The three statutory tests for a planning obligation
The three tests in regulation 122 are statutory restrictions rather than policy to be weighed. Agreeing to an unnecessary contribution does not cure the failure, and an inspector will apply the tests directly.
The planning obligation statutory tests are set out in regulation 122 of the Community Infrastructure Levy Regulations 2010, and they are legal limits rather than guidance. An obligation may only be taken into account in deciding a planning application if it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it. An obligation failing any of the three cannot lawfully be a reason for granting permission, which means a decision resting on it is open to challenge and an inspector on appeal will set it aside.
For an architect, this is more practical than it sounds. The tests decide whether a requested contribution can be answered with a design change instead of a cheque.
Where the tests come from and their statutory force
Before 2010 the same three tests existed as policy in a government circular, which meant they could be weighed against other considerations. Regulation 122 converted them into a statutory restriction on what a decision maker may take into account, and that shift changed the nature of the argument.
The consequence is that the tests are not balanced against anything. No reading of regulation 122 makes an obligation failing the necessity test acceptable because the applicant has agreed to it. If the obligation is not necessary, it cannot be a reason for granting permission, and the authority has to grant or refuse on the rest of the case.
A separate point follows for applicants who are tempted to offer contributions to smooth a path. An offer does not cure a test failure, and it does create a precedent in the authority's formula for the next scheme.
Necessary to make the development acceptable
This is the test that does most of the work. The question is whether permission would have to be refused if the obligation were not entered into.
Answering it requires the authority to identify the planning harm that the obligation addresses. Pressure on primary school places attributable to this development's child yield is a harm. A general wish to improve the local park is not, unless the development's occupiers will create a deficiency against an adopted standard.
Two further points often decide a dispute. Where a condition could achieve the same outcome, national guidance prefers the condition, and an obligation duplicating what a condition could do is harder to justify as necessary. And where the development already provides the facility on site, a contribution towards the same facility off site usually fails, which is where design and obligations meet: providing play space on site at the standard required removes the contribution, and a Play Space Assessment is the document that shows it.
Directly related to the development
The second test asks for a causal and practical link between the obligation and the development. Two dimensions matter: geography and function.
Geographically, the facility or project has to be one that this development's occupiers will plausibly use or affect. A contribution towards a sports hall four miles away, on the other side of a river with no crossing, is not directly related however much the authority needs the money.
Functionally, the obligation has to address something the development causes. A contribution towards town centre street improvements from a scheme of light industrial units has to be explained by reference to the units' effect on the town centre, and often cannot be.
Mixed schemes complicate this honestly. Where a development contains housing, workspace and retail, each element generates different impacts, and a single per-square-metre formula applied to the whole is vulnerable on this test.
Fairly and reasonably related in scale and kind
The third test is proportionality. The obligation has to match the development in size and in type, which means a small scheme does not pay for the whole of a project it contributes to, and a residential scheme is not asked to fund something only a commercial occupier would need.
| Test | The question | A common failure |
|---|---|---|
| Necessary | Would permission be refused without it | A contribution to an already funded project |
| Directly related | Does this development cause or use it | A facility too distant to serve the occupiers |
| Fairly and reasonably related in scale and kind | Is the quantum proportionate | A flat formula applied regardless of unit mix |
Scale arguments are usually arithmetic. If an authority seeks a contribution calculated per dwelling for a facility serving a catchment of several thousand homes, ask what share of the catchment your scheme accounts for and whether the figure matches. If it does not, the discrepancy is the argument.
Kind arguments are usually about unit type. Student accommodation, extra care housing and one-bedroom flats generate different child yields from family housing, and a request that ignores the difference fails on kind as well as scale.
Applying the tests to a contested request
- Write out each requested obligation as a separate line, with the sum and the stated purpose.
- For each, ask the authority to state the harm it addresses and to identify the evidence.
- Check whether the development already addresses that harm on site, through design or through an existing condition.
- Check whether the project is already funded or programmed, using the authority's published infrastructure funding statement.
- Test the quantum against the catchment, the unit mix and the occupancy assumptions.
- Set out your conclusions on each line, in writing, before the committee report is drafted.
Step six is the one that changes outcomes. Officers write the report, and a report that has already recommended a contribution is a harder document to unpick than a draft that has not yet been written.
Where the request is affordable housing rather than a financial contribution, the argument is different in kind and belongs with the viability evidence and the Affordable Housing Statement rather than with regulation 122, although the tests still apply to how the obligation is framed.
Recording compliance in the committee report
Officers are expected to explain, in the report, how each obligation meets the three tests. Read that paragraph closely, because it tells you which obligations have real evidence behind them and which have been carried forward from a standard list.
Three weaknesses show up repeatedly. A single sentence asserting that all obligations meet the tests without addressing any of them individually. A necessity justification that describes general service pressure rather than an effect of this development. And a scale justification that cites the formula as its own evidence.
None of those is fatal to a permission on its own. All of them are useful if the application is refused and the obligations become part of the appeal, because the report is the authority's own record of its reasoning.
Appealing on an unjustified obligation
On a section 78 appeal the inspector applies regulation 122 directly, and the usual mechanism is a unilateral undertaking offered in the alternative: one version containing the obligations you accept, with submissions that the contested items fail the tests. The inspector can then grant permission on the basis of the narrower package.
Timing matters. Draft the undertaking early, get the authority's comments on the drafting even while disagreeing on content, and have it executed before the deadline the inspector sets. A good argument on the tests undone by a late undertaking is a familiar and avoidable loss.
Where viability is in play alongside the tests, the two arguments interact and the order matters, as our note on when an inspector reopens viability at appeal explains. Take the regulation 122 point first: an obligation that fails the tests comes out regardless of what the appraisal shows.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. To see which supporting documents a scheme is likely to need, enter your postcode on PlanScope.
PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
Where are the statutory tests for planning obligations set out?
In regulation 122 of the Community Infrastructure Levy Regulations 2010. An obligation may only be taken into account in deciding an application if it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. Before 2010 the same tests existed only as policy.
Does agreeing to a contribution make it lawful?
No. The tests restrict what a decision maker may take into account, so an obligation that fails one of them cannot be a reason for granting permission even where the applicant has offered it. An offer also sets a precedent in the authority's formula, which affects the next applicant on a similar site.
How do I show a contribution is not necessary?
Ask the authority to identify the planning harm the obligation addresses and the evidence for it. Then show either that the harm does not arise from your development, that the scheme already addresses it on site, that a condition could achieve the same outcome, or that the project is already funded in the published infrastructure funding statement.
Can on-site provision replace a contribution?
Often, and this is where design answers the obligations question. Where a scheme provides play space, open space or amenity space on site to the standard the plan requires, a contribution towards the same facility off site usually fails the necessity test. The assessment showing the standard is met is the evidence that closes it.
How are obligations dealt with on appeal?
The inspector applies regulation 122 directly. The usual mechanism is a unilateral undertaking offered in the alternative, containing the obligations you accept, with submissions that the contested items fail the tests. Draft it early and have it executed before the inspector's deadline, because a late undertaking undoes a good argument.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.