Understanding Section 106 agreements: your planning obligations explained

What is a Section 106 agreement?

Section 106 of the Town and Country Planning Act 1990 enables local planning authorities to enter into legally binding agreements with landowners to secure contributions or obligations that make a proposed development acceptable in planning terms. These obligations, commonly known as Section 106 (s106) agreements, often relate to matters such as the delivery of affordable housing, essential infrastructure, highway works, or other measures required to mitigate the impacts of development.

Wider planning objectives

Importantly, a local authority may impose planning obligations not only in respect of the land directly subject to the planning application, but also in relation to adjoining or nearby land where the obligation is necessary to achieve wider planning objectives. This flexibility allows planning authorities to secure measures that support the broader public interest and ensure that developments proceed in a coordinated and sustainable manner.

Binding nature of S106 agreements

A key feature of s106 agreements is that they run with the land, meaning they bind the land itself rather than the individual who entered into the agreement. As a result, when the land is sold, transferred, or otherwise changes ownership, the obligations typically pass automatically to the new landowner. This ensures continuity and enforceability, preventing obligations from becoming unenforceable simply because the original signatory is no longer involved with the property.

Liability of landowners

The general legal principle is that the liability of the original landowner ends once they dispose of their entire interest in the land, provided there is a suitable exclusion clause contained in the agreement. Additionally, if a breach occurred while they were the owner, they may remain liable for that historic breach even after transferring the land. Conversely, where no breach has taken place, the responsibility for future compliance passes to the successor in title.

Retained land and phased developments

There is, however, an important qualification. If the original landowner retains any part of the land that is subject to the s106 agreement, they may remain liable for the obligations linked to the retained parcel. This is particularly relevant in phased developments or transactions involving only part of a larger site. In such cases, the original landowner may seek to vary the s106 and remove their retained land from any ongoing obligations.

Due diligence for purchasers

Given the binding and often long-term nature of planning obligations, prospective purchasers must undertake robust due diligence when acquiring land affected by an s106 agreement. This typically involves reviewing the full terms of the agreement, confirming whether any obligations are outstanding, assessing the cost and practical implications of compliance, and determining whether any variations or releases may be required.

Importance of professional advice

Professional advice from planning and legal specialists is strongly recommended, as the consequences of overlooking s106 liabilities can be significant, ranging from unexpected financial burdens to restrictions on future development.

Section 106 agreements are complex, binding, and often long-term commitments that can materially affect both landowners and prospective purchasers. A clear understanding of these obligations is essential to avoid unforeseen liabilities and to ensure developments proceed smoothly and lawfully.

If you are considering the purchase or development of land subject to a Section 106 agreement, it is essential to obtain professional planning and legal advice to ensure full understanding and compliance with the obligations involved. Get in touch with our experts today on 01202 525333.