If you are buying a new-build home or a property on a larger development site, your solicitor may refer to a section 106 agreement. Understanding what a section 106 agreement property buyer UK should look for — and the obligations it creates — is essential due diligence before exchanging contracts. This guide explains what s.106 is, the three main types of obligation, how to find out if your prospective property is affected, and what it means in practice.
What Is a Section 106 Agreement?
A planning obligation under Section 106 of the Town and Country Planning Act 1990 (TCPA 1990) is a legally binding agreement between a local planning authority (LPA) and a developer (and/or landowner) that is used to mitigate the impact of a development on the local area. Planning obligations can be unilateral undertakings (signed by the developer alone) or bilateral agreements (signed by both developer and LPA).
Unlike planning conditions — which are attached directly to a planning permission — s.106 obligations are registered as a local land charge and bind the land itself. They transfer automatically to successive owners: if you buy a property subject to a s.106 obligation, you inherit that obligation.
For a broader introduction to how planning agreements fit into the planning system, see the section 106 agreements explained guide and how to get planning permission for a house in the UK.
The Three Types of S.106 Obligation
1. Financial Contributions
The developer pays a sum of money to the LPA for a specific purpose: highway improvements, school places, open space provision, GP surgery capacity, or community facilities. Financial contributions are normally triggered at specific stages of development (for example, on occupation of the 50th dwelling) and are usually the developer's obligation, not the individual homeowner's. However, some contributions are structured as obligations that could theoretically bind successors in title — your solicitor should check the precise wording.
2. Restrictions on Use
These place limitations on how the land or buildings can be used. Common examples include:
- Restrictions preventing a dwelling from being used as anything other than a principal private residence (preventing buy-to-let or short-term letting)
- Restrictions on alterations, extensions, or permitted development rights
- Employment obligations (requiring the developer to use local contractors)
- Affordable housing obligations (see below)
- Restrictions on occupation until infrastructure contributions are paid
3. Land Transfers
The developer agrees to transfer land to the LPA or a registered provider, typically for affordable housing, public open space, or a community facility. Land transfer obligations bind the developer and do not normally affect individual homeowners directly, though the physical result of the transfer (e.g., a neighbouring affordable housing block) is relevant to buyers of adjacent properties.
How to Find Out If a Property Is Subject to a S.106 Obligation
There are three main routes:
Local Authority Planning Portal
Search for the planning application reference for the development. S.106 agreements are listed as associated documents with the planning permission. Most LPA portals allow free public access. You can find the planning reference on the Land Registry title register or by searching the LPA's planning portal by address or postcode.
HMLR Official Copies
Order official copies of the title register and title plan from HM Land Registry (gov.uk/get-information-about-property — £3 per document). The register entry for the property should reveal whether any planning obligations, local land charges, or unilateral undertakings have been registered against the title. For an explanation of how to read a title register, see the understanding property title deeds UK guide.
Local Land Charges Search (LLC1)
Your solicitor's standard conveyancing searches will include a local land charges search (LLC1), which reveals planning obligations registered as local land charges. However, the LLC1 is a point-in-time snapshot; it does not always describe the full scope of s.106 obligations, so reviewing the actual agreement document is essential for development properties. For a full explanation of conveyancing searches, see the conveyancing searches explained guide.
Affordable Housing Obligations and the Cascade Clause
Affordable housing is one of the most significant types of s.106 obligation. LPAs typically require a proportion of dwellings on sites above a certain threshold (usually 10–25 units) to be provided as affordable housing — typically a mix of social rent, affordable rent, and intermediate products such as shared ownership.
A cascade clause (also called a viability cascade or review mechanism) provides that if the affordable housing provision cannot be delivered in the agreed form within a specified period, the obligation falls back ("cascades") to an alternative — for example, a commuted sum payment in lieu of on-site affordable units.
