Section 106 agreements are a central
mechanism for delivering affordable housing through the planning process in
England. Although their legal basis is relatively straightforward, the
practical application of these agreements is often complex and requires a solid
understanding from housing professionals. These agreements serve to secure
planning obligations that come into effect once planning permission is granted.
Governed by Section 106 of the Town and Country Planning Act 1990, they are
shaped not only by statute but also by national planning guidance and local
policies, which add further layers of complexity.
Planning obligations under Section 106
must meet three statutory tests: they must be 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 proposed project. These
obligations may involve restricting land use, requiring specific actions to be
taken (such as providing affordable housing), or securing financial
contributions to mitigate the development's impacts. These agreements are
legally binding and must be entered into by the developer, the planning
authority, and any other parties with a legal interest in the land.
Although frequently described as
“negotiated”, Section 106 agreements should only be negotiated by individuals
with a sound understanding of planning law. Local authorities may face
difficulties when negotiating terms that fail to meet viability thresholds,
particularly during times of high market demand. In such cases, developers can
often leverage their stronger economic and legal position. It is therefore
crucial for councils to approach Section 106 discussions well-prepared,
particularly in terms of funding models and viability appraisals, to ensure
that the outcomes benefit the wider community.
The Legal Framework of
S106 Agreements
The legislative foundation for Section
106 agreements is embedded in the Town and Country Planning Act 1990, which
serves as the cornerstone of planning law in England. This statute empowers
both the Secretary of State and local planning authorities to impose conditions
or restrictions on land use that serve the public interest. Section 106 enables
planning authorities to require measures that make otherwise unacceptable
developments permissible by addressing their negative impacts through
compensatory obligations.
In practical terms, this means that
local planning authorities can require developers to contribute to
infrastructure or services as a condition for receiving planning permission.
These obligations may include funding public amenities, enhancing
transportation networks, or providing affordable housing units. However, such
provisions must be legally justified, directly related to the development, and
proportionate to their scale and impact. This ensures that developers are not
unfairly burdened but are held accountable for the effects of their projects.
The introduction of the Planning Act
2008 further expanded the application of Section 106-type agreements by
allowing their use in nationally significant infrastructure projects. These
planning obligations are commonly structured as partnerships among developers,
landowners, and public agencies. They provide flexibility in applying national
and local policies, making it possible to deliver infrastructure and housing at
reduced costs. As such, Section 106 agreements continue to be an essential tool
in shaping responsible development that aligns with community needs.
The Town and Country
Planning Act 1990
Section 106(1) of the Town and Country
Planning Act 1990 (as amended) sets out the powers available to local
authorities to enter into legal agreements with those who hold an interest in
the land. These agreements may restrict land use, require its maintenance in a
specific condition, or impose other planning obligations. Their primary purpose
is to render development proposals acceptable in planning terms that would
otherwise be rejected.
Section 106 agreements enable local
planning authorities and applicants to impose obligations that exceed standard
planning conditions. They provide a legal mechanism to influence the nature,
scale, and impact of development in ways that address specific local concerns. Typical
uses include setting limits on operating hours, ensuring the provision of
public amenities, or placing restrictions that protect community interests. The
binding nature of these agreements ensures compliance even when ownership of the
land changes.
Historically, the UK’s planning system
evolved to respond to the pressures of industrialisation, especially the need
to protect urban populations from unregulated development. Section 106 evolved
as a response to such challenges, providing a legal framework for local
authorities to ensure that development makes a positive contribution to the
community. The agreements aim to strike a balance between the developer’s
rights and the public interest, ensuring that the benefits and burdens of
growth are fairly shared and responsibly managed.
Origins of Section 106
The concept of planning obligations
traces back to Section 52 of the Town and Country Planning Act 1971. This
predecessor laid the groundwork for what would later become Section 106,
introducing a formal mechanism to balance development rights with public
benefits. It aimed to create legal agreements that tied planning permissions to
obligations serving the wider community, thereby embedding public interest into
the development process.
