Planning Obligations: Section 106 Agreements and Unilateral Undertakings
Section 106 of the Town and Country Planning Act 1990 allows Local Planning Authorities to seek both physical on-site obligations and off-site financial contributions, when it is considered that a development will have negative impacts that cannot be dealt with through conditions in the planning permission. Collectively, these are known as planning obligations and may take the form of a Section 106 (S.106) Agreement between a developer/landowner, the Council and possibly other parties, or alternatively, a Unilateral Undertaking providing a legal commitment by the developer alone.
Obligations form part of a planning permission, but are only used when planning conditions are unsuitable, because of their complexity and the delay they can add to the planning process. Since 2010 it has been a legal requirement that that planning obligations may only constitute a reason for granting planning permission for the development if the obligation is:
- necessary to make the development acceptable in planning terms;
- directly related to the development; and
- fairly and reasonably related in scale and kind to the development.
The Council generally negotiates contributions for the following:
- Affordable housing
- Community facilities
- Highways and transport
- Open space, play areas and sports facilities
- Waste and recycling
The Agreements are designed to help make sure that new developments enhance local communities and reduce the impact of developments by, for example:
- Easing the impact of a new development on the local community, e.g. providing adequate public open space, improving infrastructure like bus stops
- Compensating for any impact caused by a development - for example if public open space is lost
- Ensuring that a certain proportion of houses on the development are provided as affordable housing
Section 106 Agreements are negotiated between the Borough Council and/or Worcestershire County Council and the developer (occasionally involving other parties) and become legally binding agreements between the Council and the developers/landowners upon the granting of planning permission. The Agreements are normally dealt with by our Planning Solicitor or by external Solicitors appointed by us and the applicant/developer will be liable to pay our/external Solicitors' legal fees for drafting and completing the Agreement.
They are binding on the land to which the planning permission relates. If the land is sold, the new owner becomes responsible for the Section 106 Agreement. However if a development with an Agreement does not proceed, the Section 106 Agreement will not be implemented.
If we think a proposed development requires an Agreement, planning permission will not be granted until one is agreed. Here's our standard Section 106 Agreement template.
On 1 September 2019, the Community Infrastructure Levy (Amendment) (England) (No.2) Regulations 2019 were introduced. These Regulations introduce new requirements to report and monitor on the collection of planning obligations. The Regulations permit the Borough Council to apply a fee to planning obligations so long as it:
- Fairly and reasonably relates in scale and kind to the development
- Does not exceed the authority’s estimate of its cost of monitoring the development over the lifetime of the planning obligations
The fee will fairly compensate the Council for the time and resources Officers spend on monitoring the collection of planning obligations. Further details are available here.
Amending or Varying a Section 106 Agreement
A Section 106 planning obligation may be changed (Deed of Modification) or discharged in two ways. Firstly, planning contributions may be modified or discharged at any time by a Deed between the Borough Council and all parties to the agreement. Secondly, where an application is made to modify or discharge a planning contribution, the Borough Council may decide to either:
(a) continue the planning contribution without modification
(b) discharge it, if it no longer serves a useful purpose; or
(c) if it continues to serve a useful purpose, but would serve that purpose equally well if it had effect subject to the modifications applied for, then allow the modifications, provided it does not place any burden on a third party
Where the Borough Council decides not to allow a modification or change, and the agreement has been in existence for 5 years or more the applicant may appeal the determination to the Secretary of State, pursuant to Section 106B of the Town and Country Planning Act. There is also a special procedure for varying affordable housing requirements under Section 106BA of the Act.
1) Within five years of the date of the completion of the obligation, at any time, by agreement between the Borough Council and the person or persons against whom the obligation is enforceable.
There is no fee payable for this type of application but the applicant/developer will be liable to pay our/external Solicitors' legal fees for drafting and completing any modified Agreement. We would encourage applicants to fill out the main pages of the relevant application form or provide the relevant information via email. The primary legislation for this option is The Town and Country Planning Act 1990.
2) After five years beginning with the date the obligation was legally completed (or a later date specified in the obligation itself).
There is no fee payable for this type of application but the applicant/developer will be liable to pay our/external Solicitors' legal fees for drafting and completing any modified Agreement. The relevant application form must be completed and the appropriate notice given for the application to be valid. Once accepted as a valid application there is a time limit for the application to be decided of 8 weeks. The primary legislation for this option is The Town and Country Planning (Modification and Discharge of Planning Obligations) Regulations 1992.
Annual Infrastructure Funding Statement (IFS) 2019/2020
Local Planning Authorities (LPAs) are now required to produce an annual Infrastructure Funding Statement (IFS) in conformity with The Community Infrastructure Levy (Amendment) (England) (No.2) Regulations 2019 (No.1103), which came into force on 1 September 2019 (the Regulations).
Part 10A (Reporting and monitoring on CIL and planning obligations) of the Regulations sets out details about planning obligation receipts and anticipated expenditure. This is to provide clarity and transparency to local communities and developers on the infrastructure and expenditure in relation to planned development.