(Long-term – secures permanent change through formal Local Plan policy or national law)

Phase 3 delivers the end goal: a binding and enforceable cap on developer profit margins tied to planning approvals. This phase moves beyond guidance and expectations and introduces mandatory conditions under local or national frameworks, ensuring developers cannot extract excessive profits without accountability.

It also addresses the wider system failure by contributing to national-level advocacy, helping ensure consistent planning fairness across England.

🎯 Objectives of Phase 3

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• Require capped profit margins as a condition of planning approval — especially for major or speculative applications.

• Make capped profits a mandatory planning policy requirement via the Local Plan or Section 106 Agreements (legal agreements between developers and local authorities that are used to mitigate the impact of new developments).

• Only permit exceptions where the developer transparently proves that the cap would render the scheme unviable — through open-book viability testing, subject to independent verification and benchmarking.

• Prevent developer-controlled cost inflation by requiring justification for inflated inputs and limiting closed procurement routes.

• Protect councils from speculative behaviour by making excess profits legally recoverable or conditional.

• Institutionalise fairness and transparency into the Local Plan (a council’s official development rulebook) or national guidance.

• Ensure high-impact developments (those causing large relative changes in population or infrastructure pressure, not just physical size) are judged by their proportional effect on a community.

• Includes anti-inflation safeguards (see below) to prevent developers from distorting costs and undermining the profit cap through internal manipulation.

🧩 Key Components of Phase 3

1. Local Plan Policy on Profit Caps

1. Local Plan Policy on Profit Caps

2. Developer Preference Framework

3. Enforceable Profit Cap in Planning Conditions or S106

4. National Reform Campaign

5. Relative Impact Threshold Policy

📚 Legal and Policy Support

• NPPF Viability Guidance (para 007, 008, 010) – supports fair return, discourages overpayment for land.
• Town and Country Planning Act 1990 – allows planning conditions and obligations.
• Public Contracts Regulations 2015 – enables value-for-money selection criteria in procurement.
• Equality Act 2010 and Human Rights Act 1998 – support transparency and fairness.

🧭 Alignment with Previous Phases

Phase 3 formalises the mechanisms trialled in Phase 1 and piloted in Phase 2:

• Builds directly on SPD and data infrastructure developed in Phase 2.
• Makes permanent the escalator models, contribution tiers, and profit tracking.
• Eliminates ambiguity about developer expectations in policy.

Together, Phases 1–3 form a clear path from informal pressure to legal enforcement — delivering a planning system where permission is earned through public value, not private leverage.

(Medium-term – formalises expectations using local powers under current law)

Phase 2 begins the active transfer of control away from developers by introducing structured policies that limit speculative behaviour, tie developer profits to local outcomes, and establish clear thresholds for what is considered fair and acceptable in planning agreements.

All measures in this phase are deliverable under current planning legislation and do not require national reform, but some may involve Cabinet approval, internal guidance updates, or adoption of Supplementary Planning Documents (SPDs). Crucially, several can be launched immediately as trials, giving councils the power to act now while preparing for formal adoption.

Where Phase 1 laid the groundwork through administrative practice, Phase 2 empowers councils to codify these expectations, apply them systematically — especially to tilted balance and speculative applications — and begin shaping a local development culture that rewards fairness, not exploitation.

🌟 Phase 2 Objectives: Introduce Local Leverage Against Excessive Profit and Encourage Developer Accountability

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1. Pilot SPD on Profit Transparency and Fair Return

2. Tiered Developer Contributions Based on Profit Levels

3. “High-Impact Site” Classification Criteria

4. Affordable Housing Delivery Escalator

5. Early Viability Disclosure for Tilted Balance Sites

6. Public Access to All Viability Data in Registry

🔁 Mapping from Phase 1 to Phase 2

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Phase 1 Component	Handled in Phase 2?	How it’s Evolved or Extended in Phase 2	Phase 2 Component #
Time-bound delivery clauses	✅ Continued	Still handled under Phase 1 as immediate practice. May be embedded into “High-Impact Site” policy in Phase 2, which would formalise the expectation that all speculative or out-of-policy sites must include enforceable delivery deadlines.	#3 (indirectly)
Delay penalties	✅ Still Phase 1	Not altered formally in Phase 2, but can be linked to #3 (extra scrutiny on high-impact sites).	#3 (potential support)
Open-book viability disclosure	✅ Formalised	Early viability submission made mandatory, especially for tilted balance sites.	#5
Uniform viability reporting format	✅ Evolved	SPD to define standardised format and assumptions.	#1
Profit-linked contribution clauses	✅ Enhanced	Tiered obligations linked to profitability levels.	#2
Raised affordable housing expectations	✅ Strengthened	Escalator model: higher profit = higher % unless proven unviable.	#4
Public transparency platform	✅ Upgraded	Formal public registry for viability and delivery data.	#6
Community scrutiny of build-out timing	✅ Ongoing	Supported via public registry; reinforces Phase 1 tracking.	#6
Tilted balance application registry	✅ Merged	Incorporated into #6 with visibility on justification and outcomes.	#6
Cumulative rural development monitoring	✅ Still Phase 1	Remains part of Phase 1; not yet addressed by Phase 2.	—

