What Is a Section 106 Agreement?
A Section 106 agreement (S106) is a legal agreement made under Section 106 of the Town and Country Planning Act 1990 between a planning authority and a developer (or landowner). It is a planning obligation — something the developer commits to do or provide in connection with a planning permission.
S106 agreements are attached to the land, not the applicant — if the property is sold, the new owner inherits the obligations.
When Does Section 106 Apply?
Section 106 obligations are most commonly required for:
- Residential developments: Typically 10+ dwellings in London (though thresholds vary by borough)
- Major commercial developments
- Significant infrastructure-affecting developments (transport, drainage, open space)
For most householder extensions and loft conversions: Section 106 does not apply. It is primarily relevant to developers building new homes or commercial premises.
What Can Be Required Under Section 106?
Affordable Housing
For residential developments above the borough threshold (typically 10+ units in London), a proportion of the homes must be provided as affordable housing. The London Plan currently seeks 35–50% affordable housing, depending on the tenure mix and whether the development is public or private sector.
Affordable housing contributions are either:
- On-site provision: A proportion of the dwellings are affordable
- Off-site financial contribution: A payment to the local authority to fund affordable housing elsewhere
Infrastructure Contributions
S106 obligations can fund a wide range of local infrastructure:
- Highways improvements (new pedestrian crossings, road widening)
- Public transport contributions
- Open space and play area improvements
- Education contributions (new school places if development increases local demand)
- Health contributions
- Employment and training obligations
Employment and Training
Some London boroughs require major developers to provide local employment, training opportunities, or first-refusal job offers for local residents in the construction phase.
Sustainability
Contributions toward carbon offset (where energy standards are not fully met on-site), tree planting, or biodiversity net gain.
Community Infrastructure Levy (CIL)
Alongside Section 106, the Community Infrastructure Levy (CIL) is a standard charge per square metre of new floorspace applied to most developments in most London boroughs.
CIL is simpler than S106 — it is a fixed rate applied to the new floor area at the point planning permission is granted. It does not require negotiation.
For residential extensions (adding floor area to an existing dwelling), CIL may apply in some boroughs. However, many boroughs have a householder relief or exemption. Always check the borough's CIL schedule and whether any exemptions apply to your project.
Viability and S106 Negotiation
S106 obligations are subject to a viability test — the developer can argue that the level of S106 required makes the development financially unviable, and the obligation should be reduced. This is a complex negotiation and typically requires a professional development appraisal.
For Small Developers and Self-Builders
If you are a self-builder or small developer building fewer than 10 units in London, Section 106 obligations are unlikely to be imposed, but:
- Check whether CIL applies to your project
- Complete the CIL exemption form if eligible (self-build exemptions are available for people building their own primary residence)
- Submit the CIL commencement notice before starting work — failure to do so can invalidate the exemption
Relevance to RCB Projects
For RCB's core market — extensions, loft conversions, refurbishments, and small residential projects — Section 106 obligations are not typically relevant. However, for clients developing multiple units, HMO conversions that change the use of a property, or schemes that cross the borough threshold, S106 and CIL awareness is important.
RCB advises clients on CIL and S106 exposure at the pre-planning stage and can recommend specialist planning consultants where formal obligation negotiation is required.