An Introduction to Section 106 Agreements

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Following the submission of a planning application to the Local Planning Authority (LPA), you may find that the LPA requires a Section 106 Agreement to be entered into before planning permission is granted.

The Section 106 Agreement will contain planning obligations which enable the local authority to secure restrictions on the use of the land or the operation of the development or to make contributions towards the local infrastructure and facilities.

The planning obligations will be attached to the planning permission to make acceptable development which would otherwise be unacceptable in planning terms.

The Section 106 Agreement will bind the site itself, as opposed to the party developing the site, which means the planning obligations will “run with the land” and will be enforceable against the original parties to the Section 106 Agreement as well as successors in title.

The LPA may require all persons with an interest in the site to enter into the Section 106 Agreement, including mortgagees.

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An Introduction to Section 106 Agreements

Planning Obligations

Planning obligations must be directly relevant to the proposed development and fairly and reasonably related in scale and kind to the development.

They are used for three main purposes:

  • To prescribe the nature of the development.
  • To compensate for loss or damage created by development.
  • To mitigate a development’s impact.

Some common examples of a planning obligation include affordable housing contributions, financial contributions towards education or sports and play facilities and off-site highway works.

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Planning obligations

Community Infrastructure Levy

Contributions may also be made towards infrastructure through the Community Infrastructure Levy (CIL), a local charge that local authorities can choose to levy on new developments in their area to fund infrastructure.

Where the CIL is in place for an area, planning obligations cannot be used to double charge a developer for infrastructure, and once an authority has introduced a levy in its local area, it must not use planning obligations to fund the infrastructure they intend to fund via the levy.

Planning obligations are generally used where it is not possible to address unacceptable impacts through a planning condition.

They are negotiable, and discussions should take place as early as possible in the planning process.

Often, the party developing the site will employ their own planning consultant to deal with the negotiation of the obligations and the underlying terms of the Section 106 Agreement and to provide specialist planning advice, as this is likely to be outside of the scope of the solicitor.

The planning consultant should try to ensure that any substantive obligations are conditional upon the grant of planning permission and, ideally commencement of the development.

If the LPA decides to grant planning permission subject to prior completion of a Section 106 Agreement, they will usually instruct their solicitor to prepare the first draft.

The solicitor who is acting for the party developing the site will review, negotiate and agree on the draft with the LPA.

The LPA is also likely to require their legal costs incurred in connection with the Section 106 Agreement to be paid by the party developing the site.

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Community Infrastructure Levy v2

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