An introduction to... Section 106 Agreements

Sometimes, in order to make a development acceptable in planning terms, a local planning authority require a developer to enter into certain obligations, as a pre-condition of granting planning permission. The deeds containing these obligations are commonly referred to as section 106 agreements. Parties to the agreement will typically need to be the local planning authority (or authorities, depending on the location and obligations) and anyone with an interest in the land, including the landowner, mortgagees and long-term leaseholders. Once entered, section 106 agreements bind the land and are enforceable against successive owners of the land.

The details of the agreement will vary depending on the size and type of the development and the requirements of the local planning authority. The purpose of a section 106 agreement is to make acceptable a proposed development that would otherwise have to have been refused. All sorts of obligations for the landowner can be included, so long as the obligations are:

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

Common requirements include:

• prescribing that a specific portion of new housing being built must be affordable housing;
• requesting contributions towards local services (such as education, healthcare) so the services can meet the increase in demand caused by the development;
• requiring compensation for the loss of open space;
• ensuring the development is car free or putting in place measures to encourage sustainable means of transport;
• securing flood defence and mitigation measures.

In some cases, only the landowner needs to be bound by planning obligations and there are no reciprocal obligations for the local planning authority (in a section 106 agreement the local planning authority may be required to, for example, spend any financial contribution within a specified period of time or register the agreement at the Land Registry as a local land charge). In such a situation, a unilateral undertaking may then be appropriate. This means only the landowner (and anyone else with an interest in the land) will need to sign the agreement, although its contents will still need to be negotiated with the local planning authority.

A non-exhaustive list of ways we, the Planning and Environmental Team at Irwin Mitchell, may be able to help:

• Negotiating and drafting a section 106 agreement or unilateral undertaking on behalf of a landowner / mortgagee / local planning authority.  
• Assisting with modifying or discharging planning obligations.  
• Advising on the interplay between planning obligations, planning conditions and the Community Infrastructure Levy.