Section 106 Planning ObligationEdit
Section 106 planning obligation is a tool within the United Kingdom’s planning system that allows local authorities to secure contributions from developers to cover the cost of infrastructure and services needed because a new development will place greater demand on them. These commitments are legally binding and are tied to planning permission under the Town and Country Planning Act 1990. They are negotiated as part of a planning obligation, sometimes expressed as a Section 106 agreement or as a unilateral undertaking, and they can involve money payments or in-kind works and facilities. The aim is to ensure that growth pays for itself and that the local area receives the necessary upgrades to roads, schools, healthcare facilities, open spaces, and other public services that accompany new development.
From a policy perspective, supporters argue that Section 106 obligations strike a practical balance between private property rights and the needs of communities. They provide a disciplined way to capture the incremental cost of growth and to target funding for projects that would otherwise struggle to get financed. In many cases, the negotiated terms are tailored to reflect the specific impact of a given site, making them more precise than broader blanket schemes. Proponents also point out that S106 can preserve the pace of development by ensuring that essential infrastructure is delivered in conjunction with housing or commercial growth.
However, the mechanism is not without controversy. Critics argue that the negotiation process can slow down development, especially for smaller builders who lack teams to navigate lengthy negotiations. The costs imposed by S106 obligations can be passed through to buyers, worsening affordability, particularly where contributions apply to housing projects in areas with tight margins. There is also concern that the process can create uncertainty, as the exact terms may vary from one site to another, and as viability assessments play a role in determining what can be required. In this sense, some developers view S106 as a prudent affordance for local needs, while others see it as a source of friction that can deter investment and reduce housing supply.
Another persistent debate centers on how S106 relates to the broader infrastructure funding framework. The Community Infrastructure Levy (CIL) was introduced to standardize and streamline infrastructure funding, reducing reliance on site-by-site negotiations. In practice, CIL and S106 operate in parallel: CIL provides a predictable, levy-based funding stream for broader infrastructure needs, while S106 addresses site-specific impacts that may not be adequately captured by a levy alone. Critics argue that the coexistence of two systems can be duplicative or confusing, while supporters contend that each tool serves complementary purposes. See Community Infrastructure Levy and planning obligation for more on the broader funding framework and how it interacts with S106.
In debates about reform, many observers emphasize improving predictability, transparency, and speed. Proposals include standardizing common obligations, setting clearer thresholds, and ensuring that contributions are strictly related in scale and kind to the impacts of the development. These aims echo the language of the underlying legal framework, which requires that obligations be necessary to make the development acceptable and fairly related to its scale and kind, as defined in the relevant statute and policy guidance. See Town and Country Planning Act 1990 for the statutory basis and National Planning Policy Framework for the higher-level policy context.
Controversies and debates, viewed from a pro-growth, market-friendly perspective, often revolve around three themes. First, the cost and delay associated with negotiations can chill investment and push developers toward alternative sites with lower or more certain requirements. Second, the distributional effects—particularly on affordable housing and on the price of new homes—are hotly debated, with critics arguing the regime adds unnecessary costs, while supporters argue that without these contributions, the local services and infrastructure would lag behind development. Third, the transparency and accountability of the process come under scrutiny; critics worry about opaque terms and the potential for “planning by negotiation,” whereas defenders highlight that well-structured agreements reflect real impacts and create enforceable financial commitments that deliver tangible benefits.
From a reform standpoint, many advocate codifying and streamlining S106: reducing negotiation frictions, aligning obligations with clearer national or regional standards, and strengthening the link to measurable outcomes. They argue that a more predictable framework would reduce delays, protect the supply of housing, and still deliver targeted infrastructure improvements. In this view, the right balance is achieved when developers know what is expected in advance, when the local community can count on capital projects, and when the system avoids shopping lists of unrelated demands. See Planning permission and local planning authority for the entities that administer these processes, and Education or affordable housing for typical areas where contributions are directed.
The discussion also engages broader questions about how growth should be funded and what role the market should play in shaping local infrastructure. Advocates of a lighter touch argue that the market, rather than bureaucratic processes, should determine where housing should go, with minimal impediments to land development and streamlining of contributions. Opponents contend that growth without adequate infrastructure creates a drag on the local economy and reduces quality of life, making S106-type mechanisms a necessary instrument of responsible growth management. The debate continues to revolve around efficiency, predictability, and the right scale of local control.
See also