What is a Section 106 Agreement?

Understanding Section 106 agreements

A Section 106 agreement, formally known as a planning obligation, is a legally binding contract between developers and local planning authorities in England and Wales. Named after Section 106 of the Town and Country Planning Act 1990, these agreements ensure that new developments contribute to the infrastructure and services needed to support growth.

When a developer submits a planning application for a significant project, the local authority assesses the impact this development will have on the surrounding area. Section 106 agreements then require developers to either provide specific facilities directly or contribute financially towards infrastructure improvements.

How do Section 106 contributions work?

1. The negotiation of Section 106 contributions begins during the planning application process. Local authorities identify the infrastructure needed to mitigate the impact of a proposed development on the local area
2. Contributions can take several forms. Developers may provide infrastructure directly, such as building a new school or health centre, as part of their development. Alternatively, they may make financial contributions that the local authority then uses to improve existing facilities or create new ones
3. The scale of contributions depends on the size and nature of the development. Larger residential developments typically trigger more substantial obligations, as they place greater demands on local services
4. Once agreed, Section 106 obligations become legally binding. Developers must fulfil their commitments before specified trigger points in the development process

Which sectors benefit from Section 106 agreements?

Education

Schools and educational institutions are among the primary beneficiaries of Section 106 contributions. New residential developments increase demand for school places, and developers must help expand existing schools or build new facilities.

Healthcare

Growing populations from new developments place additional pressure on healthcare services. Section 106 agreements often include contributions towards expanding GP surgeries, health centres and other medical facilities.

Public sector

Local authorities and other public sector bodies benefit significantly from Section 106 contributions. Funding can support libraries, community centres, sports facilities and other public amenities.

Transport and infrastructure

Major developments often require improvements to local transport networks, including new roads, bus services, cycle paths and parking facilities.

How to access Section 106 funding

If your organisation is hoping to benefit from Section 106 contributions, proactive engagement with your local authority is essential. You should monitor planning applications in your area and understand what developments are on the horizon.

Building relationships with planning officers allows you to communicate how your facilities will be impacted by new developments and what improvements would be beneficial. When local authorities negotiate Section 106 agreements, they need to demonstrate that contributions are necessary and directly related to the development.

Preparing robust evidence of need strengthens your case for receiving Section 106 funding. This might include data on capacity constraints, demographic projections showing increased demand, or feasibility studies demonstrating how improvements would benefit the community.

Get expert guidance on Section 106 agreements

Navigating Section 106 agreements requires expertise in planning law, property development and stakeholder negotiation. Our specialists have extensive experience in each of these areas and can help you achieve the best possible outcomes.

To discuss how Section 106 agreements could support your development or infrastructure project, please call 0800 051 2593 or complete the form below. Our team will be happy to provide tailored advice for your specific circumstances.