Company & Commercial

What are Section 106 Agreements?

Section 106 Agreement, commonly known as Planning Obligations, are agreements entered into by a developer in which they agree to obligations which would make a development proposal acceptable in planning terms.

Normal planning conditions (those conditions contained in a planning permission) are restricted in what they can contain, and so Section 106 Agreements provide a way for the local authority to grant planning permission and to secure other obligations which they couldn’t otherwise. A prime example of this would be a contribution to the Highways Authority for the purposes of improving transport infrastructure.

A Section 106 Agreement can also set restrictions on the use of land.The policy tests relating to Section 106 Agreements are detailed in the government’s National Planning Policy Framework which clarify that Section 106 Agreements should be used only when the obligations meet the following tests:

• The obligations are necessary to make the development acceptable in planning terms ;
• The obligations are directly related to the development; and
• The obligations are fairly and reasonably related in scale and kind to the development.

Are Section 106 Agreements still used now that the Community Infrastructure Levy (CIL) is coming into force?

Yes, but their role is far more limited than it was. Section 106 Agreements will continue to be used where contributions sought are not listed on the Local Planning Authority’s CIL schedule and in cases where non-financial obligations are being sought, such as a requirement to provide affordable housing, or to carry out highway works to accommodate the development.

The Local Planning Authority has asked me to enter into a Section 106 Agreement, what should I do?We would suggest in the first instance that you contact us and discuss it with us. We can assist you primarily with reviewing and negotiating the Section 106 Agreement. We can also point you in the direction of specialist planning consultants who will be able to advise on the level of any contributions or works required where these have not been agreed in principle with the Local Planning Authority.