Section 106 Agreement

Legal Framework

Section 106 Agreements are legally binding and enforceable covenants that run with the land, meaning they bind successive owners. They make development proposals acceptable in planning terms, which might otherwise be refused.

Town and Country Planning Act 1990

Section 106 of the Town and Country Planning Act 1990 provides the statutory basis for these agreements. It allows local planning authorities to negotiate with developers to secure planning obligations.

National Planning Policy Framework (NPPF)

The NPPF sets out the government’s planning policies for England and guides the use of planning obligations. It emphasises that planning obligations should only be used where necessary to make the development acceptable, directly related to the development, and fairly and reasonably related in scale and kind.

Community Infrastructure Levy (CIL) Regulations 2010

The CIL Regulations govern the use of planning obligations alongside the Community Infrastructure Levy, ensuring that there is no duplication in contributions and that they meet the statutory tests of necessity, relevance, and proportionality.

Importance of Section 106 Agreements

Section 106 Agreements play a vital role in ensuring that the impacts of new developments are adequately managed and that the necessary infrastructure and services are provided to support sustainable communities.

Mitigating Development Impact

Section 106 Agreements help mitigate the adverse impacts of development on local communities and the environment. Contributions can include affordable housing, transport infrastructure, education facilities, open spaces, and community services.

Enhancing Community Benefits

These agreements ensure that developments contribute positively to the local area by providing or improving infrastructure and services. This enhances the overall quality of life for residents and promotes sustainable development.

Securing Affordable Housing

One of the primary uses of Section 106 Agreements is to secure affordable housing. Developers are often required to provide a percentage of affordable housing within new developments or make financial contributions to off-site affordable housing.

Supporting Local Planning Policies

Section 106 Agreements help local authorities achieve their planning objectives and policies, ensuring that development is aligned with the local plan and other strategic priorities.

The Process of Negotiating a Section 106 Agreement

Negotiating a Section 106 Agreement involves several stages, each requiring careful consideration and adherence to legal requirements to ensure a fair and enforceable agreement.

Pre-Application Discussions

Early engagement between developers and local planning authorities is crucial. Pre-application discussions help identify the likely planning obligations and their scope, allowing developers to consider these in their planning and financial appraisals.

Planning Application Submission

When submitting a planning application, developers should include details of the proposed planning obligations. This can be a draft of the Section 106 Agreement or a heads-of-terms document outlining the fundamental obligations.

Negotiation and Agreement

Negotiation of the Section 106 Agreement typically takes place alongside the planning application process. Key considerations include:

• Necessity: The obligation must be necessary to make the development acceptable in planning terms.
• Direct Relationship: The obligation must relate directly to the proposed development.
• Proportionality: The scale and kind of the obligation must be fairly and reasonably related to the development.

Drafting the Agreement

Once the terms are agreed upon, the Section 106 Agreement is drafted. This legally binding document sets out the developer’s and local authorities’ obligations, including the timing and triggers for delivering them.

Legal Review and Signing

Legal advisors review the draft agreement for both the developer and the local authority to ensure compliance with legal requirements and accuracy. Once finalised, the agreement is signed by both parties and formally executed.

Planning Permission Grant

The grant of planning permission is usually conditional upon completing the Section 106 Agreement. Once the agreement is signed, planning permission can be formally granted, and the development can proceed.

Key Components of a Section 106 Agreement

A comprehensive Section 106 Agreement includes several key components, each essential for defining the obligations and ensuring their enforceability.

Definitions and Interpretations

The agreement should include clear definitions and interpretations of key terms to avoid ambiguities and ensure all parties understand the obligations.

Planning Obligations

This section outlines the specific obligations of the developer, which may include:

• Affordable Housing: Provision of on-site affordable housing or financial contributions for off-site affordable housing.
• Infrastructure Contributions: Contributions to transport infrastructure, education facilities, healthcare services, and public open spaces.
• Environmental Mitigations: Measures to mitigate environmental impacts, such as biodiversity offsetting or sustainable drainage systems.
• Community Facilities: Provision or improvement of community facilities, such as parks, libraries, and sports centres.

Triggers and Timings

The agreement should specify the triggers and timing for delivering the obligations. This includes critical milestones, such as the commencement of development, the occupation of units, or the completion of specific phases.

Monitoring and Enforcement

Details of how the obligations will be monitored and enforced should be included. This ensures the local authority can track compliance and act if the obligations are unmet.

Dispute Resolution

The agreement should outline the procedures for resolving any disputes that may arise, including mediation or arbitration processes.

Indexation and Review Mechanisms

Provisions for indexation of financial contributions to reflect changes in costs over time and review mechanisms to reassess obligations if the development context changes.

Benefits of Section 106 Agreements

Section 106 Agreements offer numerous benefits, ensuring that developments contribute positively to local communities and align with planning policies.

Enhanced Community Infrastructure

Section 106 Agreements secure essential contributions to community infrastructure, ensuring that new developments do not strain existing services and facilities. This enhances the quality of life for residents and supports sustainable communities.