Early planning reforms emerged from the
post-war consensus, particularly the 1947 Town and Country Planning Act, which
nationalised development rights. However, during the pro-development climate of
the 1950s and 1960s, many of the initial safeguards were weakened. By the late
1980s, mounting concern over unregulated development led to renewed emphasis on
securing public gain through planning obligations. The principle of “planning
gain” was thus reasserted, forming the basis of the modern Section 106 framework.
Over time, Section 106 agreements
evolved to support more structured negotiations between developers and local
authorities. While initially reactive and inconsistent, the approach became
more formalised as planning departments gained experience in leveraging
agreements to deliver public goods. Local authorities began to realise the
potential of these “bargains” not just to mitigate harm, but also to shape
development outcomes proactively. Section 106 became a critical part of
development control, especially in densely populated areas where the stakes of
unplanned growth were highest.
Purpose of Section 106
Agreements
The primary aim of Section 106
agreements is to address the additional pressures created by new developments,
ensuring that the resulting impacts are mitigated in ways that make the
development acceptable to existing communities. These agreements enable local
authorities to impose legally binding obligations that secure public benefits,
such as infrastructure improvements, community amenities, or environmental
protections, all of which are directly linked to the proposed development.
Section 106 agreements form part of a
local authority’s broader strategic planning toolkit, enabling councils to
deliver the objectives set out in their development plans. They are
particularly effective in responding to site-specific needs that cannot be
addressed through standard planning conditions alone. For example, a
development that increases population density may be required to contribute
towards the expansion of local schools, public transport, or health services.
The legal agreement ensures that these needs are met in a timely and
enforceable manner.
Once entered into, a Section 106
agreement is registered as a local land charge and binds not only the original
developer but also future owners. This ensures continuity in compliance and
provides a clear framework for accountability. In this way, Section 106
agreements serve as both a safeguard against negative development impacts and a
vehicle for delivering tangible community benefits. They help prevent
deterioration in the quality of life for existing residents while supporting
sustainable growth and infrastructure investment.
Negotiating Section 106
Agreements
Negotiating Section 106 agreements is
often a lengthy and complex process that requires careful balancing of
developer interests with public needs. Local authorities may choose to employ
negotiation experts, particularly where viability assessments are contested or
the proposed development raises unusual issues. These specialists bring technical
knowledge and planning expertise to the table, helping to ensure that
negotiations result in agreements that are both lawful and equitable.
Engaging both parties early in the
planning process is widely recognised as best practice. Early dialogue helps
clarify expectations, identify key issues, and reduce the likelihood of
disputes. If a local authority believes that a development offers minimal
benefit to the local community or delivers only a limited number of affordable
homes, it may be advisable to conduct a viability assessment at the outset.
This ensures that the council can make informed decisions and avoid protracted
disputes later in the process.
For developers, delays in negotiations
can be costly and frustrating, particularly when working with multiple local
authorities that have differing expectations. From their perspective, faster
agreement means earlier commencement of construction and quicker realisation of
investment returns. For councils, expediting negotiations means delivering
infrastructure and affordable homes earlier. Where negotiations are handled
efficiently and fairly, both parties benefit, and the broader community gains
from developments that are better integrated and responsibly managed.
Developer Social
Housing Obligations
The developer’s obligation to provide
social housing is outlined in the schedule of residential development, which
details the affordability and type of units. This ensures that affordable
housing is incorporated into every phase of growth. The schedule specifies the
kind, size, and location of these units, ensuring alignment with the area’s
needs. Typically, these affordable homes are delivered alongside market housing
and may include a variety of types to support different demographics and income
groups.
Affordable housing types can include
starter homes offered at discounted market rates to first-time buyers, though
these are not necessarily prioritised for residents. Discounted market homes
may be reserved for local people for an initial five-month period and are
targeted at households with incomes falling within intermediate bands, as
defined by the local council. Additionally, affordable rented homes are subject
to rent caps and are typically managed by Registered Providers. Other forms
might include specialist housing for older or disabled residents.
Housing agreements rarely set exact
figures for specific types of housing. Instead, they impose minimum thresholds
for affordable housing types within developments. This allows flexibility in
addressing the unique nature of each scheme and local housing needs. Some sites
may offer 100% affordable housing, while others may include just 30%. The
resulting variation within the same locality often depends on negotiations,
planning conditions, and the developer’s approach. Without rigorous planning,
this inconsistency can lead to fragmented communities and dysfunctional estate
layouts.
