When a developer applies for planning permission to build homes, the local planning authority often wants something in return — a contribution towards affordable housing, new roads, school places, or green space. The legal mechanism that secures those contributions is known as a Section 106 agreement, or s.106 obligation. If you're buying a new-build or a property on a larger development site, there's a reasonable chance a s.106 agreement is attached to the land. This guide explains what it is, how it works, and what you need to know as a buyer.
What Is a Section 106 Agreement?
A Section 106 agreement is a legal obligation entered into under Section 106 of the Town and Country Planning Act 1990. It is a planning condition — not a separate contract between private parties, but a charge on the land itself — that runs with the title. This means the obligations bind not just the original developer but also future owners and occupiers of the land unless specifically discharged.
The purpose of s.106 is to make an otherwise unacceptable development acceptable in planning terms. Local planning authorities (LPAs) cannot impose conditions that go beyond what is reasonable and necessary to mitigate the impact of the development. The obligations must be:
- Necessary to make the development acceptable in planning terms
- Directly related to the development
- Fairly and reasonably related in scale and kind to the proposed development
This three-part test, enshrined in the NPPF (National Planning Policy Framework) and regulation 122 of the Community Infrastructure Levy Regulations 2010, is the legal basis on which LPAs negotiate s.106 content.
What Developers Are Typically Asked to Contribute
The specific obligations vary enormously by local authority and development type, but common categories include:
| Obligation Category | Typical Form | Example |
|---|---|---|
| Affordable housing | On-site provision or off-site commuted sum | 25–40% of units as affordable rent or shared ownership |
| Highway improvements | Works or financial contribution | Junction upgrades, new bus stops, footpath widening |
| Education | Financial contribution to LPA | £3,000–£6,000 per dwelling for school places |
| Open space / parks | On-site land dedication or commuted sum | Play areas, formal parkland maintained by a management company |
| Healthcare | Financial contribution to NHS | Contribution to GP surgery expansion |
| Ecology / biodiversity | Habitat creation, management plans | Wildflower meadows, bat boxes, management company obligations |
| Travel plans | Ongoing monitoring and reporting | Car club memberships, cycling infrastructure |
For residential developments of 10 or more dwellings, the affordable housing requirement is often the dominant obligation — and in many parts of England, the LPA will require 20–40% of all homes to be provided as affordable housing, either on-site or through an equivalent financial payment.
Section 106 vs Community Infrastructure Levy (CIL)
CIL is a separate charge introduced by the Planning Act 2008 and brought into effect by the Community Infrastructure Levy Regulations 2010. Many people confuse the two, but they operate very differently.
| Feature | Section 106 | CIL |
|---|---|---|
| Legal basis | Town and Country Planning Act 1990, s.106 | Planning Act 2008; CIL Regulations 2010 |
| Who pays | Developer (negotiated) | Developer (set by LPA schedule) |
| How it's set | Negotiated case by case | Fixed charge per square metre |
| What it funds | Site-specific mitigation | General infrastructure across the area |
| Can it be pooled? | Limited pooling rules since 2010 | Yes — pooled across multiple contributions |
| Indexed? | Sometimes, by negotiation | Yes — typically RPI or construction index |
| Applies to | Usually larger developments | Most developments above a threshold floorspace |
| Runs with land? | Yes | Charged on commencement, not the land title |
Not all LPAs have adopted CIL — adoption requires a charging schedule and examination process. Where CIL has been adopted, the use of pooled s.106 contributions to fund general infrastructure has been restricted: LPAs cannot pool more than five s.106 obligations towards the same piece of infrastructure.
How Section 106 Is Negotiated
S.106 obligations are negotiated during the planning application process — typically between the developer's planning consultants and the LPA's planning officers, with input from statutory consultees (highways authority, education authority, NHS, etc.).
The process works broadly as follows:
- The developer submits a planning application.
- Statutory consultees respond with infrastructure requirements.
- The LPA and developer negotiate the terms of a draft s.106.
- Once agreed, the s.106 is formally executed (signed as a deed) before planning permission is granted.
- The permission is issued and the s.106 is registered against the title at HM Land Registry.
Negotiations can take weeks or months on complex sites. The developer is typically represented by a planning solicitor; the LPA is advised by its legal team and planning officers.
