Section 106 Agreements in London Planning: What They Are and What They Cover

Section 106 agreements in London typically cover one or more of the following obligations, depending on the scale and nature of the development: Affordable housing: The most significant and commonly litigated Section 106 obligation in London — the requirement to provide a specified number or percentage of new dwellings as affordable housing, transferred to a Registered Housing Provider at an agreed affordable housing transfer value. Affordable housing obligations are negotiated in the Section 106 agreement and legally enforced through it. Highway and transport contributions: Contributions to transport infrastructure improvements made necessary by the traffic generated by the development — new road junctions, pedestrian crossings, bus stop improvements, cycle infrastructure, or contributions to a highway authority's transport fund. Open space and recreational contributions: Contributions to the provision or improvement of public open space in the vicinity of the development, to address the recreational demand generated by the new residents. Employment, skills and training obligations: Requirements for the developer to demonstrate that local employment and training opportunities have been offered during the construction phase of the development, and sometimes in the completed building's operation. Management and maintenance obligations: For shared amenity areas, open space, or infrastructure that will not be adopted by a public body — the Section 106 may establish a management company or maintenance obligation, including how costs are to be funded and how the obligation transfers with the land. Monitoring fees: Increasingly, London planning authorities also include a Section 106 obligation to pay the authority's costs of monitoring compliance with the Section 106 obligations themselves — typically a fixed fee or a percentage of the obligation value.

The Community Infrastructure Levy (CIL) is a standardised charge per square metre of new net additional floorspace created by qualifying development, set by the local planning authority in their Charging Schedule. In London, there is a Mayoral CIL (MCIL2) charged by the GLA, plus in many boroughs a separate local CIL. The key differences between Section 106 and CIL are: Basis of charge: CIL is a fixed per-square-metre charge, set by policy and applied automatically to qualifying development. Section 106 obligations are negotiated case-by-case, based on the specific impacts of the individual development. What it pays for: CIL can be spent on any infrastructure that supports development across the area, not just the infrastructure directly related to a specific site. Section 106 must be directly related to the specific development and its impacts — it cannot be pooled for general infrastructure from more than 5 developments (the pooling restriction). Negotiability: CIL cannot generally be negotiated or reduced (except in limited circumstances such as social housing relief or exceptional circumstances relief). Section 106 obligations can be negotiated as part of the planning application process, subject to the legal tests. Timing: CIL is typically charged on commencement of development. Section 106 obligations may have specific trigger points — affordable housing transferred at completion, highway contributions paid before commencement, etc. Land charges: Both CIL and Section 106 obligations are registered as local land charges.

One of the most practically significant aspects of Section 106 agreements is that they are registered as local land charges and are binding on successors in title. This means: If you purchase a property that is subject to a Section 106 agreement, you inherit the obligations under that agreement — even if you were not party to it and even if you did not know about it at the time of purchase (though it should be revealed in the local land charge search that is standard in any conveyancing transaction). If you develop land and enter into a Section 106 agreement but then sell the site (or part of it), the buyer and all subsequent owners of the land are bound by the Section 106 obligations. This is why Section 106 agreement drafting typically addresses what happens when the original developer is no longer the landowner — typically by making the obligations run with the land and by requiring that any buyer or successor provides an obligation to the planning authority that they will comply with the Section 106 terms. For a buyer of a residential property on a development site subject to Section 106, specific obligations may include: management company membership and service charge contributions; restrictions on use (such as restrictions on subletting or on use as a short-term let); or obligations to use affordable housing nominations registers for shared ownership units.