Local Authority Roles
in Section 106 Agreements
Local authorities play a crucial role in
shaping and overseeing housing development, particularly in relation to Section
106 agreements. Their responsibilities extend beyond facilitating housing
delivery to include assessing local housing needs, monitoring viability, and
determining the quantity and type of affordable housing that is needed. This
process is guided by statutory local plans, which must include housing policies
aligned with regional and national planning frameworks and support a sufficient
supply of affordable housing to meet local demand.
Local planning authorities use a
combination of methods to assess housing need and determine the appropriate
tenure mix. These include property records, direct provision analysis, and
housing needs assessments. Authorities also draw on demographic data and
broader housing market information to make informed decisions. This evidence
base allows them to specify the types and sizes of affordable homes required in
each development, ensuring their policies remain data-driven and reflect actual
community needs.
However, when developers fail to deliver
on affordable quotas, housing associations can step in to apply for planning
permission and help meet unmet need. That said, local authorities do not
automatically support alternative proposals. They rigorously assess viability,
particularly when the market is not meeting affordable housing targets. If
unmet need is high and well-evidenced, councils are unlikely to approve reduced
quotas or alternative tenures, especially where it undermines funding
strategies such as shared ownership or rental subsidy models.
Community Involvement
in Social Housing Decisions
Community
involvement in social housing decisions in the UK empowers residents to have a
direct role in shaping their living environments. This approach values local
knowledge and lived experience, ensuring that housing policies and services
align with actual needs. Involving tenants early in the decision-making process
leads to more responsive and sustainable solutions. It also strengthens
accountability, as residents can challenge poor performance and influence
improvements from the ground up, rather than relying solely on external
oversight.
Social
landlords, including local councils and housing associations, are legally
required to involve tenants in key decision-making processes. This includes
issues like rent setting, repairs, and estate regeneration. The Regulator of
Social Housing in England expects providers to meet the Tenant Involvement and
Empowerment Standard. By formalising tenant participation, these regulations
aim to embed residents’ voices in how housing services are designed and
delivered. As a result, many landlords have developed structures for ongoing
engagement.
Tenant
panels and scrutiny boards are standard tools for resident involvement. These
groups review services, policies, and performance data to hold landlords to
account. Some organisations also run co-production workshops, where residents
and staff work as equals to shape decisions. These practices help shift power
dynamics and build mutual respect between tenants and providers. When
successful, they lead to more effective services and a sense of shared
responsibility.
However,
barriers still exist that limit genuine participation. Residents may face
language barriers, digital exclusion, or a lack of time and confidence. There
is also a risk of tokenism, where landlords consult tenants but fail to act on
their views. This can lead to frustration and disengagement. To address this,
providers must create accessible and inclusive opportunities and commit to
transparency in their decision-making processes.
In
some areas, resident involvement has contributed to shaping broader community
development. Tenants have influenced the design of public spaces, safety
measures, and local services. When residents help set priorities, outcomes are
often more relevant and trusted. Community involvement not only improves
housing quality but also builds social capital. Stronger relationships between
tenants, landlords, and local authorities lead to more resilient and connected
neighbourhoods.
Ultimately,
effective community involvement in social housing decisions requires long-term
commitment. It must go beyond formal meetings and include regular, honest
communication. Landlords need to invest in tenant training and support so that
all residents can participate meaningfully in their community. When done well,
involvement empowers communities, improves services, and makes housing policy
more democratic and accountable to those it affects most.
Implementation of
Section 106 Agreements
The enforcement of Section 106
agreements typically involves financial contributions in place of on-site
affordable housing, which are managed by the approving planning authority.
Although these funds may resemble service charges, they carry broader
implications linked to zoning and housing policy. Planning authorities have
discretion in how these funds are allocated, and their use is shaped by the
strategic goals of the authority, rather than being governed by rigid municipal
service ordinances.
