Planning Obligations

The purpose of this information is to help you understand what "Planning Obligations", "Section 106 Agreements" and "Unilateral Undertakings" are. It also tries to explain what you need to do if you are asked to enter into one, as well as the process involved.

• What is a planning obligation?
• What can an Obligation ask me to do?
• Types of Obligations
• Other Potential Sources of Funding

What is a planning obligation?
"Section 106 Agreements" and "Unilateral Undertakings" are types of Planning Obligation authorised by Section 106 of the Town and Country Planning Act 1990 as amended by Planning and Compensation Act 1991 Section 12. A planning obligation is a legal agreement between the planning authority and the applicant/developer and any others that may have an interest in the land. An obligation either requires the developer to do something or restricts what can be done with land following the granting of planning permission. Overall, only a few planning applications need a planning obligation before planning permission is granted. They tend to apply to major development schemes.

A Planning Obligation can only be used if:

• it is relevant to planning and is directly related to the proposed development
• it would make the proposed development acceptable in planning terms
• planning conditions or other procedures cannot achieve this.

Therefore, a planning obligation should represent a benefit for the land and/or the locality. Applicants will not be asked to solve existing problems, although they may be asked to contribute towards resolving an existing problem if the proposed development would make things worse.

Obligations are registered as Local Land Charges and are normally enforceable against the people entering into the obligation and any subsequent owner of the site

All planning obligations are legal instruments executed as deeds. Therefore, you may need to employ a planning agent and/or a solicitor to act on your behalf.

1 Previously known as a Section 52 Agreement under the 1971 Act.

What can an Obligation ask me to do?
If an obligation is required it can:

• restrict the development or use of land
• require specific operations or activities to be carried out in relation to the land
• require payment of a sum or sums of money - e.g. towards future maintenance costs
• require land to be used in a certain way

As a general rule, straightforward planning applications will not require a planning obligation whereas large scale developments may. However, as each application is judged on its own merits, this may not always be the case. Examples of applications where an obligation may be required are:

• self-contained residential annexes where agreement is sought to ensure that the annexe is not sold off as a separate unit or sub-let
• sites restricted to occupation by persons over a certain age (retirement homes)
• large-scale development where a contribution is sought for road or public transport improvements because of the impact of the development.

Types of Obligations
There are two types of obligations. These are a bilateral agreement known commonly as a "Section 106 Agreement", or a "unilateral undertaking". Both are entered into under section 106 of the Town and Country Planning Act.

A bilateral agreement (Section 106 Agreement) is an agreement between the applicant and the
Council, and occasionally others. The need for this type of agreement normally comes to light either during the pre-application discussion process or after the application has been submitted. If the need for such an agreement is identified prior to the submission of the application applicants are advised to submit either a draft agreement or "heads of terms" with the application to speed up the decision-making process. If an agreement is required the applicant will be advised of the main requirements and reasons. When agreement in principle is reached, the application is reported to the Planning Applications Committee, if necessary, for authority to proceed.

Following the approval by the Planning Applications Committee, a letter is sent by the Council's Legal Services Section to the Applicant / Agent / Solicitor seeking:

• an undertaking for payment of the Council's costs incurred in preparing the legal agreement
• Evidence of ownership of the land (for registered land this is by way of Office Copy Entries obtainable from HM Land Registry, for unregistered land this is by way of an epitome of title)

A charge is made because the Council incurs additional costs and this charge reflects the level of work involved, including any aborted work. This charge is payable immediately prior to completion or upon notification that the agreement is not to be proceeded with. Once an appropriate undertaking is received, the Council prepares a draft agreements and this is sent to the Applicant / Agent / Solicitor for ratification and final endorsement. Planning Permission is issued on completion of the legal agreement

To avoid slowing down the process:

• if you believe an agreement will be required by the Council submit a draft, or heads of terms with the application
• if you have concerns with the requirements of the suggested agreement, speak with the planning officer dealing with the application
• give the name and address of the person who will be dealing with the legal agreement to the planning officer dealing with the application as soon as possible: failure to do so may cause delays

A unilateral undertaking is an obligation offered by the applicant to the planning authority either in support of a planning application or a planning appeal. The terms of the agreement are identified by the applicant. This is produced by the applicant's solicitor in its entirety with no Council involvement. Only relevant undertakings will be considered. The planning authority will check that the undertaking is needed. If you would like the Council to check that the undertaking is in an acceptable format this can be done although a charge will be payable based upon the level of work involved. If you do not wish to submit the undertaking in draft format for comment then the Council will either accept this undertaking or reject it with reasons as appropriate.

Other Potential Sources of Funding
Developers could pursue a number of other possible funding sources:

• Landfill tax provides another potential source of funding and this could be investigated, particularly as regards the possibility of improvements to rural walking and cycling and the development of the National Cycle Network
• The National Lottery can make improvements to transportation.
• Quality partnerships will involve investment from one or more bus operators and will be agreed independently from the S106 process.
• Interchange facility improvements will rely on investment from interchange owners and possibly operators with possible support through the Local Transport Plan process.
• The potential for European funding is extremely limited, although it may be available in certain circumstances.
• The introduction of Green Transport Plans may provide the Council with
  opportunities for joint investment with the Highway Authority.
• Other potential sources of funding will be investigated as and when the initiative arises.