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Section 106 Agreements – Planning Obligations

As part of the consideration of a planning application, section 106 of the Town and Country Planning Act 1990 enables local authorities to negotiate with developers certain works, restrictions, or contributions towards a range of infrastructure and services, such as community facilities, public open space, transport improvements and/or affordable housing. Such agreements are an established and valuable mechanism for mitigating a particular impact arising from a development proposal. They are commonly used to bring development in line with the objectives of sustainable development as articulated through relevant local, regional and national planning policies.

More about planning obligations

Planning obligations can be positive (requiring a specified action to be taken before the start of a development), negative (preventing development from taking place until a specified action has been taken by the developer) or restrictive (restricting how the development may be used).

More specifically, planning obligations may:

  • be unconditional or subject to conditions
  • restrict development or use of the land
  • require operations or activities to be carried in, on, under or over the land
  • require the land to be used in any specified way
  • impose any restrictions or requirement for an indefinite or specified period (enabling, for instance, an obligation to end when a planning permission expires)
  • require payment to be made either in a single sum or periodically, for either a specific amount or based on a specific formula

Planning obligations can include

  • affordable housing provision/contribution 
  • creation, maintenance and adoption of open spaces and recreational facilities
  • provision or adoption of new highways and public rights of way
  • community facilities
  • travel plans

Planning obligations are tied to the land. They may be enforced against anyone who originally enters into the agreement and any successor in title, unless the agreement specifies otherwise. Under the Local Land Charges Act 1975, these obligations must be registered in the Local Land Charges Register.

A S106 agreement may be entered into by a number of relevant parties with an interest in the land and the local planning authority (where there are obligations on the local planning authority), but may also be made as unilateral undertakings (without the local planning authority) where the obligations are solely on one party.

Use of planning obligations

Current Government guidance in relation to planning obligations is set out in the National Planning Policy Framework 2012 and the Communities and Local Government Planning Circular 05/2005 (July 2005) called Planning Obligations

Circular 05/2005 states that planning obligations must be:

  • relevant to planning
  • necessary to make the proposed development acceptable in planning terms
  • directly related to the proposed development
  • fairly and reasonably related in scale and kind to the proposed development
  • reasonable in all other respects

The use of planning obligations is governed by the fundamental principle that planning permission may not be bought or sold. It is therefore not legitimate for unacceptable development to be permitted because of benefits offered by a developer. Similarly, planning obligations should never be used purely as a means of securing a share in the development profits for the local community.

In addition, there are several other key principles guiding the appropriate use of planning obligations:

  • Planning obligations should only be used where they are necessary to the development and are fairly and reasonably related in scale and acceptable in planning terms
  • The council should not use its development control powers to require benefits from property owners which are unrelated to the development under consideration
  • The council should not seek to control matters which are not proper planning considerations and should not normally use planning obligations to impose restrictions on tenure, price or ownership
  • Where developers are expected to enter into planning obligations on a regular basis in relation to similar types of development, the council should set out its policy in its Local Plan
  • Local Plan policies should not, however, specify standard conditions or planning obligations to be imposed on certain kinds of planning permission because they must be based upon the individual circumstances of each application
  • Local Plan policies should give a clear indication on the types of development for which agreements of these kinds may be appropriate
  • Government guidance is that planning conditions should be used in preference to planning obligations

Drafting a S106 agreement

The council encourages applicants to enter into early pre-application discussions at which stage the need for, and heads of terms of, any Section 106 agreement can be agreed. The council will expect that where required, a draft agreement will be submitted with the planning application together with proof of title of ownership of the application site.

In drafting the agreement, it is advised that the applicant/developer employs a Solicitor. The Law Society has produced a model S106 agreement with appropriate relevant clauses, which should assist the drafting process.

The council will not either accept, or enter into a s106 agreement unless it is satisfied that the agreement is legally compliant. In this respect it will assess any draft agreement and negotiate amendments as necessary. The Council charges a fee for the legal costs involved in the preparation and production of section 106 agreements. The current standard fee is £400 (this is currently under review) but will rise on complexity of the agreement. An estimate of the fees will be given by the Council's legal officer upon first instruction from the relevant planning officer.

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