What Is S106 Funding?

In the realm of property development and planning, Section 106 (S106) funding plays a pivotal role in facilitating infrastructure improvements, affordable housing provision, and community benefits associated with new developments. However, there is often confusion surrounding the nature and purpose of S106 funding. In this article, What Is S106 Funding, we take a look at the process and mechanism involved.

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What is S106 Funding?

Section 106 of the Town and Country Planning Act 1990 empowers local planning authorities to enter into legally binding agreements with developers, known as Section 106 agreements or planning obligations. These agreements typically accompany the grant of planning permission for new development projects and specify certain obligations and requirements that the developer must fulfil as a condition of planning consent.

S106 funding refers to financial contributions or payments made by developers to local planning authorities to mitigate the impact of development on the local area and provide necessary infrastructure and amenities. The funds collected through S106 agreements are earmarked for specific purposes outlined in the agreement and are used to support community infrastructure, affordable housing initiatives, public services, and environmental enhancements.

Key Elements of S106 Funding

S106 funding arrangements typically involve the following key elements:

• Affordable Housing Provision: Developers may be required to contribute financially towards the provision of affordable housing as part of the S106 agreement. This could involve funding the construction of affordable homes within the development or making financial contributions towards affordable housing projects elsewhere in the local area.
• Infrastructure Improvements: S106 agreements often include provisions for funding infrastructure improvements to support the new development and address the additional demands placed on local services and amenities. This may include funding for road improvements, public transport enhancements, utilities infrastructure, and community facilities.
• Open Space and Recreation: Developers may be required to provide or fund the creation of open spaces, parks, and recreational facilities within or near the development site to enhance the quality of life for residents and promote community wellbeing.
• Education and Healthcare: S106 funding may be allocated towards improving educational facilities, such as schools and colleges, or healthcare services, such as hospitals and medical centres, to accommodate the needs of the growing population resulting from the new development.
• Environmental Mitigation: Developers may be required to contribute towards environmental mitigation measures to offset the impact of development on the natural environment, such as tree planting, habitat creation, or pollution control initiatives.

Legal Framework for S106 Funding

S106 funding operates within a robust legal framework governed by legislation, policy guidance, and case law. Key aspects of the legal framework for S106 funding include:

• Town and Country Planning Act 1990: Section 106 of the Town and Country Planning Act 1990 provides the statutory basis for planning obligations, including S106 agreements, and sets out the legal requirements and procedures for entering into such agreements.
• National Planning Policy Framework (NPPF): The NPPF sets out the government’s planning policies and principles, including guidance on the use of S106 agreements to secure planning obligations. Local planning authorities are required to adhere to the policies and objectives outlined in the NPPF when negotiating and implementing S106 agreements.
• Local Development Plans: Local planning authorities develop Local Development Plans (LDPs) that set out their strategic priorities and objectives for development within their jurisdiction. S106 agreements are often negotiated in accordance with the policies and priorities identified in the LDP.
• Case Law: Legal precedents established through court decisions and appeals provide guidance on the interpretation and application of S106 agreements, particularly in relation to matters such as the scope of planning obligations, the enforceability of agreements, and the calculation of financial contributions.

Implications for Stakeholders

S106 funding has significant implications for various stakeholders involved in the planning and development process:

• Developers: Developers are responsible for negotiating and fulfilling the obligations outlined in S106 agreements, including making financial contributions towards infrastructure, affordable housing, and community facilities. S106 funding requirements can impact project costs and profitability, so developers must carefully assess and plan for these obligations.
• Local Authorities: Local planning authorities play a crucial role in negotiating S106 agreements with developers and overseeing the implementation of planning obligations. S106 funding provides vital resources for local authorities to deliver essential infrastructure and services, but they must ensure transparency, accountability, and effective management of funds.
• Communities: S106 funding can bring tangible benefits to local communities by supporting the provision of affordable housing, improving infrastructure, and enhancing public amenities. However, communities must be involved in the consultation and decision-making process to ensure that S106 funding addresses their needs and priorities.

Conclusion

S106 funding is a vital mechanism for delivering essential infrastructure, affordable housing, and community benefits associated with new development projects in England and Wales. By providing a framework for developers to contribute financially towards mitigating the impact of development on the local area, S106 agreements play a crucial role in promoting sustainable development and enhancing the quality of life for residents. Understanding the nature, purpose, and legal framework of S106 funding is essential for stakeholders involved in the planning and development process, ensuring that S106 agreements are negotiated, implemented, and managed effectively to deliver positive outcomes for communities and the built environment.

How we can help

We have a proven track record of helping clients deal with the legal aspects of S106 funding. 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 funding. 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.

Authored by Ben Posted in Blog, News Tagged as

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