S.106 vs Community Infrastructure Levy (CIL)
Since 2010, LPAs have been able to adopt a Community Infrastructure Levy (CIL) — a tariff-based charge on new development calculated by reference to the floor area of new buildings. CIL is increasingly used alongside or instead of financial contributions in s.106 agreements for generic infrastructure.
| Section 106 | Community Infrastructure Levy (CIL) | |
|---|---|---|
| Legal basis | TCPA 1990 s.106 | Planning Act 2008; CIL Regulations 2010 |
| Calculation method | Negotiated; site-specific | Fixed rate per m² of floor area |
| Spending flexibility | Must be spent on the specific purpose agreed | LPA can pool for wider infrastructure |
| Affordable housing | Yes — delivered via s.106 | No — CIL cannot fund affordable housing |
| Self-build exemption | N/A (s.106 site-specific) | Yes — self-builders can claim CIL exemption |
| Who pays | Developer; may bind land | Developer; payable in instalments |
Modification and Discharge: Sections 106A and 106B
Planning obligations can be modified or discharged by agreement between the parties under s.106A TCPA 1990, or — if five years have passed since the obligation was entered into — by application to the LPA under s.106B. Under s.106B, the LPA has eight weeks to determine the application; if it refuses, there is a right of appeal to the Planning Inspectorate.
First Homes Scheme Obligations
Since June 2021, the First Homes Scheme has required LPAs in England to deliver a proportion of affordable housing on eligible sites as First Homes — properties discounted at a minimum of 30% from open market value, with the discount locked in perpetuity via a s.106 restriction on the title. When a First Home is resold, it must be sold at the same discounted percentage from market value, and eligibility criteria (first-time buyers, local connection, income caps of £80,000 or £90,000 in London) must be met by the buyer.
If you are buying a First Home, the s.106 restriction is one of the most significant obligations you will inherit. It limits your pool of future buyers and may affect mortgage availability — not all lenders operate in this market. For a guide to shared ownership (another s.106-delivered product), see shared ownership explained UK.
Freehold vs Leasehold and S.106
S.106 obligations can affect both freehold and leasehold properties. For leasehold purchases — particularly flats on development sites — s.106 obligations may interact with service charge arrangements, estate management structures, and use restrictions in the lease itself. Before exchanging on any leasehold flat on a development site, work through the leasehold vs freehold buyer's guide alongside your solicitor's s.106 review.
Practical Checklist for Buyers
| Step | What to Do |
|---|---|
| 1. Ask your solicitor | Request that they obtain and review the full s.106 agreement before exchange, not just the LLC1 search result |
| 2. Check the planning portal | Search the LPA's planning portal for the development's planning reference; download the s.106 as a PDF |
| 3. Identify obligations binding your plot | Many s.106 obligations bind the developer, not individual purchasers — confirm which apply to your specific plot |
| 4. Check for use restrictions | Look for principal-residence restrictions, restrictions on permitted development, or letting restrictions |
| 5. Confirm infrastructure delivery | Ask the developer which s.106 obligations have been discharged and what infrastructure is still outstanding |
| 6. First Homes — confirm mortgage options | If buying a First Home, check which lenders operate in this market before proceeding |
| 7. CIL — check if relevant | If self-building or extending, check whether the LPA has adopted CIL and whether a relief or exemption applies |
Related Guides
- Section 106 Agreements Explained UK — a detailed overview of s.106 from the developer's perspective: financial contributions, affordable housing obligations, and how viability assessments work
- The Conveyancing Process UK Explained — what your solicitor does from offer accepted to completion, including local authority searches that reveal s.106 obligations
- Leasehold vs Freehold: Buyer's Guide UK — how s.106 obligations interact with leasehold service charges and use restrictions on development sites
- Planning Permission in the UK: A Complete Guide — how planning conditions and s.106 obligations work together as planning controls
- Freehold vs Leasehold UK — the key legal and financial differences between the two tenures, relevant for any development site purchase
- Shared Ownership Explained UK — how shared ownership is delivered via s.106 affordable housing obligations, and what restrictions apply