The Housing Act does not prevent local
authorities from receiving contributions for affordable housing, nor does it
mandate where the funds should be spent. However, most authorities restrict
fund usage to the donor municipality to ensure alignment with local development
objectives. While fund transfer agreements between municipalities are
increasingly common, they often complicate the delivery process. Therefore,
transfers should only occur when explicitly requested by the receiving
authority and with prior consultation to preserve accountability.
Authorities sometimes impose additional
conditions on the use of Section 106 funds, which can alter the fundamental
nature of the development agreement. These conditions may affect not just the implementation
but the viability and character of housing schemes themselves. As such, the
approval and dispersal of funds require scrutiny to ensure they support the
intended policy outcomes and do not inadvertently create barriers to affordable
housing delivery.
Monitoring Compliance
Monitoring compliance with Section 106
agreements is a vital but often neglected part of affordable housing
enforcement. This process ensures that developers fulfil their obligations,
particularly after planning permission is granted and construction commences.
Because projects evolve, it is common for planning permissions to be altered.
These changes can affect the agreed affordable housing terms, which underscores
the need for careful oversight by local authorities and housing professionals.
The agreement should clearly outline
monitoring, reporting, and verification requirements. Local authorities
typically mandate developers to submit detailed compliance reports following
completion. These reports may be addressed to the City Manager, Planning
Director, or another designated official. They may also stipulate inspection
rights, enabling periodic site visits to verify ongoing compliance. The local
government’s ability to audit projects ensures that the terms of the Section
106 agreement continue to be respected post-construction.
Additional monitoring tools may include
on-site signage during construction and mandatory notifications in the event
the property is leased, sold, or transferred. Such measures ensure transparency
throughout the project’s lifecycle. Without adequate monitoring mechanisms, the
risk of non-compliance increases, potentially leading to the loss of affordable
housing units. Therefore, local authorities must remain vigilant, engaging with
developers, community advocates, and housing teams to ensure adherence to obligations
and protect housing affordability over time.
Enforcement Mechanisms
Enforcing obligations under a Section
106 agreement usually involves formal legal mechanisms, often initiated through
public law proceedings such as applications for statutory injunctions. These
proceedings aim to ensure compliance and facilitate the implementation of
developments in accordance with the agreed-upon planning conditions.
Enforcement powers are crucial in upholding the integrity of housing policies
and ensuring long-term community benefits from residential schemes.
Under Section 106B of the Town and
Country Planning Act 1990, local authorities have the legal right to enter land
to remedy a breach of a planning obligation. They can carry out necessary works
themselves and recover costs from the landowner. If the landowner fails to
reimburse the local authority, the costs become a recoverable debt. There are
also variations in how authorities calculate and recover expenses, though the
principle of cost recovery remains consistent.
Beyond Section 106B, Section 196 of the
Act provides a more limited right of entry for breaches related to standard
planning conditions, rather than those specific to Section 106 agreements.
Section 196A offers broader powers, but enforcement still requires clear
evidence of a breach. These legal tools collectively provide a framework for
holding developers accountable, though effective enforcement depends on the
willingness and capacity of local planning authorities to act decisively.
Challenges and
Criticisms of Section 106 Agreements
Section 106 agreements are widely used
to secure affordable housing; however, they remain subject to significant
criticism and legal challenges. Disputes typically arise around the scale,
timing, and types of affordable housing required. Developers may challenge
agreements through planning appeals or judicial review, particularly where they
consider the demands to be unviable or unjustified given the nature of the site
or market conditions.
Viability remains the most common basis
for resistance to affordable housing provision. For smaller sites, national
policy often exempts them from affordable housing contributions, arguing that
such requirements could discourage development. However, this raises questions
about whether larger sites must compensate by delivering more affordable units,
potentially distorting the balance of developments and putting greater pressure
on already limited land resources.
These debates also highlight broader
concerns about planning and development. Although Local Plans must be
viability-tested, the government has expressed a strong aversion to plans
requiring viability appraisals after they have been adopted. As a result, local
authorities may face restrictions on using Section 106 to secure additional
concessions beyond those initially agreed. This potentially limits their
flexibility, leading to imbalanced site designs with disproportionate private
housing or poor-quality public amenities. These tensions continue to shape debates
on housing delivery at both local and national levels.
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