Back to basics: the impact of old planning agreements

When purchasing land, it is always advisable to check what obligations could come with ownership. Such obligations include planning obligations, which are now made pursuant to section 106 of the Town and Country Planning Act 1990 (the 1990 Act) but used to be made under the Town and Country Planning Act 1971 (section 52 agreements). What happens where a new planning permission is granted over land that is bound by old planning agreements? Does the grant of a new planning permission supersede restrictions imposed on a site under a historical section 52 agreement? Is an old section 52 agreement still relevant? If so, can it be discharged or modified? If you uncover a historical section 52 agreement relating to land, these are the sorts of questions you may need to ask. So what exactly is the effect of these old agreements and what can be done about them?

Section 52 of the 1971 Act was superseded by the coming into force of section 106 of the 1990 Act, which was later amended by the Planning and Compensation Act 1991 (the 1991 Act). Most section 52 agreements will have been entered into either unilaterally or with the local planning authority. Like section 106 agreements, they "run with the land" and bind anyone acquiring an interest in the land subject to any overriding clause in the agreement or until they have been formally discharged. Unlike obligations under section 106 which, since 25 October 1991 (the date on which the 1991 Act amendments came into effect) can be formally discharged pursuant to section 106A of the 1990 Act, there is no statutory mechanism for the discharge of section 52 obligations under the 1971 Act, or for section 106 obligations entered into before that date.

So, how can an old planning agreement be discharged?

Discharging an old planning agreement

A section 52 agreement entered into before 25 October 1991, or a section 106 agreement entered into before that date, can only be discharged or modified in one of three ways:

1. by an application pursuant to section 84 of the Law of Property Act 1925 (the LPA 1925); or
2. by agreement between the parties; or
3. by legislation.

Option 1: by application pursuant to section 84 of the LPA 1925

The first option requires an application to the Upper Tribunal (Lands Chamber) for a discharge or modification of a restrictive covenant under section 84 of the Law of Property Act 1925. The Upper Tribunal may discharge or modify a restrictive covenant if satisfied that one of the following grounds applies:

• the covenant is obsolete (section 84(1)(a) LPA 1925);
• the covenant impedes some reasonable use of the land (section 84(1)(aa) LPA 1925);
• the beneficiaries expressly or impliedly agree (section 84(1)(b) LPA 1925); and
• no injury will be caused (section 84(1)(c) LPA 1925).

Option 2: by agreement between the parties

The second option is that the parties could agree to the discharge of the agreement on a consensual basis. It is a principle of common law that an agreement/deed can be discharged or varied by parties. This is clearly the simplest method to modify or discharge a planning agreement and the negotiations are typically embodied in a deed of variation.

Option 3: by legislation

The third option is using legislative powers to override the agreement. One such power lies in section 120(4) of the Planning Act 2008 which provides that a Development Consent Order (DCO) may make provision for any of the matters listed in Part 1 of Schedule 5, including "the abrogation or modification of agreements relating to land". Although we aren’t aware of any instances where this power has been used in any DCOs to date, we envisage that it will be increasingly relied on to modify or abolish restrictions contained in planning agreements.

In many instances, the obligations contained within section 52 agreements will be historical and there is a good chance they will have been discharged around the time permission was granted. However, obligations can be ongoing and therefore it is important to read the agreement carefully to check if there are any restrictions, particularly in relation to the use of land. Although the risk of enforcement for historical obligations may be low, strictly speaking the section 52 agreement will run with the land and may continue to appear on the land charges register until it is formally discharged using one of the three routes discussed above.

Practical steps

Ask the seller for evidence confirming that all relevant planning obligations have been discharged. If no evidence is available, or if there are ongoing restrictive obligations that conflict with redevelopment proposals, then consider making the transaction conditional on a deed of variation being entered into. If the local planning authority has granted a subsequent planning permission which is inconsistent with a restriction contained in a section 52 agreement, this will generally be a good indication of the authority's willingness to enter into a deed of variation or discharge agreement. On the contrary, if the local planning authority is not willing to enter into a variation, then this is likely to be an indication that they feel the restrictions contained in the agreement still serve a valid planning purpose. In such a situation, a buyer will need to reconsider any development proposals that conflict with restrictive obligations (eg in relation to use) in the extant planning agreement, or factor the obligations into the price of the land.

Author: Lisa Bazalo, senior associate (New Zealand), planning, London

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