Increased Affordable Housing

By securing affordable housing contributions, Section 106 Agreements help address housing shortages and provide homes for lower-income households. This promotes social inclusion and diversity within communities.

Environmental Protection

These agreements often include obligations for environmental mitigation, such as green spaces, sustainable drainage, and biodiversity enhancements. This helps protect and enhance the natural environment.

Legal Certainty

Section 106 Agreements provide legal certainty for both developers and local authorities. The clearly defined obligations and conditions ensure that all parties understand their responsibilities and the development can proceed smoothly.

Challenges and Considerations

While Section 106 Agreements provide significant benefits, they also present certain challenges and considerations.

Complexity and Negotiation

Negotiating a Section 106 Agreement can be complex and time-consuming, requiring careful consideration of legal, financial, and planning issues. Early and continuous engagement between developers and local authorities is essential.

Financial Viability

The obligations imposed by a Section 106 Agreement can impact the financial viability of a development. Developers must carefully assess the costs and ensure that the project remains economically feasible.

Compliance and Enforcement

Ensuring compliance with the obligations and enforcing the terms of the agreement can be challenging. Local authorities need effective monitoring and enforcement mechanisms to track progress and address breaches.

Changing Circumstances

Developments can span several years, during which time circumstances can change. Provisions to review and modify the agreement are essential to ensure the obligations remain relevant and achievable.

Case Studies and Examples

Urban Regeneration Project

An urban regeneration project in a deprived area included a Section 106 Agreement securing significant contributions to affordable housing, public transport improvements, and community facilities. The agreement ensured that the development provided much-needed housing and enhanced the local infrastructure, contributing to the area’s revitalisation.

Large-Scale Residential Development

A large-scale residential development on the outskirts of a city involved a Section 106 Agreement that secured contributions to new schools, healthcare facilities, and green spaces. The agreement included phased triggers for delivering these obligations, aligned with the development’s progress. This ensured the necessary infrastructure was in place to support the growing community.

Mixed-Use Development

A mixed-use development in a town centre included a Section 106 Agreement with obligations for affordable housing, public realm improvements, and transport infrastructure. The agreement also included provisions for environmental sustainability, such as green roofs and energy-efficient buildings. This comprehensive approach ensured that the development contributed positively to the town’s social, economic, and environmental sustainability.

Legal Instruments and Safeguards

Several legal instruments and safeguards ensure the effective implementation and enforcement of Section 106 agreements.

Legal Review and Advice

Seeking legal review and advice ensures that the Section 106 Agreement is legally sound and compliant with relevant regulations. Solicitors can provide valuable guidance on negotiating and drafting the agreement.

Monitoring and Reporting

Effective monitoring and reporting mechanisms are essential for tracking compliance with the obligations. This includes regular progress reports, site inspections, and financial audits.

Enforcement Powers

Local authorities have enforcement powers to ensure compliance with the terms of the agreement. This can include issuing enforcement notices, seeking court orders, and imposing financial penalties for breaches.

Dispute Resolution Mechanisms

In the event of a dispute, the agreement should include clear procedures for resolution. This can involve mediation, arbitration, or court recourse, providing a structured process for addressing disagreements.

Best Practices

Adopting best practices can enhance the effectiveness and success of Section 106 agreements.

Early and Continuous Engagement

Early and continuous engagement between developers and local authorities is crucial for identifying potential obligations and negotiating fair and reasonable terms. This proactive approach helps prevent delays and ensures that all parties are aligned.

Clear and Transparent Communication

Maintaining clear and transparent communication throughout the negotiation and implementation process helps prevent misunderstandings and disputes. This includes regular updates and consultations with stakeholders.

Thorough Financial Appraisals

Conducting thorough financial appraisals ensures the obligations are economically viable and do not jeopardise the development’s feasibility. This includes assessing the impact of the obligations on the project’s overall costs and profitability.

Flexibility and Adaptability

Including provisions for review and modification of the agreement allows flexibility and adaptability to changing circumstances. This ensures the obligations remain relevant and achievable throughout the development’s lifecycle.

Robust Monitoring and Enforcement

Implementing robust monitoring and enforcement mechanisms ensures the obligations are met and any breaches are promptly addressed. This includes regular progress reports, site inspections, and financial audits.

Conclusion

Section 106 Agreements are a vital tool in the UK’s planning system. They ensure that new developments contribute positively to local communities and align with planning policies. By securing contributions to infrastructure, affordable housing, and environmental sustainability, these agreements help mitigate development impacts and promote sustainable communities.

At DLS Solicitors, we are committed to providing comprehensive support and guidance to clients navigating the complexities of Section 106 Agreements. Our expertise ensures clients achieve the best possible outcomes when dealing with residential, commercial, or mixed-use developments.

By adopting best practices, seeking professional advice, and maintaining clear communication, developers and local authorities can effectively manage Section 106 Agreements and achieve positive outcomes. When managed correctly, these agreements can facilitate sustainable development, enhance community benefits, and ensure the long-term success of projects.