It is believed these planning agreements were intended to claw back the 'planning gain' made by a developer once planning permission had been granted and the value of his land subsequently increased as a result. Section 106 of the Town and Country Planning Act 1990, allows local planning authorities (LPA) to enter into a legally binding planning obligation or agreement with a developer over a related issue for the purpose of restricting or regulating the development or use of the land. This obligation is termed a Section 106 Agreement.

The Community Infrastructure Levy came into force on 6 April 2011 and will fully replace the Section 106 Agreements after a transitional period to 6 April 2014.  


These agreements place restrictions on the developer requiring them to reduce the impact their proposed development may have on the local community and infrastructure and to undertake (or make a financial contribution for), works that provide community benefits. This might be an obligation to build a by-pass, leisure centre, school, or provide a local children’s play area or landscaped open space in return for planning permission.

Affordable housing

The ever broadening scope of the section 106 agreements, commonly now also provide provisions for social and affordable housing on new developments. The builder provides these homes for free alongside the homes for sale in order to obtain local authority approval for his proposals. The price of your new home includes the cost of the 106 agreement. It is estimated that 40%* of large residential developments have paid section 106 contributions. The total figure agreed between councils and developers is a staggering £1.2 billion* - the estimated value of affordable housing provided as a result of planning gain, accounting for half* of this. This can put an average of £25,000 on the cost of providing your new home.

"Roof tax"

It is interesting to note that Milton Keynes is considering a policy of charging a so called 'roof tax' of around £18,000 per dwelling in return for planning permission, as an alternative to specific requirements in a 106 agreement. It is likely that other LPA’s may follow this route.

Sustainable energy

Recent proposals also working their way into the planning system include sustainable energy policies. These could require developers to ensure that a development generates a certain level of energy from renewable sources. This may take the form of solar panels on roofs or wind turbines, further adding to the cost and therefore price of a new home. However this would at least provide buyers with reduced energy costs.

(* figures from a report by Sheffield Hallam University for the DCLG - Government study on the section 106 system)

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Section 106 Agreements