Navigate Section 106 agreements

Guide summary

You do not have to agree to a proposed obligation, but the council may then refuse permission or fail to decide
Raise obligations with the council before you apply, so they are in your land appraisal
Have a planning solicitor review the draft deed and check when each payment falls due
Register the deed as a local land charge and give the council a copy
If you do not do required works, the council can enter after at least 21 days' notice and recover its costs
Apply under section 106A to change an obligation 5 years after it was entered into (made from April 2010)
The council must decide a section 106A application within 8 weeks unless you agree a longer period in writing
Appeal to the Secretary of State within 6 months if the council keeps the obligation unchanged or does not decide

These rules are for England. A Section 106 agreement (S106) is the deed through which a landowner and the local planning authority agree what a development must provide, or pay for, to be acceptable in planning terms. It is usually signed before the council grants planning permission, and it stays attached to the land after the permission is built out.

What a Section 106 agreement is

National policy says a council should use an obligation only where a planning condition cannot deal with the problem. You can also give the council a unilateral undertaking, which you sign alone. The council cannot be bound by it, but it can be used where there is no agreement.

Section 106 planning obligations

What Section 106 planning obligations are, how they bind land, the three statutory tests they must meet under CIL Regulation 122, and how they are modified.

A Section 106 planning obligation is made under section 106 of the Town and Country Planning Act 1990 by a person interested in land in a local planning authority's area, by agreement or otherwise. It can restrict the development or use of the land, require operations or activities to be carried out on it, require it to be used in a specified way, or require payment of a sum or sums to the authority. The authority enforces it against the person who entered into it and against anyone who derives title from that person, unless the instrument says a person is not bound for any period when they no longer have an interest in the land.

An obligation can be a reason for granting planning permission only if it is 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.

Legal basis: Town and Country Planning Act 1990, section 106
Testing requirements: CIL Regulations 2010, Regulation 122
Form: Instrument executed as a deed
Land charge: A local land charge, so it appears on property searches
Enforcement: By injunction, or by the authority carrying out works and recovering its costs
Modification waiting period: 5 years from the date the obligation was entered into (s.106A(4) TCPA 1990), unless a different period is prescribed
Appeal to Secretary of State: Under section 106B if the authority fails to give notice of its decision in time or decides the obligation continues without modification

You do not have to agree to a proposed obligation. If you refuse, the council may refuse permission or fail to decide, and you can appeal against either. For major development, the planning statement you submit with the application must set out the obligations you propose.

The three tests an obligation must pass

These tests apply whether or not the council charges the Community Infrastructure Levy (CIL), and they are your grounds for challenge. A leisure centre across town fails the second test; a payment sized for a 500-home scheme asked of a 12-home scheme fails the third.

Affordable housing can be required only from major housing development: 10 or more homes, or a site of 0.5 hectares or more. In designated rural areas a council's local plan may set a lower threshold. Government guidance says no obligation should be sought from a development that is only a residential extension or annex.

How CIL fits

CIL vs Section 106 - which applies in England

Comparison of the Community Infrastructure Levy and Section 106 planning obligations in England - how each works and how they fit together.

The Community Infrastructure Levy (CIL) and Section 106 planning obligations are different mechanisms for developer contributions. Both can apply to the same development.

CIL legal basis: Planning Act 2008, Part 11, and the Community Infrastructure Levy Regulations 2010
S106 legal basis: Town and Country Planning Act 1990, section 106
CIL nature: Charged at the rates in the council's charging schedule
S106 nature: Negotiated obligation that must meet the three tests in regulation 122
S106 pooling limit: Removed in England from 1 September 2019 (it had capped pooling at five obligations)
Infrastructure funding statement: Published each year by 31 December, setting out what CIL is intended to fund and reporting on CIL and S106

The three tests for S106

A planning obligation can be a reason for granting planning permission only if it is 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.

What changed on 1 September 2019

The Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019 removed regulation 123 of the CIL Regulations in England. That ended two restrictions: the limit of five obligations that could fund the same infrastructure project or type, and the bar on a planning obligation funding infrastructure that the council had listed for CIL. Councils instead publish an annual infrastructure funding statement.

Not every council has a CIL charging schedule. Check with your local planning authority whether CIL applies in your area.

Argue viability

Section 106 and viability assessment

When viability can reduce Section 106 obligations, how viability assessments work, and the principle that policy-compliant sites are assumed viable.

Viability assessment can reduce Section 106 contributions where full compliance would make development undeliverable. However, the government's policy is clear: sites complying with up-to-date policies should be assumed viable.

