Section 106 Agreements

What is a Section 106 agreement?

A Section 106 agreement relates to a small but very significant part of the Town and Country Planning Act 1990, in its basic form it is a developer agreement. It is often referred to as a ‘Planning Obligation’.

These agreements are a way of delivering or addressing matters that are necessary to make a development acceptable in planning terms. 

The House of Commons Library has produced a briefing paper for Ministers which provides a helpful and up to date guide on Section 106 agreements.

Restrictions on the use of Section 106 agreements

We have a number of Development Control Policies that help inform and describe what planning obligations may be required depending on the nature and scale of development.

The application of these policies are influenced and constrained by a number of Government policies.

First from 6 April 2015, the use of ‘pooled’ contributions toward infrastructure projects has been restricted. Previously, Local Planning Authorities had been able to combine planning obligation contributions towards a single item or infrastructure ‘pot’. However, under the Community Infrastructure Levy Regulation 123(3), LPAs are longer be able to pool more than five planning obligations together if they were entered into since 6 April 2010, and if it is for a type of infrastructure that is capable of being funded by the CIL. These restrictions apply even where an LPA does not yet have a CIL charging schedule in place.

Second a Written Ministerial Statement first made on 28 November 2014 was reintroduced alongside an updated Planning Practice Guidance on 19 May 2016 and which now prevents 'tariff style planning obligations' from being sought on small scale and self-build development in circumstances where the development in 10 dwellings or less or has a combined foorspace of less than 1000 sqm.

In response to the WMS and PPG on 18 February 2015 the Planning Portfolio Holder approved a recommendation the effect of which was to cease securing financial contributions from developments beneath the Government threshold but to continue requiring affordable housing. On 4 March 2015 South Cambridgeshire planning committee decision approved a similar recommendation.

It is important to recognise that the national threshold on section 106 contributions relates to tariff style section 106 planning obligations only. There may well be legitimate circumstances where a financial contribution is required to be paid in respect of a development beneath this threshold in order to mitigate its impact. Such circumstances may relate to the compensation for the loss of wildlife habitat or upgrading a nearby Awarded watercourse.

Third a planning obligation may only constitute a reason for granting planning permission for the development if the obligation is: 

  1. Necessary to make the development acceptable in planning terms.
  2. Directly related to the development; and
  3. Fairly and reasonably related in scale and kind to the development

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