UK: Planning Gain In Scotland - What Next?

Last Updated: 18 September 2008
Article by Murray Shaw

Introduction

The whole of the planning system in Scotland is undergoing considerable change. These changes are primarily to do with processes and procedures though underlying them there is a perceived need for "culture change".

The future for one critical area of the planning system, namely "planning gain", remains unclear. The position has moved on in England. The question is whether, or to what extent, Scotland will go down a similar route.

Developments outwith Scotland

Over the past two or three years the Government (the UK Government) considered the introduction of a Planning Gain Supplement based upon advice from the respected economist, Kate Barker. In effect this was a "tax" intended to capture part of the increase in the value of property following the grant of planning permission. The funds realised would be used to meet deficiencies in infrastructure.

The Planning Gain Supplement was roundly criticised by many including the development industry both in principle and because of the perceived difficulties in administering the system fairly.

The concept of the Planning Gain Supplement has been abandoned in England and Wales and is to be replaced with a Community Infrastructure Levy. The statutory basis for this is included in the Planning Bill currently before the Westminster Parliament. In August the Communities and Local Government Department published a detailed report setting out how the Community Infrastructure Levy will work.

In effect the Levy will be a new charge which local authorities will have a discretion to levy on development. It is intended the Levy will be based, as the report puts it, on a formula which relates the amount of the Levy to the size and character of the development involved. The proceeds of the Levy will be spent on "local and sub-regional infrastructure to support the development of the area".

In effect, the Levy will be fixed on a tariff basis by the relevant authority rather than being related to some perceived increase in value of the proposed development.

The consultation paper suggests that one of the attractions of this scheme is certainty for developers and there appears to be have been widespread consultation with bodies representing the property industry prior to the report coming out.

The sums realised are to be spent on infrastructure. The primary intention is that the Levy should fund infrastructure to meet the needs of future development provided for in the Development Plan rather than to remedy existing deficiencies. That aspiration may be more difficult to achieve in reality than in theory.

The authorities entitled to charge the Levy (those who prepare Development Plans) are to provide a draft charging schedule which is to exist outside of, but alongside, the Development Plan. The current intention is that there will be an independent inquiry into the charging schedule and that the report of the independent party who undertakes that inquiry will be binding. The charging authority will have an option (rather than accepting that report) to come forward with revised proposals if unhappy, albeit these would equally be subject to independent scrutiny.

The charging schedule is intended to set out amounts for different types of development being sums to be levied on a square foot basis. Presumably it is intended that the amounts levied should take account of the infrastructure needs or requirements of different developments. Payment is to be made when development commences though the Government is looking at payment on a phased basis where the development is phased.

The new system will not be implemented until 2009 though preparatory work is to be undertaken immediately.

The report produced by the UK Government does acknowledge that, as it puts it, "the housing market is experiencing some challenging conditions in the short term". Notwithstanding the generally challenging economic times, the Government is firmly of the view, it appears, that this is the appropriate time to bring in the Community Infrastructure Levy. At least in part it appears the Government envisages that in fixing the levy for an area, the "charging" authorities will take into account land values with a view to ensuring that development is not stifled.

The Community Infrastructure Levy will not replace planning obligations entered into under Section 106, the equivalent of Section 75 in Scotland. Planning obligations under Section 106 will be used to deal with the specific issues raised by a particular development and to deal with affordable housing. In other words, it appears that developers may be expected to meet, where appropriate, the cost of affordable housing deal with site-specific issues and pay the Community Infrastructure Levy.

It is intended that the infrastructure upon which the money raised can be spent will be defined in regulations but is likely to include public uses such as transport and flood defences, schools, sporting and recreational facilities, open space and other community facilities.

Developments in Scotland

While this is of interest, it is of limited relevance to Scotland where it is still unclear what changes the Scottish Government intend to make to deal with the general topic of "planning gain".

In the draft of SPP3, which was published in January 2008, reference was made to a review being undertaken - albeit this document commented that the Scottish Government believed at that time that it was "right in principle that the public should benefit from the uplift in value of land due to the grant of planning permission". That language had a strong relationship to the concepts underlying the now abandoned Planning Gain Supplement.

The final version of SPP3 came out in July 2008. All it says on the topic is:-

"The Scottish Government is undertaking a review of the framework governing planning agreements. The aim of the review is to produce a system that will balance provision of contributions to support related infrastructure and amenity while facilitating development necessary to increase sustainable economic growth in Scotland at a local and national level".

The draft Aberdeen City and Shire Structure Plan identifies infrastructure issues as impediments to development and sees a significant private sector input commenting:-

"Developers will have to accept the need for contribution towards necessary infrastructure. However in cases where development has wider effects we will have to secure extra contributions. We also expect that the increase in land value as a result of granting planning permission will fund a large percentage of the new infrastructure needed, although the public sector will also need to make an important contribution".

The problems with infrastructure remain great in Scotland. Reference is made to this in the draft National Planning Framework 2 which identifies the need for up to date infrastructure to support development and the deficiencies which exist.

That is fine as far as it goes. The review process presently means we are unclear about what is to happen. In a speech on 19 August the First Minister indicated that an "alternative" to the Planning Gain Supplement would not be pursued meantime as a result of market conditions.

It remains to be seen however whether the Scottish Government will eventually seek to follow the approach south of the border following on from the current review. Obviously they are unlikely to want a system in Scotland which is an impediment to development if the system in England is perceived to be more favourable, or at least certain, particularly in the current economic climate. Equally, however, failing to address infrastructure issues does not help the development process.

Come what may, it seems unlikely that the processes and procedures in relation to any comparable Scottish Community Infrastructure Levy will be the same as those in England. In England it is proposed that there will be an examination of the charging schedule including "a right to be heard in person before an independent person". That right to be heard may be a formal inquiry or hearing to be at the discretion of the person carrying out the investigation. While we still await the final version of the proposed changes to the Development Plan system in Scotland, it appears unlikely that there is to be a right to be "heard" – objections may well be dealt with in writing. Likewise in England it is proposed that the report of the independent person will be binding – in a comparable processes in Scotland, the Scottish Government deliberately decided not to make Reporters' recommendations in relation to Development Plans binding.

Conclusion

Given the problems in infrastructure in Scotland, notwithstanding current market conditions, we need a firm and early indication from the Scottish Government about how they intend to approach this issue even if implementation is delayed meantime. The development industry frequently tells the Government that it needs certainty with regard to planning. Certainty is certainly needed in the present economic climate. The proposals of the Scottish Government therefore are awaited with considerable interest.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions