<b></b><p></p><p><b><b>John Stewart considers the industry&amp;’s growing anger at local authority affordable housing demands</b></b><br><b>The eagerly-awaited Green Paper on planning reform will also tackle the vexed issue of planning gain. Local authority demands for affordable housing on private housing developments, through so-called section 106 planning obligation agreements, are undoubtedly the most serious source of planning delay for private developers. Recently the industry&amp;’s complaints about these demands have reached a new crescendo.</b><br><b><b>Setting the rules</b></b><br>From an economic perspective, a key feature of s106 negotiations is that they are between a local authority with monopoly power to grant planning permission, and a private developer operating in the highly competitive land market. Local authorities were given their monopoly powers in the Town and Country Planning Act (1947). </p><p>We are all familiar with the problems created by monopolies: inefficiency, disregard for customers, arrogance and abuse of power, lack of innovation. To prevent monopolies from abusing their powers, their activities have to be regulated by clear and transparent rules.</p><p>The principles governing planning obligations, set out in Circular 1/97, seem reasonable and practical. To be legitimate, obligations have to meet five tests. They must be:</p><p>&amp;• necessary to make a proposal acceptable in land-use planning terms</p><p> &amp;• relevant to planning</p><p> …