What is a “Section 75 Agreement”?
In order to obtain planning permission, a planning authority may require developers to enter into a contract to offset adverse impacts of their project. Such a contract contains provisions designed to overcome obstacles to the grant of consent and is typically concluded before a planning permission is formally issued.
In Scotland, they are most commonly (though not exclusively) made under Section 75 of the Town and Country Planning (Scotland) Act 1997. Section 75 agreements are broadly equivalent to “Section 106 agreements” in England and Wales.
Section 75 agreements are used where conditions attached to the planning permission itself are not appropriate. While planning conditions control how a project is built and used, Section 75 agreements tend to provide for financial contributions and any requirements affecting land outside the area to which the planning permission relates (outside the “redline boundary”).
For example, a developer seeking consent to build a large housing estate might be required to enter into a S75 agreement covering:
- Provision of affordable housing (so that a proportion of the houses delivered is made available by the developer for occupation at below market value) or payment in lieu of providing affordable housing (so the planning authority can build affordable housing elsewhere); and
- Transport improvements (so the developer pays for and/or installs new bus stops or pedestrian crossings to service the residents of the new houses being built).
Who do they affect?
- Developers, for whom Section 75 agreements can unlock the grant of consent for proposals which might otherwise not comply with local policy.
- Planning authorities and decision-makers, which can use S75 agreements to secure policy objectives and regulate development.
- Investors, mortgagees, landlords and future owners of the land. Section 75 agreements can involve large sums of money and last for many years. They are normally registered on the title of the land and can potentially be enforced against successive owners and occupiers (despite them not being party to the original agreement). Statutory provisions could even impose continuing liability on parties after they sell their interest in the affected land.
- Local communities, which stand to benefit from transport improvements, employment opportunities, affordable housing and other investments through a Section 75 agreement.
It can be essential to the viability of a project to understand the implications of Section 75 agreements and to ensure they are appropriately drafted.
How can Davidson Chalmers Stewart help?
We have specialist expertise in planning contracts. Section 75 agreements are subject to stricter legal requirements than a standard commercial contract. They must restrict or regulate the development or use of land and fulfil the Scottish Government Circular tests. Each planning authority has its own approach to negotiating them and its own preferred wording.
We assist clients in negotiating, modifying, complying with, discharging and appealing decisions on Section 75 agreements and on other statutory planning agreements. Our experience includes contracting with utility companies, community benefit agreements, with settlement agreements between conflicting parties and advising on planning aspects of commercial agreements and leases.
We carry out due diligence, including advising funders and purchasers of land on their potential exposure to liability where an existing Section 75 agreement is in place. We also help minimise planning risks by negotiating warranties and specific indemnities and carrying out apportionment discussions on behalf of our clients.
We have experience in complex, multi-party negotiations and planning agreements related to specialist projects, such as large masterplan development and renewable energy infrastructure. We can also advise you on future-proofing your developments in the face of forthcoming changes under the Planning (Scotland) Act 2019.
Please contact Jacqueline Cook, Head of Planning Law, to find out more.