Acronym Key:

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• SPD: Supplementary Planning Document (non-statutory policy document that guides planning decisions)

• GDV: Gross Development Value (the estimated total market value of a development when complete)

• S106: Section 106 of the Town and Country Planning Act 1990 – allows councils to enter agreements with developers for contributions (e.g., infrastructure, affordable housing)

• NPPF: National Planning Policy Framework (sets government planning policy in England)

• EHDC: East Hampshire District Council

Phase 2 equips EHDC to set expectations that developers must earn planning permission, not just profit. While not yet enforceable caps, it puts the burden of justification on those asking for out-of-policy approvals — and aligns contributions to public benefit.

🔧 Implementation Path: Trial First or Formal Consultation?

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SPD policies and transparency pilots can be introduced in two stages:

1. Trial Period (6–12 months):
   • EHDC adopts internal officer practice and Cabinet-approved policy notes that implement Phase 2 ideas.
   • The pilot allows data collection and refinement based on live experience before public consultation.
   • Example: Treating tilted balance applications as “high impact” and expecting profit disclosures and higher affordable housing benchmarks.
2. Formal Consultation and SPD Adoption:
   • After reviewing pilot results, EHDC conducts public consultation to adopt elements into an SPD.
   • This makes expectations enforceable through formal policy guidance.

Why Trial First Works:

• Quicker to implement.
• Allows for learning and adjustment.
• Builds political and officer confidence.

This method ensures reform starts immediately — without waiting for SPD timelines — while preparing for long-term enforceability.

📅 Phase 2 Rollout Plan (2025 Timeline)

Step	Action	Entity Responsible	Estimated Timeframe	Dependencies or Notes
1	Internal Scoping & Policy Briefing	Planning Policy Team / Legal Officers	2 weeks	Draft internal paper outlining Phase 2 intent and legal basis for Cabinet. Phase 1 tracking and viability review must be underway.
2	Cabinet Proposal	Cabinet Member for Planning / Chief Executive	1–2 weeks after scoping	Submit formal proposal to Cabinet to launch pilot implementation (trial basis). Requires member backing but not yet public consultation.
3	Officer Guidance Note Issued	Head of Planning / Policy Team	Same week as Cabinet approval	Internal guidance to case officers for immediate application of Phase 2 components under trial. Enables early viability checks, use of “High-Impact Site” label, etc.
4	Setup of Transparency Tools	IT + Planning Admin + Comms	1–2 months	Expand Phase 1 portal to include profitability benchmarks and tilted balance log. Can be staged by priority (e.g. viability registry first).
5	Draft SPD for Consultation	Planning Policy Team	2 months drafting	Begin drafting Supplementary Planning Document based on trial insights. Includes profit cap thresholds, contribution tiers, reporting format.
6	Run 6–12 Month Pilot	All Case Officers / Monitoring Officers	Live during 2025–2026	Trial full Phase 2 policy on all speculative or out-of-policy applications. Track outcomes, feedback, developer pushback, etc.
7	Public Consultation	Policy Team + Comms	6 weeks minimum	Launch formal consultation on SPD and accompanying policy guidance. Required under regulations. Builds legitimacy.
8	SPD Adoption & Formalisation	Cabinet + Legal Review	1–2 months post consultation	Finalise and adopt SPD to lock in expectations and decision-making power. Final SPD becomes material consideration in planning decisions.

⏱️ Total Rollout Duration (Trial-to-SPD Adoption):

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✅ Immediate launch via Cabinet pilot: 1–2 months
📋 SPD formalisation: 6–9 months

🔄 Parallel Actions to Keep Reform Momentum:

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• Open resident engagement window for informal feedback during pilot.

• Begin case tracking logs immediately.

• Hold training for councillors on how Phase 2 changes affect committee reports and tilted balance scrutiny.