Definition
Section 106 agreement
The legal contract that hangs off a planning permission and locks in the obligations a council insists on — affordable housing, contributions, long-term maintenance — for the life of the development.
In one sentence
A Section 106 agreement (sometimes called a "planning obligation" or "S106") is a legally-binding deed between the developer, landowner and council that secures specific contributions or restrictions alongside the grant of planning permission.
Where it comes from
Section 106 of the Town and Country Planning Act 1990 gives councils the power to enter into planning obligations with anyone with an interest in land. These obligations attach to the land itself — not the developer — so they pass to every future owner.
The legal tests for what a Section 106 can require are set out in the CIL Regulations: the obligation must be necessary, directly related, and fairly and reasonably related to the development. Councils can't use S106 to fund unrelated wishlist items.
What's typically inside a Section 106
- ▸Affordable housing. A number or percentage of the homes to be transferred to a registered provider on agreed terms, or sold as First Homes.
- ▸Financial contributions. Per-unit sums towards education, healthcare, open space, sports/leisure facilities — only on sites where CIL doesn't already cover them.
- ▸Highways works. New junctions, footways, traffic-calming, bus-stop improvements paid for and built by the developer.
- ▸Biodiversity Net Gain. The 30-year habitat management plan, monitoring, and remedies if the 10% gain isn't delivered.
- ▸Open space management. Long-term arrangements for play areas, SuDS ponds, public footpaths.
- ▸Restrictive obligations. E.g. "no occupation until the school contribution is paid" or "no more than 50% of homes occupied until the spine road is complete".
Section 106 vs CIL
People often confuse Section 106 with the Community Infrastructure Levy (CIL). They're distinct, and most sites are subject to one or both.
| Section 106 | CIL | |
|---|---|---|
| Nature | Negotiated legal agreement | Fixed per-m² charge |
| Tied to development? | Yes — site-specific obligations | No — pooled for general infrastructure |
| Affordable housing? | Yes — main route | No |
| Self-build exempt? | Often — small sites usually below threshold | Yes, with formal application |
Section 106 on small sites
Government policy says councils should not seek affordable housing contributions on schemes of 10 or fewer dwellings (5 in designated rural areas). Some councils still try; it's usually successfully resisted on appeal.
But that doesn't mean small sites are S106-free. Even a 4-home rural site will commonly need a Section 106 to secure:
- Biodiversity Net Gain (30-year monitoring)
- Highway access works
- Surface-water drainage easements
- Self-build occupancy restrictions (where the site is granted under self-build policies)
Allow £3,000–£8,000 in legal fees for a typical small-site S106, plus the council's own legal costs (which the developer pays).
The drafting process
- 1Heads of terms. Issued by the council during the application — sets out what they want secured.
- 2Draft S106. Either drafted by council solicitors or by the applicant's solicitors using the council's template, then negotiated.
- 3Engrossment. All parties — landowner, developer, council, plus any mortgagee — sign the final deed.
- 4Permission issued. The decision notice can't be issued until the S106 is completed.
- 5Registration. The S106 is registered as a local land charge — visible to any future buyer or solicitor.
Can a Section 106 be changed?
Yes, by agreement with the council under section 106A. Five years after the agreement is signed, either party can apply for modification or discharge if the obligation no longer serves a useful purpose; refusals can be appealed to the Planning Inspectorate.
In practice modifications are slow and tend only to succeed where viability has fundamentally changed — for example a large affordable housing obligation made unviable by a market downturn.
Related terms
- Community Infrastructure Levy (CIL) — the per-m² alternative.
- Biodiversity Net Gain — usually secured by S106.
- Affordable housing contribution — the most common S106 element.
- Discharge of conditions — the sibling process for planning conditions (not S106).
Worried what a Section 106 might cost you?
We give every landowner site a free development appraisal that includes indicative S106, CIL and BNG costs upfront — before you commit a penny.