Viability Assessments: The "Not Viable" Argument
Developers sometimes argue that meeting the LPA's s.106 requirements would make the development financially unviable — that the scheme simply cannot proceed if the obligations are as large as the LPA wants. This argument is supported by a formal document called a viability assessment.
Viability assessments model the development's costs and revenues to estimate a Residual Land Value (RLV). If the RLV after meeting obligations is lower than the Benchmark Land Value (BLV) — the price a landowner would reasonably accept — the developer argues the scheme is unviable and obligations should be reduced.
This is an area of significant controversy. The NPPF states that where a viability assessment is submitted, "the weight to be given to a viability assessment is a matter for the decision maker, having regard to all the circumstances in the case." The National Planning Policy Guidance (NPPG) sets out how assessments should be conducted, including the profit margins and land values that should be used — but there is considerable room for dispute between developers and LPAs over the inputs.
Crucially, planning permission is sometimes granted with lower s.106 obligations than originally sought, with a review mechanism allowing the LPA to "clawback" additional contributions if the development proves more profitable than the viability assessment predicted.
What Happens If a Developer Doesn't Comply?
A s.106 agreement is a legally enforceable deed. If a developer fails to comply, the LPA has several remedies:
- Injunction — requiring the developer to carry out the obligation or stop carrying out works
- Civil proceedings — to recover a financial contribution that has fallen due but not been paid
- Restriction on the title — if registered, the LPA can prevent disposal of the land until obligations are discharged
In practice, enforcement is relatively rare on well-resourced developments, because the developer's solicitors will typically ensure obligations are triggered and discharged as required. Problems more often arise on phased developments where the developer becomes insolvent mid-build, or on small developments where monitoring is less rigorous.
Buyer Implications: What to Check Before You Exchange
If you're purchasing a new-build or any property on a larger residential development site, your conveyancing solicitor should check the following:
Does a s.106 agreement exist? The title register will show any registered obligation; the planning register on the LPA's website will contain the executed deed.
What obligations are ongoing? Some s.106 obligations — particularly those relating to management companies, open space maintenance, and travel plans — can bind occupiers, not just owners. If you're buying a flat or a home on a private estate managed by a residents' management company, the s.106 may underpin obligations passed down through the lease or transfer.
Have contributions been paid? On a completed development, most financial contributions will have been paid and can be confirmed as discharged. On an ongoing phased development, some may still be due on future phases.
Are there occupancy restrictions? On sites with affordable housing, there may be s.106 restrictions on who can occupy certain units (local connection requirements, income caps for shared ownership). These won't apply to open-market homes, but they affect resale flexibility on affordable units.
Estate management charges: Many modern developments are subject to estate management charges — for maintaining roads, communal open space, and landscaping — that sit alongside or flow from the s.106. These charges are not covered by the Landlord and Tenant Act 1985 in the same way service charges on leasehold flats are, though the Leasehold and Freehold Reform Act 2024 includes provisions to extend regulation to such charges.
How to Check If a Property Has a Section 106 Obligation
- HM Land Registry — Download the title register (£3 per document at gov.uk/get-information-about-property). Charges, restrictions, and obligations are recorded in the C (Charges) Register.
- Local planning authority planning portal — Search by address or planning reference number. The s.106 deed should be listed as a document associated with the planning application.
- Your solicitor's local authority search — The official local authority search (CON29 form) will reveal whether a s.106 agreement affects the property.
- Developer's sales pack — On new-build purchases, the developer is required to disclose material information including planning obligations.
Conclusion
Section 106 agreements are a fundamental part of how the UK planning system secures community benefits from new development. As a buyer, the key questions are: what obligations run with the title you're acquiring, which have been discharged, and which remain active? Your conveyancing solicitor should be asking those questions as standard — but it's worth prompting them explicitly if you're buying on any site larger than a handful of homes.
For more on the planning process, see our guides on how to get planning permission for a house in the UK and home extensions: permitted development vs planning permission. If you are buying a property on a development site and need a detailed checklist covering how to find s.106 documents, First Homes obligations, CIL, and cascade clauses, see the section 106 agreements: what property buyers need to know.