Local Planning Authorities and their Responsibility for Holding Developers to Account

By Nige on November 29, 2024 at 7:41 am
Type: Post Category: Freehold
Tags: S106 | Section 106

In respect to Section 106 (S106) legal agreements, can Local Planning Authorities (LPAs) include clauses in their legal agreements that obligate the developer to retain financial responsibility for maintenance of Public Open Spaces (POS) until fully signed off by the LPA?

LPAs can include clauses in S106 agreements that obligate developers to retain financial responsibility for maintaining POS until these areas are fully signed off or adopted by the LPA or other relevant bodies. This is a common practice to ensure the proper maintenance and standard of public open spaces during the interim period before transfer to a Management Company (MC), residents’ group, or the LPA.

Quick Links

• Key Points to Consider
• Practical Considerations
• Conclusion
• Why is this Important to Clients of Residents First?

Key Points to Consider

1. Purpose of S106 Agreements:
   • S106 agreements are legally binding contracts between the developer and the LPA, designed to mitigate the impacts of new developments. They often include provisions for open space, infrastructure, and affordable housing.
   • Clauses regarding open space maintenance ensure that the spaces are adequately maintained during the development process and before their formal adoption by the relevant authority or transfer to a Management Company.
2. Maintenance Obligations:
   • Clauses can specify that the developer must:
     • Maintain the open spaces to a specified standard.
     • Carry out regular inspections and repairs.
     • Provide financial contributions for future maintenance if the open space is to be adopted by the LPA.
   • These obligations typically remain in place until the open space is signed off by the LPA or transferred to a Management Company or other entity.
3. Trigger Points:
   • S106 agreements can define clear “trigger points” for the transfer of maintenance responsibility, such as:
     • When the LPA is satisfied that the open space meets agreed design and quality standards.
     • After a defects liability period, during which the developer rectifies any issues identified by the LPA.
4. Compliance and Enforcement:
   • Developers are legally bound to comply with S106 obligations. If they fail to maintain the open space to the agreed standard, the LPA can take enforcement action, including financial penalties or legal proceedings.
5. Benefits for LPAs and Residents:
   • Retaining the developer’s financial responsibility for maintenance ensures that public open spaces are not neglected, reducing the burden on residents or the LPA during the early phases of development.
   • It also encourages developers to meet quality standards promptly to transition responsibility and minimize their ongoing costs.
6. Similarities to Other Infrastructure Construction:
   • Consider the related requirements of the construction of roads and junctions works under Section 38 (S38) and Section 278 (S278).
   • Local authorities will eventually adopt and take on responsibility for enduring maintenance.
   • Does the local authority pay for maintenance before these works have been signed off and handed over? No – the Developer retains full responsibility for maintenance.
   • So why are residents treated any differently when it comes to POS construction under S106 agreements?

Practical Considerations

• The specific terms and conditions regarding maintenance and financial responsibility depend on the negotiation between the LPA and the developer during the planning process.
• The S106 agreement must be clear and enforceable, outlining the developer’s obligations, timescales, and mechanisms for transfer or sign-off.
• LPAs often require commuted sums from developers to cover future maintenance costs if the space is transferred to them.

Conclusion

LPAs are within their rights to include such clauses in S106 agreements, and these provisions play a crucial role in ensuring that public open spaces are maintained to a high standard until they are signed off or transferred to a responsible party.

Why is this Important to Clients of Residents First?

The majority of residents that we have been engaged by have been forced into paying Service Charge Fees from Management Companies that have received instruction from their Developer to take on responsibility for maintenance ahead of the POS being signed off and the land transferred to the relevant Management Company.

In most cases, this goes against the legal obligations set out in the relevant S106 agreement. If not explicitly prevented, it goes against the spirit of the S106, whereby Developers should remain responsible for infrastructure they have constructed until such point that it has been signed off and handed over to the body responsible for enduring maintenance.

Residents First aims at supporting residents in claiming back any Service Charge Fees incurred prior to sign off of the POS by the LPA.