What is a Section 106 Agreement?
If you are a developer and seeking planning permission for your latest project, the Local Planning Authority may require a Section 106 Agreement before granting planning permission.
What is a Section 106 Agreement?
A Section 106 Agreement is a legally binding agreement made under Section 106 of the Town and Country Planning Act 1990. Typically, this type of agreement is made between the local authority, landowner, developer or any other party who has an interest in the land.
What are Section 106 Agreements for?
The purpose of a Section106 Agreement is to mitigate the impacts of the developer proposals which would otherwise make the development unacceptable in planning. As the s.106 Agreement works alongside the planning conditions and Community Infrastructure Levy (“CIL”), it addresses the issues with the development which cannot be dealt with by planning conditions alone. The Section 106 Agreement secures the development or use of the land as it requires a person or entity to undertake specific actions, provide financial contributions or refrain from certain activities.
In addition, the obligations run with the land, which means that the obligations are binding on successors in title, and can be enforced by the Local Planning Authority.
What are the typical obligations contained in a Section 106 Agreement?
A s.106 agreement is generally used where a development creates a demand on local infrastructure and services under the Local Planning Authority’s Local Plan.
The obligations may include on-site works, off-site works, payment of monies and restrictions on the use of the land. Typical obligations include:
- Affordable housing provisions. Examples can include providing a certain percentage of homes on-site as affordable housing.
- Transport and Highways. Examples can include contributions or works to improve junctions, pedestrians and traffic regulation orders.
- Education and Health. Examples can include financial contributions towards schools or healthcare facilities.
- Biodiversity enhancements. Examples can include habitat creation or offsetting, flood risk measures or landscaping schemes.
These obligations can be triggered at different points in the development. For instance, trigger dates can be prior to commencement, first occupation, or once a number of defined units are occupied.
Impacts on Local Communities
A Section.106 Agreement can provide local benefits directly from the developments. A major source of affordable housing is secured through s.106 agreements, funding for schools, healthcare and transport help communities absorb the growth without incurring further pressure on existing services.
How does a developer enter into a Section 106 Agreement?
If a Local Planning Authority require a s.106 Agreement, they will instruct their lawyers to prepare the first draft for the developer or the developer’s lawyers’ review.
Once the agreement is agreed, the Local Planning Authority are then required to publish the agreement to ensure that the public has had the opportunity to review it.
When ready for completion, the agreement will then be signed by the necessary parties and completed. This is usually on the provision that the developer/landowner pays for the Local Planning Authority’s legal costs.
Once complete, the s.106 agreement is registered as a local land charge against the land and will be disclosed in future searches against the land.
Considerations for developers
For developers and landowners, a Section106 agreement is a key consideration in the acquisition of land, design and viability of future developments. It is important that developers consider the timing of s.106 agreements in their scheme, as completing the agreement can affect the planning permission decision timelines.
When delivering the development, the developer will need to consider the occupation and phasing controls as this can have an impact on sales and cash flow, so it is important that the trigger dates are clear and appropriate for every development scheme.
As a developer, it is recommended that you liaise with the planning authority early in the planning application to identify likely obligations from the local policy and to engage in pre-application discussions. Having these discussions early can help streamline the process and secure the permission required for the next development. When putting a Section 106 agreement in place, you should also speak to a suitable legal professional to ensure proper reporting and completion of the deeds.
If you are a developer in the process of obtaining planning permission for your next project, the specialist property development solicitors at GA can provide you with the trusted guidance you need. As part of our wider commercial property team, our solicitors in Plymouth deal with a wide range of development sites across the South West and can ensure that your agreement is completed properly.
Please get in touch with us by calling 01752 203500 or emailing me directly via lauren.dixon@GAsolicitors.com for more information.
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