Planning obligations under Section 106 of the Town and Country Planning Act 1990 (as amended), commonly known as s106 agreements, are a mechanism which make a development proposal acceptable in planning terms, that would not otherwise be acceptable.

They are focused on site specific issues to minimise the impact of development on the local area.

S106 agreements are often referred to as ‘developer contributions’ as there may be a financial burden or obligations to create things such as open space, playgrounds and so on within the development.

The common uses of planning obligations are to secure affordable housing, and to specify the type and timing of this housing; and to secure financial contributions to provide infrastructure or affordable housing. However, these are not the only uses for a s106 obligation. A s106 obligation can:

  1. restrict the development or use of the land in any specified way
  2. require specified operations or activities to be carried out in, on, under or over the land
  3. require the land to be used in any specified way; or
  4. require a sum or sums to be paid to the authority (or, to the Greater London Authority) on a specified date or dates or periodically.

It is important that legal advice is taken on the Section 106 Agreement and that any costs are built into the overall cost of the development. Depending on the obligations, it can have a large impact on your return on investment and general development strategy.

It is important to note that there are limits on what can be imposed through the Section 106 Agreement, so if the provisions seem onerous, please take legal advice before agreeing to them.

Planning obligations should only be sought where they meet all of the following tests:

  • 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.

The local authority has to give reasons for the conditions when a decision is issued.

Additionally, from October 2018, the local authority will usually have to seek the applicant’s consent before approving applications subject to ‘pre-commencement conditions’. This is to help ensure that such conditions are discussed between the parties and that mutually beneficial outcomes can be achieved.

If you are not prepared to accept the conditions you should discuss your objections with the authority, who may be able to suggest ways of resolving them. Alternatively, once the decision has been issued, you can appeal against the condition(s) that you do not agree with or make a subsequent application to have them varied or removed.

Should you need specialist advice, please contact Complete Property Deal who can assist.


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