According to research carried out by the Home Builders Federation (HBF), local planning authorities (LPAs) are sitting on over £9 billion of unspent developer contributions. The HBF estimates that, of this total, around £2.2bn has been raised from Community Infrastructure Levy (CIL) and £6.6bn from payments secured via Section 106 planning agreements.
LPAs use Section 106 planning obligations to assist in mitigating the impact of development to make it acceptable in planning terms and the financial contributions paid by developers should be directly related to the development and fairly and reasonably related in scale and kind to it. Typically, payments are requested towards the costs of education provision, recreation facilities, affordable housing contributions and, for larger developments, new road schemes.
LPAs are expected to use all of the funding received by way of planning obligations in order to make development acceptable in planning terms. Agreements should normally include clauses stating when and how the funds will be used by and allow for their return, after an agreed period of time, where they are not. The timeframe for developer contributions to be spent should be negotiated on an agreement by agreement basis but may commonly be 5 or 10 years. It should, however, be noted that it is only payments made under Section 106 agreements and not payments made under CIL that are returnable if unspent.
LPAs are required to publish an annual Infrastructure Funding Statement by 31 December in each year setting out the value of developer contributions from all sources held, allocated, spent and returned to developers during that year. According to the HBF, the average LPA holds £19m of unspent Section 106 contributions. These are, however, aggregate figures and if a developer wishes to establish if any payments they have made remain unspent after the expiry of the contractual deadline, they will need to make a specific freedom of information request to the LPA who may then have a legal obligation to repay unspent contributions plus interest that has accrued.
In some cases, unspent developer contributions can be returnable even where there was no contractual time limit within which they should be spent. However, that will only be the case where the contributions were to provide specific infrastructure that was subsequently considered to be unnecessary or was replaced by a lower cost solution.
