Section 106 Agreements

What is a S106 agreement?

An agreement made between a developer and a local council under section 106 of the Town and Country Planning Act 1990. Conveyancing Solicitors will check for the applicability of such agreements on property their client wishes to purchase.

Such agreements are intended to provide some benefit to the residents of a new development, and/or to reduce the impact of a development on existing community facilities.

A developer may agree to carry out works and provide facilities, or to pay money to the council to enable them to do the work.

They generally contain provisions for one or more of the following:

  • improvements and alterations to existing roads, e.g. to allow better or safer access to the development or improve traffic flow at a nearby junction
  • payments for alterations or extension to a nearby school which would enable it to cater for an increase in children wanting to attend it
  • providing land for use as a playground or public open space or for other amenity purposes
  • providing affordable housing – this could either be as part of the development or on a separate site
  • making provision for improved healthcare in the vicinity, such as provision of premises for a health centre

Councils require developers to enter into these agreements as a condition of granting planning consent, normally on major developments.

Why are they important for buyers?

Buyers should be aware that because these agreements create planning obligations, they are registered as local land charges. Anyone buying a house or flat on a new development will purchase subject to the existence of such an agreement. This means that if money is payable and a council cannot get payment from the developer, they may be able to take action against the people who have bought homes on the development.

This will not apply to all such agreements, as many councils agree to the inclusion of a clause releasing buyers of individual units from liability under any such agreement.

These agreements also impose obligations on local authorities to carry out any works they has agreed to do, especially if the developer has been paid for them. If the developer fails to take action against the council then individual buyers could refer matters to the local government ombudsman.