1. What is a Section 106 agreement?
A Section 106 (S106) agreement is a document that a developer may be asked to provide when applying for planning permission. It’s usually drawn up between a developer and a local planning authority (LPA), but there are also unilateral S106 agreements provided by the developer without the involvement of the LPA.
In law, the purpose of the S106 Town and Country Planning Act 1990 is to regulate how the land is used and to mitigate the impact of development in a specific area. In procedural terms, the S106 is signed and sealed (if the LPA is involved) as a deed. It contains planning obligations, which could include asking the developer for a financial contribution and/or to provide services which support the community.
Typical obligations could include the provision of affordable housing, new roads, or schools. A S106 agreement can also address biodiversity issues.
2. Why do developers need to enter into a Section 106 agreement?
It is quite common for an agreement to be required for larger developments. Developers must enter into S106 agreements to comply with local policy.
3. Are Section 106 contributions mandatory for all developments?
The requirement depends on the scale of the development and its potential impact on the local area. Smaller projects might not need to contribute, but larger developments that impact local infrastructure usually will. The LPA will advise developers when a S106 is required.
4. How are Section 106 contributions used?
The contributions from S106 agreements fund local infrastructure, such as improving transport, building affordable housing, and enhancing green spaces.
5. How is the amount of the Section 106 contribution determined?
The amount a developer is required to pay is usually specified by the LPA based on the policy governing the area. This is calculated taking into account factors like the size of the development, its impact on local services, and the community’s needs.
There may be some room for negotiation, but this depends very much on the context. Developers may be required to provide evidence of viability, especially in relation to affordable housing contributions.
6. If circumstances change, can a Section 106 agreement be modified or discharged?
Yes, there is provision in law to review S106 agreements or individual obligations if, later on, they no longer appear relevant.
For example, suppose a S106 agreement specifies that a house can only be occupied by a person connected with agricultural use of the land, but the new owner is not involved with agriculture. In that case, it may be possible to renegotiate or discharge the agreement.
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7. What happens to a Section 106 agreement if the property is sold?
S106 agreements are registered as local land changes with the local authority. Consequently, when a property with a S106 agreement is sold, the new owners will be on notice that there is an agreement. This is because S106 agreements are legally binding on the land and bind the successor in title, i.e., the new owner.
8. Can a developer be refunded their Section 106 contributions?
In some cases, developers can claim refunds if the local authority has yet to use the contributions within a specified time or if the development project does not proceed as planned.
9. What is the difference between a Section 106 agreement and the Community Infrastructure Levy (CIL)?
While both S106 and CIL are used to fund local infrastructure, CIL is a fixed charge based on the development’s floor space, whereas S106 agreements are connected with the use of the land and tailored to specific projects.
Another difference is that the CIL Regulation set out when payments are required during a development’s lifetime. On the other hand, payment for S106 contributions will fall due as set out in the S106 agreement itself.
10. Are Section 106 agreements public?
Yes, S106 agreements are public documents. They are registered as local land charges, which allows prospective purchasers to find out about them.
In addition, LPAs publish them on their websites to keep a record of what contributions the developers have agreed.
If you are asked to provide a S106 agreement, Fortune Green Legal Practice can help.
Contact us for more details here and read more about S106 agreements here.
Photo by Jakub Zerdzicki: https://www.pexels.com/photo/hand-selecting-pink-house-model-for-real-estate-choice-28763652/
