What Is A Section 106 Agreement?

section 106 agreement is an agreement between a developer and a local planning authority about measures that the developer must take to reduce their impact on the community. A section 106 agreement is designed to make a development possible that would otherwise not be possible, by obtaining concessions and contributions from the developer. It forms a section of the Town And Country Planning Act 1990.

A section 106 agreement may be modified or discharged, for help negotiating this process a planning expert's help should be sought.

Section 106 agreements may also be known as S106 agreements or planning obligations, or section 106 planning agreements, but they all currently refer to the same thing and can be interpreted as equivalent terms. 


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Rules Governing Section 106 Agreements

A section 106 agreement must meet the following requirements:

  • It must be necessary.
  • It must be relevant.
  • It must be reasonable.

To expand on these requirements:

  • A section 106 agreement must be necessary to make the development acceptable in terms of planning.
  • A section 106 agreement must be directly related to the development in question.
  • A section 106 agreement must be fair in terms of scale and type when compared with the development.

Beyond these rules, viability and the wider economy play a role in determining the scope and scale a section 106 agreement should have.


Section 106 Agreement Viability Checklist

The viability of a section 106 agreement will usually be based on the following factors:

  • Land value
  • Related land costs and fees
  • Site investigation, preparation and infrastructure costs
  • Abnormal construction costs
  • Building costs
  • Taxes and duties
  • Planning and other obligations
  • Costs of capital and debt financing
  • Housing grant availability
  • Gross development value (GDV)
  • Sales costs
  • Developers' profits
  • Contingency allowances (if any)

Need Help With A Section 106 Appeal?

If you need help with removing or negotiating a section 106 agreement, get in touch with KSLaw.

We have a great amount of experience with planning law and a fantastic track record of achieving amazing results for our clients.

If you'd just like more information, send us a message and we'll get back to you as soon as possible. In the mean-time, there are several government sites that attempt to provide clarity and guidance on the key issues.