Section 75 Agreements - Pay the Council's Legal Costs or Else...!
Many Councils now routinely expect applicants to reimburse legal costs they incur in preparing Section 75 agreements – this includes the costs incurred by the Council to its external solicitors, as well as its own internal legal costs.
In our experience applicants are understandably less than pleased about being hit with an additional bill from the planning authority – especially in light of the significant increase in planning application fees. From June 2017, maximum fees for applications for planning permission in principle increased from £10,028 to £62,500, and for full planning applications from £20,055 to £125,000. Legal fees are charged on top of these costs, adding thousands of pounds to the cost of the application process.
However, applicants are in a difficult position, with planning authorities adopting a ‘like it or lump it’ approach – either agree to pay their legal costs (usually up front through a letter of undertaking), or risk not getting planning permission.
Disappointingly from an applicant’s point of view, there is no link between the payment of fees and the time it takes for agreements to be put in place. It is not uncommon for Councils to require payment of their legal costs irrespective of the outcome of the process.
We therefore welcome Highland Council’s decision to accept the recommendation of Scottish Ministers and delete the requirement in their draft supplementary guidance that developers pay the Council’s Section 75 legal costs. In issuing their revised Guidance, Highland Council recognised that “Whilst the Council firmly believes that the developer should be responsible for the Council’s legal, management and administration costs associated with legal agreements, it is accepted that there is currently no legislative provision for such charges at present.”
This follows similar directions from Scottish Government to other local authorities. In November 2016, the Scottish Ministers directed Angus Council to remove a requirement from its developer contributions guidance regarding payment of legal costs. A similar direction was also made to Aberdeen City’s guidance, although in that case the Council has effectively ignored Scottish Ministers and continues to seek payment of its legal costs.
Although commercial pressures on applicants means they pay these additional costs rather than risk delaying development, the granting of planning permission is not conditional on paying legal fees. It is difficult to see how any Council can make not paying their lawyers a legitimate reason to refuse consent.
The Scottish Government’s recent direction means applicants should not have to ’like it or lump it’ when it comes to a Council’s legal fees, and these should be resisted. However, this may be only a temporary reprieve. Amongst the proposals in the new Planning Bill is a power to allow local authorities to charge for additional services – which may give a legal basis to charge for Section 75 costs.
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