(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
- 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
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.