What is Section 106?

Man in a hard hat pointing at building plans on a screen

If you have ever planned a new renovation and applied to your local council for permission, you will know that there are many hurdles that you have to jump over before starting the project. Your development has to be authorised by the council, and in some cases, you might enter a Section 106 Agreement.

However, many people do not know what these agreements are and when they are relevant. In this guide, we will define them and explain when they are needed.

What is a Section 106 Agreement?

Under the Town and Country Planning Regulations 2013, the planning authority can enter an agreement with a landowner when they grant planning permission to make the development acceptable. These agreements are called Planning Obligations.

If a local authority believes that your proposed development will negatively impact the area and they cannot add effective planning conditions to your planning agreement, they will draft a Planning Obligation. In real-world terms, the deal aims to balance any pressure and impact on an existing area to improve the overall conditions.

Requirements For Planning Obligations

To treat every party fairly, the agreement must adhere to strict requirements regarding their existence and terms. It must be:

Necessary to make the planned development acceptable
Directly relevant to the proposed development
Reasonable regarding the size and scope of the development

Town and Country Planning Act 1990

The Planning Obligations arise from the Town and Country Planning Act 1990, Section 106.1. This section lays out how they are to be used. The agreement can:

Restrict your development and how you can use the land in any way
Require your take carry out particular operations regarding the land
Require you to use the land in a certain way
Demand sums to be paid to the authority, either by a specific date or periodically

The act then rules that the obligation is enforceable against the person entering the agreement and anybody deriving title from that original individual, meaning that the authority could enforce the obligation on your relatives.

What Does The Agreement Include?

As Section 106 agreements must be relevant and reasonable to the proposed development, each planning obligation will differ. However, some elements are common as they are typical concerns that local councils face. For example, the agreement could cover:

Roads, especially A-roads and motorways
Health
Town Centre Improvement
Schools and education
Affordable housing
Recreation Disturbance Avoidance and Management Strategy (RAMS)

Preparing An Agreement

These agreements are negotiated and decided by the planning officer, applicants and any other relevant parties during the planning application process. Then the authority’s solicitors will draw up the agreement, and the applicants will pay the legal fees.

Exemptions

The main issue Section 106 Agreements create is that self-builders would have to pay tens of thousands of pounds to upgrade local infrastructure when constructing relatively small projects. This money is diverted away from their renovation, meaning the required budget increases dramatically. Campaigns quickly arose for exemptions in these circumstances.

In November 2014, the Minister for Housing and Planning, Brandon Lewis MP, introduced the exemption for self-builders that applied to developments in England of up to ten homes or five in designated rural areas. It came after campaigns from National Custom and Self Build Association, NaCSBA, pointed out the disparity between the size of the developments and the sums paid to local councils.

Overturns and Appeals

This exemption gave rise to a series of decisions, appeals and u-turns that left the status of Planning Obligations in limbo. Firstly, in July 2015, a High Court Judge found the exemption unlawful when ruling in a case for Reading and West Berkshire authorities.

Then the NaCSBA campaigned again to reintroduce the exemption. The Court of Appeals overturned the judge’s ruling in May 2016 and upheld the exemption’s lawfulness with immediate effect.

The exemption was questioned again in September 2016 when South Cambridgeshire and Elmbridge councils brought planning appeals. It was then agreed that new local plans would overrule the exemption if they were introduced after November 2014. This latest ruling does not apply to all local councils, so check with your authority when renovating.

DB Symmetry Ltd. v Swindon Borough Council (2022)

This recent case has brought the agreements back into the news cycle and the public eye. Swindon Borough Council granted DB Symmetry Ltd outline planning permission for a development that included two roads. The council granted permission on the condition that the planned access road was constructed to provide each unit with ‘fully functional highways’.

However, DB Symmetry believed that the authority could not impose that the roads were used as public highways. They applied for a certificate of lawfulness for the creation of private access roads. In response, the council rejected the application.

The decision was taken to the Supreme Court, which unanimously ruled that Swindon Borough Council could not impose the public highway condition, as it was not an LPA, clearing up the matter of public highways for developers.

Recommendations For Building a New Home

With all the uncertainty, appeals and variations in the application of Section 106 agreements, knowing what to do when building or renovating is complex. Before you do anything, research and contact your local council to understand their approach to these agreements. This information will help you gauge whether you will be subject to one.

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FAQ

What is a Section 106 Agreement in housing and planning?

A Section 106 agreement is a legally binding planning obligation between a developer and a local authority to offset the impact of their development on a local area. Commonly, the developer will have to pay compensation.

What are 106 occupancy restrictions?

106 occupancy restrictions are conditions agreed upon before a development project begins to secure the local area. They may state that the development occupant must have a local connection.

What will my Section 106 funding be used to create?

Your funding will solve reasonable, relevant and necessary issues. It may pay for town centre improvements, education, health, roads, affordable housing or Recreation Disturbance Avoidance and Management Strategy (RAMS).