Starting assumption: Policy-compliant sites are viable - burden of proof is on applicant to show otherwise
Benchmark Land Value: Existing Use Value (EUV) plus a premium to incentivise sale
Transparency requirement: All viability assessments should be made publicly available
Exceptions to transparency: Genuinely commercially sensitive information may be redacted

When viability review is justified

Abnormal site costs (contamination, infrastructure, archaeology)
Market conditions significantly different from plan assumptions
Specific site constraints not envisaged in policy

When viability review is NOT justified

Landowner paid too much for the site
Developer expected higher profit than reasonable
Costs are higher than industry benchmarks without good reason

Review mechanisms

Where viability reduces obligations, review mechanisms may be required:

Early review - If development not started within specified period
Late review - At a specified stage agreed in the agreement (e.g. 50% sales is a common example, though the PPG leaves the trigger to individual plan makers) to capture uplift
Clawback - Overage provisions if values increase above appraisal

Key principle

Land values should reflect policy requirements. The price paid for land should assume full policy compliance. Landowners should not expect windfalls from reduced planning obligations.

Your assessment must be based on, and refer back to, the viability assessment behind the local plan. It must set out every input and assumption and explain any difference from the plan's. The price you paid for the land, or agreed to pay under an option, is never a reason to depart from policy. The council decides how much weight to give your assessment.

Agree the deed

Raise obligations at pre-application stage so that the council's requirements are in your land appraisal rather than a surprise. Ask what evidence supports each payment, such as the pupil numbers behind an education contribution. The council should negotiate so that it can decide within the statutory period, or a longer one you agree in writing.

Have a planning solicitor review the draft. Check:

when each payment or action falls due, and what counts as the trigger, such as starting work or occupying a number of homes
how payments are indexed
when and how the council must spend a payment, and that unspent money is returned after an agreed period
what review mechanism applies if viability reduced your obligations

The agreement must be a deed that states it is a planning obligation, identifies the land, you and the council, and is registered as a local land charge. Give the council a copy.

Meet the obligations

Build the trigger points into your construction programme and cash flow, and keep evidence that you met each one.

If you do not carry out works the obligation requires, the council can, after at least 21 days' notice, enter the land, do them and recover its reasonable costs from you. Wilfully obstructing it is an offence with a fine of up to level 3 on the standard scale.

Change an obligation

Modifying or discharging Section 106 agreements

How to modify or discharge Section 106 planning obligations by agreement or by a Section 106A application, and how to appeal under Section 106B.

A Section 106 obligation can be modified or discharged only by agreement with the local planning authority, or by a formal application under Section 106A of the Town and Country Planning Act 1990. Either way, the person against whom the obligation is enforceable has to take the first step.

By agreement with the authority: At any time - a deed signed by both parties
By application (s106A): After 5 years from the date the obligation was entered into, for obligations made from April 2010
Decision period: 8 weeks from receipt, unless you agree a longer period in writing
Appeal: Section 106B - to the Secretary of State within 6 months, if the authority keeps the obligation unchanged or does not decide in time
Limit on modifications: An application cannot add an obligation for any other person against whom the obligation is enforceable

Section 106A application

Check that the 5-year period has passed, if the obligation was entered into from April 2010
Complete the authority's application form, with a map of the land and your reasons for applying
Notify everyone else against whom the obligation is enforceable, as required by the Regulations
Wait for the authority's decision, which it must give within 8 weeks unless you agree longer
Appeal to the Secretary of State within 6 months if the authority refuses or does not decide

What the authority can decide

The obligation continues without change
The obligation is discharged, if it no longer serves a useful purpose
The obligation continues with the changes you asked for, if it would serve its purpose equally well

The authority cannot discharge or modify an obligation if that would prevent the biodiversity gain objective being met, or create a significant risk of that, in relation to any development.

The separate right to review affordable housing obligations on viability grounds (sections 106BA to 106BC) was repealed on 1 May 2016 and is no longer available.

Legal basis

Primary legislation and key regulations

Town and Country Planning Act 1990 Primary 1990 · UK-wide Planning Act 2008 Primary 2008 · UK-wide Community Infrastructure Levy Regulations 2010 SI 2010 · UK-wide The Town and Country Planning (Modification and Discharge of Planning Obligations) Regulations 1992 SI 1992 · UK-wide The Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019 SI 2019 · England

Browse UK legislation legislation.gov.uk

Official guidance

Community Infrastructure Levy (opens in a new tab)

MHCLG · England

Viability - Planning Practice Guidance (opens in a new tab)

MHCLG · England and Wales

GOV.UK planning obligations guidance (opens in a new tab)

MHCLG · England and Wales

Navigate Section 106 agreements

What a Section 106 agreement is

The three tests an obligation must pass

How CIL fits

Argue viability

Agree the deed

Meet the obligations

Change an obligation

Legal basis

Official guidance

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