New Regulations on Section 106 Monitoring Fees

A further regulation has been published this week (week commencing 3rd June) amending the Community Infrastructure Levy Regulations 2010

Amongst a series of variations and improvements to the CIL regime, there is a provision which entitles local planning authorities to charge a monitoring fee for oversight of compliance of Section 106 obligations. Such a fee has to be fair and reasonable based on the local planning authority’s estimates of the actual costs of monitoring. No assistance is offered as to what fair and reasonable represents in a particular circumstance and therefore local planning authorities will have to establish their own charging regime or at least be able to justify demands for monitoring fees on an ad hoc basis.

This measure, which is due to come into force on 1st September 2019, has the advantage of providing a degree of certainty over a local planning authority’s power to charge a monitoring fee.

Local authorities and monitoring charges

Local planning authorities have routinely been seeking to insert monitoring charges into Section 106 Agreements without necessarily being able to point to any statutory basis for doing so. A High Court judgement had come down fairly heavily on the attempts by a local authority to charge a monitoring fee on the grounds that it was felt that local authorities should fund the monitoring of the compliance with statutory obligations as their general revenue but not by way of a specific levy imposed upon an applicant for planning permission unless the nature of the development as sufficiently complex to clearly require additional commitments of resource on the part of the Council in ensuring compliance.

The case

That case (Oxfordshire County Council v Secretary of State for Communities and Local Government and Others) [2015] arose from a decision by a Planning Inspector on appeal in relation to a development of 26 residential units that the monitoring fees demanded by both the district and county councils failed to fall within the scope of the necessity test set out in Regulation 122 of the CIL Regulations. Clearly the High Court thought that site was not “complex” enough to merit a monitoring fee.

This seemed to suggest that monitoring fees should only be levied for more significant and complex developments and should certainly not be imposed as a standard charge in all cases.

Despite this, many local authorities have continued to demand monitoring fees, taking advantage of the fact that the question of their entitlement to do so remains a grey area. Those seeking planning permission often have little alternative but to accept the imposition of such charges as the lesser of two evils. The only alternative would be to risk refusal of the planning application and the delay and additional costs in seeking to overturn it by way of appeal.

New regulations

The introduction of the new regulations in September 2019 will remove the question of whether a local planning authority is entitled to levy a monitoring fee but the debate will then move onto what a fair and reasonable fee is in any particular circumstance.