What is a Section 106 Agreement?

You might come across this term in connection with planning permission for a new building development in your area, a proposed supermarket or a housing project for example. Section 106 Agreements, commonly referred to as ‘developer contributions’, are governed by the Town and Country Planning Act 1990. They are legal agreements between Local Authorities and owners or developers of land and are a mechanism which can make a development proposal acceptable in planning terms which otherwise might not be approved. The agreement is attached to the land itself and places an obligation on the owners or developers to fulfil its requirements.

Section 106 agreements are often drafted when the Planning department believe that a development will have considerable impact on the local area. The agreement will look to offset these effects by requiring the inclusion of projects designed to make a positive contribution to the community and the locality.

Section 106 Agreements can be used to bring about various beneficial outcomes:

• Providing social housing or business space
• Reducing the impact of the development on its surroundings
• Providing compensation for loss or damage caused by the development
• Improving or providing infrastructure
• Securing material benefits or amenities for the local community

Typical projects that arise from these agreements include the provision of affordable housing, schools, access roads, drainage projects, adult social care, improved public transport, healthcare facilities, play areas, waste recycling facilities and improvements to amenities such as village halls. The most common Section 106 Agreements occur in connection with planning applications for new homes. The local planning authorities increasingly stipulate that a number of social or affordable homes are to be incorporated on any site used for housing development. This means that a certain percentage of the houses to be built must be affordable to the local community, or rented out through social housing schemes.