Section 106 planning obligations

Guidance on use of template Section 106 planning obligations

When the Council grants planning permission and wishes to impose requirements on a development, this is normally secured by planning conditions. However, there are occasions when they are not suitable, such as when funds are required to provide infrastructure or a contribution towards affordable housing. In such circumstances, planning obligations (under Section 106 of the Town & Country Planning Act 1990) are required and the planning permission is subject to these.

Planning obligations are legally enforceable against the owner (including a successor in title) of the land to which they relate. Because planning obligations relate to the land, all owners and other parties with an interest in the land e.g. lessees and mortgagees, must sign them. The obligation may take the form of a Section 106 Agreement between the landowner and the Council or an offer of a Unilateral Undertaking given by the landowner. Either way the planning obligation is legally binding, and before entering into it independent legal advice should be sought.

This webpage provides advice on and links to templates for standard Section 106 agreements and undertakings. The templates may not be suitable in all cases, but even for the most complex applications, they should still be capable of being used as a general framework, which may be amended or have bespoke clauses added. It is the intention that the templates should simplify and speed up the process of completing Section 106 obligations. They should also reduce the time spent by an applicant’s own solicitor in having to prepare the document from scratch and, where correctly completed and submitted, the time spent by the Council’s legal officers. This should assist in keeping fees payable for legal services to a minimum.

When is a Section 106 Planning Obligation required?

Planning legislation indicates that a planning obligation is only appropriate where it is:

  • necessary to make the development acceptable in planning terms;
  • directly related to the development; and
  • fairly and reasonably related in scale and kind to the development.

National Planning Policy Guidance indicates that a planning obligation shall in most cases only be sought from developments of more than 1 units or where they have a gross floorspace more than 1,000sqm. In cases where there is a known requirement for planning obligations, a draft Section 106 agreement or obligation shall be provided when the application is submitted. If the application is not accompanied by such a document or an adequate explanation why it has not been provided, then the application will not normally be validated. 

Furthermore, it is expected that the final draft of the agreement/obligation will be completed or be ready for signature at the time that a resolution to grant planning permission is made by the Council’s Planning and Development Committee or Planning Services Manager. Planning permission will not be issued until the Section 106 agreement/undertaking has been completed to the satisfaction of the Council.

Section 106 Agreement or Unilateral Undertaking – Which is most appropriate?

In many cases either can be used although a unilateral undertaking will often be the more straightforward. The initial drafting of a unilateral undertaking can be carried out by the landowner/developer’s solicitor. This can help to reduce delay since it is less reliant on the input of officers from the Council or other statutory bodies. The Planning Inspectorate also requires use of unilateral undertakings where a planning application is subject of an appeal following the refusal of planning permission. However, there are circumstances when a Section 106 agreement is more appropriate, for example where parties other than the applicant, are bound by obligations. If in doubt, please liaise with the Council.

What should be included in the Section 106 Agreement/ Unilateral Undertaking?

It is not possible to produce a definitive list covering all planning applications. However, there are certain types of infrastructure provision (or a financial contribution in its place) which are regularly required. Reference should also be made to relevant Supplementary Planning Documents (SPDs), which are adopted Council policy, including formulae used to calculate commuted sums, which can be found here. These include thresholds, indicating the minimum size of development above which planning obligations will be normally necessary. In summary, taking account of both the SPDs and government guidance, the minimum thresholds are as follows:

  • Affordable Housing – 11+ new dwellings.
  • Green Space, Play and Sports Facilities – 11+ dwellings and for certain types of communal residential accommodation where the floorspace exceeds 1,000sqm (also dependent on an assessment of local need).
  • Education Facilities – 25+ dwellings, or 15+ dwellings in rural parts of the Borough, (also dependent on an assessment of local need).
  • Transport – there is no SPD or any set threshold, so improvements to facilities or financial contributions will be sought depending on specific circumstances, but are normally only likely to be required on larger scale developments.

For more detailed guidance, including whether infrastructure shall be provided on-site or off-site with a financial contribution, reference should be made to the relevant SPD.  Before a planning application is submitted, it is also recommended that it is discussed with planning officers and possibly the relevant statutory provider of the infrastructure who would benefit. These discussions can be used to agree informally the planning obligations which may be applicable in each case, as well as the amount payable for any commuted sums. It should be noted that Scarborough Borough Council normally charges for pre-application planning advice. 

If the applicant is seeking to establish that the Section 106 costs would render the development unviable, then this would have to be substantiated by submitting a viability assessment with the planning application.

