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 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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.