What is a Section 106 agreement in planning, and who pays for it?

Full answer

A Section 106 agreement takes its name from Section 106 of the Town and Country Planning Act 1990. It is a planning obligation negotiated between a developer and the local planning authority as a condition of granting planning permission. Its purpose is to make a development acceptable by offsetting its impact on the local area - contributions the council could not otherwise demand. How it works: the obligation is registered against the land, so it binds not just the original developer but future owners of that land. Typical requirements include a proportion of affordable housing on the site, financial contributions towards schools, healthcare, highways or public open space, or restrictions such as building only what was approved. Obligations must be necessary, directly related to the development, and reasonable in scale. S106 sits alongside the Community Infrastructure Levy (CIL), a separate charge some councils apply per square metre; the two cover different things and a scheme can attract both. Who it affects: housebuilders and commercial developers most directly, but the cost ripples through to buyers because developers price S106 contributions into sale values and into what they offer for the land. Smaller self-build and minor schemes are often below the thresholds where S106 bites, though this varies by authority. For a buyer, an S106 can matter: some affordable or shared-ownership homes carry S106 restrictions limiting resale price or who can buy, which lenders scrutinise. There is no national S106 tariff - amounts are negotiated case by case against local plan policy and viability, so there is no fixed figure to quote. Check the specific agreement on the planning portal for any property. If you are budgeting a purchase, the relevant transaction tax (Stamp Duty in England/NI) is separate from S106; use the stamp-duty and mortgage calculators to plan affordability.

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