The three tests a planning obligation must meet
An obligation must be necessary, directly related and fairly and reasonably related in scale and kind. Fail any limb and it cannot lawfully be a reason for granting permission.
The planning obligation tests in regulation 122 of the Community Infrastructure Levy Regulations 2010 are short, statutory and routinely ignored. A planning obligation may only constitute a reason for granting planning permission 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 the development. All three limbs must be satisfied. An obligation that fails any of them cannot lawfully be taken into account.
That last sentence is the part worth holding onto when a council sends a heads of terms schedule with eleven contributions on it.
Where the tests come from
The three tests began life as national policy in a circular, where they were guidance rather than law, and authorities treated them accordingly. Regulation 122 made them statutory with effect from April 2010, which changed the argument entirely: a decision maker who grants permission for a reason that fails the tests has made an unlawful decision, not merely an unwise one.
The tests sit alongside two other requirements rather than replacing them. A planning obligation must fall within the purposes permitted by section 106 of the Town and Country Planning Act 1990, which are restricting development or use of the land, requiring specified operations or activities, requiring the land to be used in a specified way, or requiring a sum to be paid. And the general law on materiality applies, under which an obligation with no more than a trivial connection to the development is not a material consideration at all, a point settled by the House of Lords in Tesco Stores Ltd v Secretary of State for the Environment.
One historical point matters in practice. The pooling restriction, which capped the number of obligations that could fund a single infrastructure project at five, was removed in September 2019. Authorities may now pool without limit, so an argument based on the number of contributions already collected no longer runs. The tests themselves are unchanged.
Necessary to make the development acceptable
The first limb asks a counterfactual question: without this obligation, would permission have to be refused?
If the answer is no, the obligation is not necessary, however desirable it might be. A contribution towards a facility the council would like to build, or towards making good a deficiency that exists whether or not the development proceeds, fails here.
Two distinctions do the work. There is a difference between an existing deficiency and a deficiency caused or worsened by the development. And there is a difference between mitigating an impact and improving the area generally. The first of each pair passes; the second does not.
The authority should be able to point to an adopted development plan policy, and to evidence supporting it, showing why the obligation is required. Where the requirement rests on a supplementary planning document alone, ask what plan policy that document is supplementing, because an SPD cannot create a requirement the plan does not support. What sits inside the statutory development plan is set out in the development plan: what counts and what does not.
Directly related to the development
The second limb is about connection. There must be a real link between the obligation and the development being permitted, in function and usually in geography.
A contribution towards a school two miles away that the development's children will attend is directly related. A contribution towards a school in a different catchment that no occupier will use is not. A footway improvement on the route between the site and the nearest bus stop is directly related. A footway improvement across town is not.
The test also catches timing. Where the funded project is not going to happen within any period relevant to the development, the connection weakens considerably, which is why obligations should specify what happens to unspent money after a defined period.
The geographical element is not absolute. Strategic infrastructure serving a wide area can be directly related to a development within that area, provided the development does place demand on it. What fails is the contribution that has been calculated by formula and applied to every application regardless of whether the particular scheme creates the need.
Fairly and reasonably related in scale and kind
The third limb is proportionality, and it is the one most often argued.
Scale means the contribution should reflect the development's share of the impact, not the total cost of the solution. A scheme adding 20 dwellings to a catchment of 2,000 does not fund the whole of a new junction. Ask for the calculation: the total cost, the basis for apportionment, the number of units or occupiers used, and the source of each figure.
Kind means the obligation should address the type of impact the development creates. A residential scheme generating demand for primary school places can properly be asked to contribute towards primary places. Asking the same scheme to fund a cultural facility because the council has a funding gap there does not pass.
Indexation deserves a mention. A contribution indexed from a base date years in the past can arrive at a figure bearing little relationship to the cost being funded. Ask for the base date and the index, and check that the index used actually tracks the relevant costs.
Obligations that commonly fail
Certain requests recur and struggle against one limb or another.
- Contributions calculated by a blanket formula with no evidence that the particular development creates the need.
- Requests to fund an existing deficiency or a backlog of maintenance.
- Monitoring fees set at a level that looks like a charge for the authority's ordinary functions rather than the cost of monitoring the specific obligation.
- Contributions towards infrastructure already funded through the levy, where the same item appears in both regimes.
- Obligations imposing planning controls better dealt with by condition, which offends the principle that a condition is preferable where one will do.
- Open-ended review mechanisms with no cap and no defined trigger.
None of these is automatically unlawful. Each requires the authority to produce evidence, and the practical value of the tests lies in asking for it.
What evidence an authority should hold
A well-run authority can produce four things on request.
The development plan policy requiring the obligation, and the evidence base behind that policy. An infrastructure delivery plan or equivalent identifying the project, its cost and its funding sources. The calculation showing how the contribution for this development was derived. And its annual infrastructure funding statement, which records what has been collected, what has been spent and what remains unspent.
That last document is more useful than it looks. A statement showing substantial sums collected for a project and never spent supports an argument that the obligation is not necessary or not directly related, and it is public.
Challenging a requested contribution
Do it in writing, early, and politely.
- Ask for the policy basis and the calculation for each item in the heads of terms, separately.
- Test each item against each of the three limbs in turn, and say which limb you say it fails and why.
- Offer what you accept. A developer who concedes the justified items and contests two of eleven is in a far stronger position than one who resists everything.
- Propose a repayment provision for unspent funds, with a defined period, which often resolves a directly-related objection.
- If the authority will not move, put the obligation you accept into a unilateral undertaking and let the decision maker decide.
- At appeal, address the tests explicitly in the statement of case, because an inspector must disregard an obligation that fails them.
Costs are available at appeal where an authority has behaved unreasonably, including by requiring an obligation it cannot justify against the tests. That prospect concentrates minds during negotiation more reliably than any amount of correspondence.
Once completed, the obligation is registered and shows on searches in the manner described in local land charges and how obligations appear on title, so the terms agreed today will be read by a purchaser's solicitor in fifteen years. Where the permission is an outline, check how the obligation interacts with the matters covered in reserved matters: scope, timing and common refusals.
PlanScope drafts Planning Statements and Viability Assessments structured to UK planning policy, with clear flags where contribution calculations and local evidence still need to be supplied. Browse the report types to see what your application is likely to need. Reports are AI-assisted drafts that should be reviewed before submission, and we do not guarantee planning approval. This is general guidance, not legal advice: take legal advice on any planning obligation before entering into it.
Frequently asked questions
What are the three tests for a planning obligation?
Under regulation 122 of the Community Infrastructure Levy Regulations 2010, an obligation may only be a reason for granting permission 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. All three must be met.
Are the tests policy or law?
Law. They began as national policy in a circular but became statutory from April 2010. A decision maker who grants permission for a reason that fails the tests has made an unlawful decision, which is a materially different position from one that merely departs from guidance.
Does the pooling restriction still apply?
No. The cap limiting to five the number of obligations that could fund a single infrastructure project was removed in September 2019, so authorities may pool without limit. An argument based on how many contributions have already been collected for a project no longer runs, though the three tests are unchanged.
Can a council ask me to fund an existing deficiency?
Not through a planning obligation. The necessity test distinguishes between a deficiency that exists whether or not the development proceeds and one the development causes or worsens. Only the second can properly be mitigated by an obligation, and the authority should be able to evidence which it is.
How do I challenge a contribution I think is excessive?
Ask in writing for the policy basis and the calculation for each item separately, test each against each limb, concede the justified items and contest the rest, propose repayment of unspent funds after a defined period, and if necessary offer what you accept in a unilateral undertaking and let the inspector decide.
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.