Section 106 Agreements: What developers need to know
If you are a developer, securing planning permission is usually only one part of your planning strategy. Legal agreements such as Section 106 are frequently tied to permissions, meaning you must meet certain obligations to carry out the project. Understanding how these agreements work is essential to delivering your project successfully.
What is a Section 106 agreement?
Section 106 (S106) agreements are legally binding planning obligations entered into by a local planning authority (LPA) and a developer. They are used where planning conditions alone would not be sufficient to make a development acceptable. These agreements are attached to the land itself, so any future owners will need to understand and meet the obligations.
The exact terms vary depending on the development, but can include:
- Restrictions on how the land can be used or developed
- Requirements to carry out specific works or activities
- Obligations to use the land in a specific way
- Financial contributions to the LPA.
What is the purpose of S106?
The purpose of S106 agreements is to mitigate the impact of a development on a local area. Planning obligations ensure that appropriate measures are put in place to address the project’s negative impact on the community and/or infrastructure. Typical obligations include a contribution towards affordable housing or infrastructure projects (ie. parks and schools) – these can be delivered either through financial contributions or in-kind works.
Practical implications for developers
S106 agreements can have a significant impact on the viability and delivery of a scheme. Planning obligations are negotiable, so a solicitor can work on your behalf to agree on terms that are suitable for both you and the LPA. However, negotiations can take time and, as the planning obligations are often attached to planning permission, you won’t be able to start works until an agreement has been reached. It’s therefore important to start negotiations early so you can factor the obligations into your budget.
A fictional case study
A developer submits a planning application to build 50 new homes on a greenfield site at the edge of a town. The LPA initially states that, under Section 106 of the Town & Country Planning Act, 30% of these homes must be affordable housing. However, the solicitor acting on behalf of the developer demonstrates that this contribution would make the project financially unviable. Following negotiations, the affordable housing contribution is revised down to 25%. The developer must also deliver a new park and football pitch within the site. Without the Section 106 agreement in place, planning permission would not be granted.
How Attwaters can help
Section 106 agreements can be complex, so it’s important to seek early legal advice. Our Town & Country Planning team has extensive experience advising developers on planning obligations – to find out how we can help, contact us on planning@attwaters.co.uk or 0203 871 0039.
