodiversity Net Gain. The floor price for an offsite BNG credit is £42,000.
One of our clients was recently hit for a £250,000 BNG contribution.
These contributions are unavoidable and sit at the top of the hierarchy of Planning Obligations.
If there is not enough cash to go round after 20% profit and all standard costs, other planning obligations such as Affordable housing will inevitably fall away.
CIL Regulation 122 sets the scene.
Limitation on use of planning obligations
122.—(1) This regulation applies where a relevant determination is made which results in planning permission being granted for development.
(2) Subject to paragraph (2A), A planning obligation may only constitute a reason for granting planning permission for the development if the obligation is—
(a) necessary to make the development acceptable in planning terms;
(b) directly related to the development; and
(c) fairly and reasonably related in scale and kind to the development
Over the years, our viability reports have been used to identify the fund that is available from a development to satisfy requests for planning contributions towards education, recreation, transport affordable housing etc (the list is endless).
The requests made by an LPA or County Council must first be considered by reference to S38(6) of the --- Act. If there is nothing in the adopted local plan, then the request does not get off the ground.
Many LPAs try to use SPD and SPGs to provide a policy basis for planning obligations – that approach is effective so long as the SPG or SPG is informing a policy set out in the adopted local plan. If it does not, then the request is ill founded.
Both these issues require expert examination before a request should be agreed.
If there is a policy basis for multiple obligations, a viability study can be used to document if the totality of the obligations passes the Regulation 122 (c) test – (fairly and reasonably related in scale and kind to the development).
If all the requests are well founded in policy – theoretically each potential planning obligation should be treated equally – and so all reduced pro rata – but that rarely happens.
In practice there is a hierarchy of need – and the highest need is fulfilled and the others nocked off the list.
So, in reality, Biodiversity Net Gain is nothing new – but it will be ‘top dog’ and be paid to the prejudice of all the other requests, thereby proving there is no such thing as a free drink.