Proof of ownership should be submitted with the draft Unilateral Undertaking/Section 106 Agreement. This should be by way of up to date Official Copies of the Register and Title Plan from H M Land Registry for registered land or an Epitome of Title (copies of the Title Deeds) for unregistered land.

The templates

Four templates (A-D) have been prepared with the aim reducing associated costs and delays. These can be accessed below. They are provided in Microsoft Word format so that the text can be easily amended electronically. Gaps in the text will need to be completed, while text in 'italics' should be amended, where appropriate. All templates can be downloaded at the bottom of this page.

  • A Section 106 Unilateral undertaking relating to off-site affordable housing contribution only
  • B Section 106 Unilateral undertaking relating to off-site affordable housing and open space/play/sports facilities contributions only
  • C

    Section 106 Unilateral undertaking with all relevant standard planning obligations

  • D Section 106 agreement with all standard planning obligations

Template D, or possibly C, would be appropriate for most applications, providing a comprehensive document covering all standard text. Text may then be added, amended or deleted as appropriate. It is unlikely that an agreement/undertaking would correspond precisely to either of these templates. They are therefore colour-coded to identify those parts of the text which should be retained, amended or deleted as follows:

  • Black non-italic – retain text
  • Black italic – delete or amend as appropriate (seek guidance if in doubt)
  • Purple – retain where financial contribution towards off-site affordable housing is required
  • Blue

    – retain where affordable housing is provided on site

  • Dark green – retain where financial contribution towards off-site open space/play/sports facilities is required
  • Bright green – retain where obligations relating to on-site open space/play/sports facilities are required
  • Pink - retain where financial contribution towards education is required
  • Brown

    - retain where financial contribution towards transport infrastructure is required.

One scenario which is not necessarily fully addressed by the template is the case of outline planning applications, where the number of dwellings, floor area or number of bedrooms has not yet been established, so it may not be possible calculate a precise financial contribution. In such circumstances the Council should normally be able to provide an alternative form of words to cover such a situation.

Section 106 monitoring, drafting and legal charges

The preparation and monitoring of Section 106 planning obligations is a time-consuming and complex process, taking up a significant amount of officer time. It is essential that the system operates effectively and efficiently.

The Council has therefore decided to introduce charges to cover the cost of monitoring and drafting planning obligations. Monitoring charges were agreed by the Council's Cabinet, following a process of consultation and consideration by the Planning and Development Committee and became operative in 1 April 2011.

The charges were drawn up having regard to relevant national guidance and legislation. They were devised to be proportionate to the amount of work undertaken in relation to planning obligations by the Council and to the scale of development. The monies raised will be spent on costs relating to the administration and monitoring of planning obligations. Section 106 Monitoring Reports are prepared annually and can be viewed here.

There is a strong presumption that the monitoring charges in particular will be applied in all cases and any reduction would only be allowed where a compelling case has been made on the basis of the principles set out in the CIL Regulations 2010 (or subsequent re-enacting legislation).

The charges are set out below:

Monitoring charge

  • Monitoring Charges on all non financial obligations - £500 per obligation.
  • Monitoring Charges on financial obligations – 5% of value of all obligations up £100,000, plus an additional 2.5% of any amount exceeding £100,000. A fixed charge of £250 shall be levied where the total is less than £5,000.

The monitoring charge is likely to be index-linked when payment takes place later than completion of the obligation, (but would not be subject to VAT).

Planning drafting charge

A planning drafting charge of £150 per planning obligation may be charged in a Section 106 document where planning officers have helped to devise non-standard obligations. This is paid on receipt of the completed document.

Legal services charges

The Council's Legal Services can assist with the preparation of Section 106 obligations if required. Alternatively, developers can utilise the templates available on this website and/or the services of their own solicitor, following which the submitted draft document and proof of ownership will be verified by Legal Services. In either case a contribution will be payable by the developer towards the Council’s legal costs. This will be based on the work involved and the time spent, but as a guide the charge for checking a submitted Unilateral Undertaking will be in the region of £250. A Section 106 Agreement is a more complex type of planning obligation which usually takes longer and as a result is more expensive to complete. This fee is payable on receipt of the completion Section 106 document.

If you have any questions or require more information please contact us.

Modification or Discharge of Planning Obligations

Under Sections 106A or 106BA of the Town & Country Planning Act 1990 a landowner may in certain circumstances seek to modify or discharge a planning obligation. The application forms and guidance notes are provided at the end of this page, but before applying it is recommended that advice is sought from Planning Services to ensure that the correct procedure is being followed.