Understanding Highway Adoption Agreements: Section 38 and Section 278 explained

Developers, landowners and property investors frequently encounter the term ‘Highway Adoption Agreement’ during the planning and development process. Whilst these agreements are commonplace, the distinction between Section 38 and Section 278 agreements is often misunderstood.

Both types of agreements are entered into pursuant to the Highways Act 1980 and involve the local highway authority, but they serve different purposes and can have significant implications for the timing, cost and delivery of development projects.

Background

When a new development is proposed, the local highway authority may require works to be carried out either within the development itself or on the surrounding highway network. A key consideration is whether newly constructed roads will become publicly maintainable highways and whether improvements to the existing highway network are required to accommodate traffic generated by the development.

Section 38 Agreements – New roads

A Section 38 Agreement enables a developer to construct new roads intended for future adoption by the local highway authority. Until formal adoption takes place, responsibility for maintenance remains with the developer or other private party responsible for the road.

Adoption is not automatic and the highway authority will commonly require roads to be completed, inspected and certified, meeting the authority’s required standards, before they are adopted.

Once adopted, responsibility for maintenance passes to the highway authority and the road becomes publicly maintainable at public expense.

Section 278 Agreements – Alterations to existing highways

Unlike Section 38 Agreements which relate to the construction and future adoption of new roads, a Section 278 Agreement applies where works are required to an existing adopted highway and are publicly maintained.

Common examples of Section 278 Agreements include new junctions, traffic signals, pedestrian crossings, road widening schemes and visibility improvements.

Unlike a Section 38 Agreement, the highway is already publicly maintained. The agreement permits highway works to be carried out in connection with a development, with the costs typically borne by the developer and the works delivered either by the highway authority or under its supervision, depending on the authority’s requirements.

Why do these agreements matter?

Delays in negotiating and completing highway agreements can have a significant impact on development programmes. Developers who fail to address highway requirements at an early stage may encounter delays, increased costs, difficulties in achieving occupation milestones, and ongoing maintenance liabilities.

Security and bond requirements

Highway authorities commonly require developers to provide a bond, cash deposit or other form of financial security before entering into a Section 38 or Section 278 Agreement.

The requirement to provide a bond provides the authority with protection should the works not be completed in accordance with the agreement.

Developments requiring both agreements

In practice, many developments can require both a Section 38 and a Section 278 Agreement. For example, a residential development may require a new access junction onto an existing highway under a Section 278 Agreement, whilst the internal estate roads are constructed under a Section 38 Agreement with a view to future adoption.

Practical considerations for developers

Before acquiring or developing a site, developers should consider whether new roads will require future adoption, whether improvements to the existing highway network will be necessary, the likely costs of entering into any highway agreements, security or bond requirements, and the time required to obtain highway authority approvals.

Section 38 and Section 278 Agreements are fundamental mechanisms used by highway authorities to ensure that development is supported by appropriate highway infrastructure.

Understanding the distinction between the different types of agreement, together with the adoption process, security requirements and potential need for both agreements on a single development, can assist developers, landowners and investors in navigating the planning and development process better while also avoiding unnecessary delays.

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