Planning Obligations, Section 106 Agreements And The Community Infrastructure Levy

Planning obligations, Unilateral Undertakings, Section 106 Agreements and the Community Infrastructure Levy are all closely related concepts in planning law.

If you already know that you need professional advice on planning obligations, we'd encourage you to get in touch and take advantage of our sophisticated and forward-thinking service.

Alternatively, if you aren't entirely sure of the distinctions between these areas of planning law, or are simply interested in learning more before you call, we explain more below.

Planning Obligations

A planning obligation is a legal agreement entered into by a developer to provide infrastructure and services. The infrastructure and services may be on or off the site, and may involve paying sums of money. A planning obligation covers legal agreements to provide infrastructure and services that cannot be covered by planning conditions.

Unilateral Undertakings, Section 106 Agreements and the Community Infrastructure Levy are all related to planning obligations.

A Community Infrastructure Levy is a planning charge designed to pay for infrastructure costs within the community, and is chargeable on specific kinds of development.

A Unilateral Undertaking is a simple, relatively straightforward type of planning agreement.

A Section 106 Agreement is a method for setting up planning obligations related to affordable housing and site-specific infrastructure.

Community Infrastructure Levy

A CIL or Community Infrastructure Levy is a particular kind of planning charge introduced in 2008, enforced in 2010, and designed to provide funds for infrastructure within the community. A CIL differs from a Section 106 Agreement in that it is not applicable to affordable housing or site-specific infrastructure requirements.

Infrastructure is quite broadly defined, and may equally refer to a park or a surgery, an education program or waste management. A CIL may not provide funds for anything other than infrastructure, the maintenance of infrastructure, or for paying the administration costs associated with the Community Infrastructure Levy. That said, the funds gained from a CIL have no time limit for expenditure, and may be saved or even used to generate interest (that is also earmarked for spending on infrastructure).

Do I Have To Pay A Community Infrastructure Levy?

You may have to pay a CIL if:

  • You are building a new house or flat of any size that is not a 'self-build' property or
  • You are creating additional floor space and
  • The total internal area of new build exceeds 100 square metres

You may be exempt from paying a CIL if:

  • You count as a 'self-builder' – you are developing a property that you will live in yourself
  • You are building social housing
  • You are building a charitable development
  • You are restoring a vacant building to its former use
  • No-one ever goes in; or, people only go in very infrequently to check on machinery or for other infrequent maintenance tasks
  • You are building a structure that is not a building, such as a wind turbine
  • Your local authority has specifically decided that developments like yours should never be liable for a CIL

Bear in mind that there are clawback clauses within some of these exemptions that means that if you change the use, purpose or nature of a development at a later date, you might have to pay a CIL.

These exemptions are also based on highly technical definitions, and intuitive or accessible definitions such as the ones we've provided here will not be accurate for all cases.

Unilateral Undertaking

A Unilateral Undertaking is a relatively simple kind of planning agreement, which will be entered into by the owner of the land on the development site, and by any other person or company that has a legal interest in the site. Their principle benefit is their speed, while their principle drawback is that in some cases they can have unexpectedly painful repercussions (see the case of R (on the application of Millgate Developments Ltd) v Wokingham Borough Council).

A Unilateral Undertaking involves the payment of money that must be paid before development begins, in addition to a Unilateral Undertaking charge that is designed to cover the local authority's costs in managing and monitoring the Unilateral Undertaking.

The Unilateral Undertaking charge can take one of the following forms, depending on circumstances:

  • For Section 106 contributions below £5,000, a Unilateral Undertaking charge of £250
  • For Section 106 contributions between £5-10,000 a Unilateral Undertaking charge of £500
  • For Section 106 contributions above £10,000, a Unilateral Undertaking charge of 10% of the planning fee

Section 106 Agreements

A Section 106 Agreement has often been practically synonymous with planning obligations. A planning obligation is not, however, a Section 106 Agreement; rather, a Section 106 Agreement is a method to obtain planning obligations.

In recent years, CILs and Unilateral Undertakings have been increasingly used to supplement Section 106 Agreements with ways of arranging planning obligations that cover different kinds of infrastructure. Where these planning obligations are less appropriate, a Section 106 Agreement is a very powerful tool for enabling developments to go ahead in a way that offers value to both the developer and the community.

For example, a CIL would be inappropriate for meeting site-specific infrastructure requirements, while a Section 106 Agreement would be more appropriate than other options for providing affordable housing.

There is no such thing as a straightforward Section 106 Agreement because they uniquely draw on land law and land use planning in a manner that is a trap for the inexperienced and can lead to immense financial losses if there is a mistake. Let us guide you through the process to safeguard your position.

Our Section 106 Experience

We have been involved with Section 106 agreements from their outset, when they were usually known as Section 52 Agreements. Judicial decisions in this area where we have been instructed routinely appear in all the main planning bulletins, encyclopaedias, and indeed some of the cases are referred to in government circulars and statements. If you ask us to help you, our expertise can be used for your benefit.

The importance of S106 is frequently under-estimated in delivery of planning permission on appeal and we are happy to explore the possibilities for your project.

If you're interested in learning about Section 106 agreements in more detail, we have a full article available to help clarify what exactly a Section 106 agreement is (or, in Scotland, a Section 75 agreement).

What A Section 106 Agreement Should Be

A section 106 agreement should be necessary, relevant and reasonable.

These terms are able to take changes over time into account. If, for example, a change in the economy means that the original agreement is no longer reasonable for your business, you might be able to renegotiate or discharge the agreement. The ability to renegotiate or discharge a section 106 agreement when it is no longer fair or necessary can sometimes make or break a project.

Primary Advisors

We are very happy to act as subordinate advisors to architects and planning consultants who are at the stage where the principle of development is approved subject to an agreement. We can provide discreet advice to such primary advisors.

Can We Help You?

Please call us on 01634 811 118, complete our online enquiry form, or email our planning law UK expert Nicholas Kingsley-Smith.

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