S106 Agreements Explained
A section 106 (S106) agreement is a legally binding agreement or planning obligation between a property owner and a local planning authority. S106 agreements are intended to mitigate the adverse effects of a proposed development on the surrounding infrastructure and community. In this article, S106 Agreements Explained, we take a look at the process and mechanism involved.
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What is the purpose of a S106 agreement?
In accordance with Section 106 of the Town and Country Planning Act 1990, the granting of planning permission by a local planning authority may involve the landowner in a legally binding agreement or planning obligation. The agreement is referred to as a section 106 obligation.
These agreements serve as a means of conveying or resolving issues that are essential for the planning department to approve of a development. They may be utilised to finance affordable housing, highways, recreational facilities, education, and healthcare, among other infrastructure and service provision.
Prior to the implementation of the Community Infrastructure Levy (CIL) on September 1st 2016, developers were liable to pay a contribution or guarantee the provision of open space or amenities in proportion to the quantity and scale of the dwellings under construction. Following this, the funds are utilised to construct amenities that cater to the influx of new inhabitants in the locality.
Additional infrastructure and facilities, including affordable housing and highway improvements, are managed in collaboration between the local authority in question and other collaborating entities, including the highways authority.
A local authority can require the execution of an S106 Agreement if the subsequent conditions are met:
- The fulfilment of the planning obligation is necessary for a development to be deemed acceptable from a planning standpoint.
- The planning obligation is intrinsically linked to the proposed development.
- The planning obligation exhibits a just and reasonable correlation with the nature and magnitude of a development.
In accordance with Section 106 of the Town and Country Planning Act of 1990, a planning obligation stipulated in an S106 Agreement may:
- Limit the land’s development or use in a predetermined manner;
- Require the execution of particular operations or activities on, beneath, within, or above the property;
- Require the land’s use in a particular manner; or
- Require mandatory payment of a sum or sums to the local authority on a predetermined date or on a periodic basis.
Obligations pertaining to planning may be conditional or unconditional, and they may impose requirements or restrictions permanently or for specified time periods.
Tips for negotiating a s106 agreement
Verify that the commitments requested by the LPA (Local planning authority) are essential for the development to be deemed acceptable in planning terms, are directly and reasonably connected to the development in terms of scale and nature and are in accordance with any conditions that may be attached to the planning permission or any Community Infrastructure Levy that may be owed.
Early on, determine who has an interest in the pertinent land. The LPA may require all parties with a vested interest in the property, including mortgagees, to sign the obligation. Short-term tenants may be subject to exclusion under certain conditions. It is essential to thoroughly examine the title in order to ascertain the interests that are present. Obligations may be unilateral (where the LPA declines to fulfil them) or contractual (where it accepts them).
Generally, obligations are incurred upon the commencement of construction or the occupation of particular portions of the development. Occupancy-based obligations are frequently imposed on residential developments upon the completion of a certain number of houses. Verify that the triggers are compatible with your construction schedule and that the definitions of Commencement of Development and Occupation include any necessary exclusions. Occupation should typically be excluded from fit-out considerations.
How we can help
We have a proven track record of helping clients deal with S106 agreements. We will guide you through the process and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact Our Commercial Property Solicitors
It is important for you to be well informed about the issues and possible implications of S106 agreements. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Commercial Property solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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