Scottish Government Circular 4/2025 on planning obligations and good neighbour agreements was published in December 2025. Although the law on planning obligations has not changed, the Circular (which replaces Circular 3/2012 as updated in 2020) reflects the new development planning system, particularly the "Infrastructure First" approach in the National Planning Framework 4 (NPF4) and provides a practical guide to the use of planning obligations and good neighbour agreements in the current economic climate.
The five tests for valid planning obligations are embodied in NPF4 Policy 18 and restated in the guidance. Obligations must:
- Be necessary for the development to proceed
- Serve a planning purpose
- Relate to the development in question
- Be fair and reasonable in scale and kind
- Be reasonable in all other respects
The Circular reminds planning authorities that obligations cannot be used to collect general funding for unspecified purposes and policies on planning obligations need to be included within Proposed Plans following the demise of statutory supplementary guidance and as such will be subject to examination.
The Proposed Plan should set out, as far as reasonably practicable, what infrastructure is needed in connection with each allocated site, including cumulative impacts, and strategic priorities for delivery. If developer contributions are expected to be sought to mitigate impacts, the policy should describe which sites will be required to contribute to each item, or the methodology for determining this, and methodologies for calculating the appropriate contribution from each site.
If contribution zones are to be used, then the policy must demonstrate a clear relationship between the development and the infrastructure. What is considered to be “infrastructure” is set out in the Appendix and reflects the definition of “Infrastructure First” in NPF4.
But the real meat will be in the Delivery Programme which a planning authority must publish within three months of adopting its Local Development Plan.
The Delivery Programme should contain the indicative costs of the required infrastructure; who is responsible for its delivery; the planned timing/phasing of the infrastructure and related payments; and funding sources, including the amount to be funded through developer contributions and formulae by which costs are to be shared. While some planning authorities already provide this level of detail, many don’t and this will provide greater transparency and help landowners and developers predict the size and types of contributions likely to be sought for specific sites or general locations prior to committing to a site or submitting a planning application.
The updated guidance contains more detail on cumulative impact, identifying the overall cost and how it is to be apportioned and reminds planning authorities that where they wish to seek contributions on the basis of standard charges and formulae, they still need to demonstrate compliance with the 5 tests for valid planning obligations and the approach used must ensure that the charges are relevant and proportionate to the impacts of the individual development. The Circular acknowledges that in a cumulative impact scenario, some developments may have to contribute to the infrastructure up-front, while others will pay after it has been delivered depending on phasing.
The need for the specified infrastructure must be kept under review since the Delivery Programme must be reviewed every two years, thus providing an evidence base for modification of planning obligations and the return of contributions which are no longer necessary. The Circular highlights that it will be difficult to demonstrate that a planning obligation was related to a specific development if the infrastructure is not provided until many years after the development has been completed; perhaps signalling the end of planning authorities being able to retain contributions for 25-30 years after the payment of the last contributions instalment.
An important feature of the updated Circular is its recognition that entering into a planning obligation may have financial consequences for developers which could make proposals uneconomic.
Paragraph 18 advises that it is a policy decision for planning authorities as to whether infrastructure should be funded through planning obligations taking local development needs and economic circumstances into account. The planning authority should take into account the existence of other agreements and conditions that already apply to a development and determine whether the overall burden is reasonable. The guidance confirms that the impact of contributions on the viability of a development is an issue which may be relevant to whether an obligation complies with the policy tests.
The Circular acknowledges that a range of factors can affect the viability of a development, including the sales value (or revenue) achievable, the costs of development (for example, construction costs and price paid for land) and the profit sought by the developer, as well as any developer contributions required. These factors are acknowledged to vary across the country and across different types of development and will change over time.
Alternative options, such as off-site provision or commuted sums, which might support viability should be considered.
If developer contributions will make a development unviable, the planning authority should exercise its planning judgement as to whether the development should go ahead with no or reduced contributions.
The Circular also contains more practical advice on the drafting of planning obligations and clauses to be included (such as the “future-proofing” clause covering section 42 obligations) and envisages that the full terms of a section 75 agreement could be agreed before a decision is reached on a planning application so that the agreement can be registered quickly following a planning authority’s willingness to approve the application. This would avoid the blame for delays post-committee being laid at the lawyers’ doors, but resource within planning authority legal teams may limit the practical implementation of this recommendation.
Finally, the Circular reminds everyone that the Development Management Regulations require a summary of the terms of a planning obligations to be included in the officer’s report on an application and available for inspection. Once sections 35 and 36 of the Planning (Scotland) Act 2019 come into force, planning authorities will also have to publish individual planning agreements and prepare annual reports of all planning obligations entered into that year.
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