A 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. The agreement 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.
In certain circumstances, a section 106 may be modified or discharged. For help negotiating this process, you should seek the help of a planning expert.
Section 106 agreements may also be known as S106 agreements or planning obligations or section 106 planning agreements or planning obligations. However, they all currently refer to the same thing and can be interpreted as equivalent terms.
How Long Do Section 106 Agreements Last?
The duration of a s106 will be dependent on the agreement itself. Some may last for a number of years, while others span decades. They can also change or be discharged within the agreed period of time.
Rules Governing Section 106 Agreements
The government has listed the s106 rules over on their website, which you can read here, summarising that an agreement is:
- Necessary to make the development acceptable in planning terms
- Directly related to the development
- Fairly and reasonably related in scale and kind to the development
To expand on these requirements:
- An agreement must be necessary to make the development acceptable in terms of planning. In other words, without the agreement, the development would not be deserving of approval
- It must be fairly and reasonably related to the development in question. This means that the benefits a local authority receives from the agreement, and the things that the developer is required to do, should have something to do with the development. An obligation to build a new road many miles away that does not serve the development, for example, would probably not be related to a development
- The 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.
Viability
A viability assessment (VA) or report confirms whether or not the proposed development is financially feasible. They can be area- and site-specific, considering the impact on the location as a whole as well as the intricacies of the development land itself.
The viability of an s106 is usually 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 Agreement?
If you need help with removing or negotiating a section 106 agreement, get in touch with Kingsley Smith Solicitors. We have a vast amount of experience with planning law and a track record of achieving results for our clients. We’ve worked closely with planning consultants, architects and developments, advising where we can to ensure that their S106 works for them.
If you'd just like more information, send us a message and we'll get back to you as soon as possible.
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