• VCAT

April 1, 2021

What is a section 173 agreement?

As part of a planning application process, we often see a condition within the planning permit that requires the permit applicant to enter into a Section 173 Agreement with the responsible authority, being the council in most cases. So what is a Section 173 Agreement and what are the obligations involved?

During the planning application process, the responsible authority (council) can negotiate an agreement with an owner of land to set out conditions or restrictions on the use or development of the land, or to achieve other planning objectives in relation to the land. These agreements are commonly known as section 173 agreements. The power to enter into the agreement arises under section 173 of the Planning and Environment Act 1987 (the Act).

The Act provides that a section 173 agreement can be entered into between a responsible authority and an owner of land (normally the registered proprietor). Provided the responsible authority and owner are parties to a section 173 agreement, other persons or bodies may be additional parties to the agreement and become bound by the terms of the agreement. This may include, for example:

  • A planning authority or referral authority where it is useful for that body to coordinate its powers or functions in relation to the land.

Like other agreements, a section 173 agreement is a legal contract. However, a section 173 agreement can be recorded on the title to the land so that the owner’s obligations under the agreement bind future owners and occupiers of the land. A section 173 agreement can also be enforced in the same way as a permit condition or planning scheme.

Councils use a Section 173 Agreement as leverage to ensure the permit applicant and those who owns the land after will adhere to the conditions or restrictions by including the preparation of Section 173 Agreement as a condition in the planning permit. The purpose of an agreement is to achieve planning objectives for an area or particular parcel of land than is not possible when relying on other statutory mechanisms.

What can an agreement cover?

Unlike a planning scheme provision or permit condition, which allows something to be done, a section 173 agreement can expressly require something to be done. This is particularly useful where a responsible authority wants to guarantee certain outcomes prior to, or as part of, the granting of a planning permit for a specific use or development. The Act allows the section 173 agreement to provide for:

  • The prohibition, restriction or regulation of the use or development of land.
  • Conditions subject to which the land may be used or developed for specified purposes.
  • Any matter intended to achieve or advance the objectives for planning in Victoria under the planning scheme or an amendment.

This provides a wide scope for agreements. However, there should generally be a connection between the agreement and the specific planning outcomes sought to be achieved in relation to the land over which the agreement will be recorded. Section 173 agreements have been used in a wide variety of matters. Some examples are:

  • Coordination of development with adjoining landowners or other regulatory authorities.
  • To provide for staged developments.
  • Rehabilitation of property, repair of the environment, heritage protection or vegetation protection.
  • Provision of community infrastructure or specific development infrastructure – such as open space or facilities on the land or nearby land.
  • Securing developer contributions.
  • Restrictions on change of use, or abandoning existing use rights.
  • Limits on future development, including neighbourhood agreements to protect neighbourhood character
  • Planning ‘trade-offs’, such as a planning concession on one property based on a commitment to do something on another property.

Example of a Section 173 Agreement:

CS Town Planning has been engaged by Simond’s Homes as part of their collaboration with Department of Health and Human Services to build social housing around Victoria. Our team of experts are involved in obtaining planning permits for the program from different councils within Victoria, such as Greater Geelong Council, Bendigo Council, Monash City Council and many other councils. In many of the permits successfully obtained, a condition involved the land owner of the property (DHHS) to enter into a Section 173 Agreement with the Responsible Authority (Council). Using a project in Norlane, we provide an example on how Section 173 Agreement is utilised by Greater Geelong Council to ensure their objective is achieved.

Greater Geelong Council has a long history of land owners connecting the stormwater pipes to points other than the legal point of discharge, causing floods and complaints by residents. This may be caused by sloped topography of a lot of the land or short cuts taken during the development of the dwellings. Greater Geelong Council wants to ensure all new dwellings are connected to the legal point of discharge correctly and well maintained moving forward. Hence the condition within the permit requiring the land owner (DHHS) to enter into a Section 173 Agreement. The condition of the permit reads:

Unless otherwise approved by the Responsible Authority and prior to the Commencement of the Development, the landowner must enter an agreement with the Responsible Authority pursuant to Section 173 of the Planning and Environment Act 1987. All costs associated with setting up the agreement must be borne by the landowner. The agreement is to be registered on title and run with the land, and is to provide to the satisfaction of the Responsible Authority: 

  • All storm water runoff is to be collected on site and discharged to the legal point of discharge using a pump system or as otherwise nominated by the responsible authority. The pump system is to be designed and constructed in accordance with Australian Standard 3500 Part 3.2 Section 9 

In order to meet this condition of the permit, a Section 173 agreement is required to be prepared by the land owner’s solicitor. Once the draft Section 173 agreement is prepared, the solicitor who represents the council will than review and advice any amendment required.

Depending on the purpose of the Section 173 agreement, the terms in the agreement are tailored to meet the purpose and the condition of the permit. In the Norlane example, the Section 173 agreement has clauses that list out the ‘Specific Obligations of the Owner’:

  • Stormwater runoff is to be collected on site and discharged to a legal point of discharge using a Pump System, or as otherwise directed by the Responsible Authority.
  • In the event of any operational difficulties with the Pump System installed on the Land pursuant to the Permit, the Owner must promptly and at its cost rectify those difficulties to the satisfaction of the Responsible Authority.

Other than the specific obligation, the Section 173 agreement also specify that the Land Owner:

  • Will not sell, transfer, dispose of, assign, mortgage or otherwise part with possession of the Land or any part of it without first providing to its successors a copy of this Agreement.

The purpose of this clause is to ensure the section 173 agreement also applies to future owners and occupiers of the land.

After the draft Section 173 agreement is approved by council, both the council and the land owner will execute the Section 173 agreement. Once the Section 173 agreement is executed by both parties, the Section 173 agreement is then lodged to Titles Office and officially registered on the title. The condition in the planning permit is now met.

The Section 173 Agreement in the Norlane example is just one of many Section 173 agreement examples. Meeting a Section 173 Agreement planning permit condition can be difficult, if you have any questions about the process, feel free to contact the team at CS Town Planning who will be able to assist.