Section 106 agreements are legal agreements between local planning authorities and developers, linked to specific planning permissions.
The power to require a planning agreement from the prospective developer is set out in section 106 of the Town and Country Planning Act 1990 (as amended) – and this is why they are often referred to as either planning agreements or planning obligations (more on that below) or section 106 agreements.
The legal basis is supported by the policy set out in the National Planning Policy Framework 2021 (NPPF) which explains what tests planning obligations must meet. They have to be:
- 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.
These tests can be found in the Community Infrastructure Levy Regulations 2010 (as amended), making sure that the planning obligation will genuinely make the development proposal acceptable in planning terms.
In some cases, planning agreements can be complex and expensive to put into action. They can include covenants associated with the provision of affordable housing, new schools, town centre improvements, new health centres and many of the other wide-ranging and often essential facilities that need to be factored into major developments.
An application for a major residential development can place extra pressure on the existing infrastructure in the area where the new development is proposed. A section 106 agreement will aim to balance the pressure created by the new development with improvements to the surrounding area.
When it comes to so-called minor developments, however, a section 106 agreement is likely to be on a much smaller scale. An agreement is likely to contain fewer covenants and involve smaller financial contributions, or even none at all. Nevertheless, it is governed by the same legislation and policy provisions, and it is also still important that all parties’ interests are protected.
Is a section 106 agreement always an “agreement?”
Strictly speaking, it is not always necessary for the parties, ie. the developer and the local planning authority, to agree the terms. For this reason, the term planning obligation is often used instead of planning agreement, as this covers agreements and unilateral undertakings, which are covenants offered under the terms of section 106 by the developer acting unilaterally.
For example, where the prospective developer is appealing to the Planning Inspector against the local planning authority’s refusal of permission, they may provide a unilateral undertaking for the Planning Inspector to consider, in the hope that this will overcome any obstacles preventing the grant of planning permission and tip the balance in the appellant’s favour.
What are some typical areas that section 106 agreements cover?
This will vary depending not just on the nature of the development but also on the needs of the area. The most common obligations include:
- Affordable Housing (for larger developments)
- Contributions towards employment and training
- Educational provision
- Parking restrictions (in city centres)
- Town centre improvements
- Contributions towards environmental improvements
These are just a few examples of the typical areas of development planning that you may come across in a s.106 agreement. The context is very important.
To see examples of section 106 agreements in the area of a particular local planning authority, you can search the authority’s website. If you know that there is a planning agreement linked to a specific application you are interested in, you should usually be able to find it by entering the planning application number into the authority’s search tool.
