A Guide to Section 106 and CIL Obligations for Developers

Section 106 and Community Infrastructure Levy Regulations

When navigating the complexities of the UK planning system, many developers focus primarily on design, density and site constraints. However, the financial viability of a project often hinges on “developer contributions,” the other measures that local planning authorities (LPAs) use to ensure that most new development contributes to fund infrastructure needed in the local area.

In accordance with the Planning Act 2008 and the National Planning Policy Framework (NPPF), these financial contributions are not optional taxes but necessary measures to make a development acceptable in planning terms.

Understanding the nuance between Section 106 Agreements and Community Infrastructure Levy (CIL) planning obligations is vital for assessing financial contributions, monitoring fees and protecting your profit margins.

1. Section 106 (S106) Planning Obligations

Section 106 agreements, or “planning obligations,” are private legal deeds entered into by a developer and the local council, arranged on a case-by-case basis. They are specifically designed to mitigate the localised impacts of a development that cannot be dealt with through planning conditions.

What it Pays For

S106 is typically reserved for on-site needs such as affordable housing requirements, or very specific site-related impacts. This often means a developer is potentially liable for:

• Affordable Housing Contributions: A requirement to provide a percentage of units as social or affordable tenures.
• Site-Specific Highways: Direct access improvements or traffic calming measures immediately adjacent to the site.
• Environmental Offsetting: Specifically, securing Biodiversity Net Gain (BNG) units if the mandatory 10% gain cannot be achieved within the red line boundary.

The Negotiation

Unlike a flat tax, Section 106 is inherently flexible. Because it is a contract, it is subject to the rules of viability. If a council’s S106 demands render the total cost of a project financially unfeasible, developers can submit a Financial Viability Assessment. This professional audit may prove that the financial contributions requested are too high for the project to proceed, often leading to a reduction in the required contribution and a more appropriate balance being found.

2. Community Infrastructure Levy (CIL): The Fixed Tariff

The Community Infrastructure Levy (CIL) was introduced to provide a more transparent and faster way of collecting developer contributions to raise funds. Unlike the bespoke nature of S106, the CIL charging schedule is a non-negotiable, mandatory charge based on the council’s Charging Schedule.

The CIL Process

CIL rates are charged per square metre of the Gross Internal Area (GIA) of net additional floor space. The levy rates are set by charging authorities and often vary depending on the type of development (residential or commercial) or the specific geographic zone within the borough.

What it Pays For

CIL acts as a pooling fund for off-site strategic infrastructure that benefits the wider community. These “pot of money” funds are used for:

• New leisure centres and community hubs.
• Regional flood defences.
• Large-scale transport improvements across the district.

Exemptions and Pitfalls

While CIL regulations are rigid, there are vital exemptions for self-builders, charities and social housing providers.

However, there’s a critical pitfall: you must claim these reliefs and receive a formal decision before any work commences on-site. Starting work before the paperwork is finalised can result in the immediate loss of the discount and the imposition of heavy surcharges.

S106 and CIL: Key Strategic Differences

The following table outlines why these two mechanisms require different management strategies.

Mastering Your Strategy to Avoid Hidden Costs

To ensure these charges don’t wreck your project’s viability, you should follow three core strategic good practice principles:

1. Avoid Double-Charging

Legally, councils are prohibited from charging you for the same piece of infrastructure through both S106 and CIL. If an LPA asks for a CIL payment for general transport and an S106 contribution for a specific road improvement on a chargeable development, your planning consultant should audit these requests against the council’s local infrastructure list to ensure compliance.

2. Factor in the Legal Documentation

Because a planning permission isn’t legally issued until the S106 agreement is signed and sealed, this stage can add months to your timeline. Efficient developers instruct solicitors early and ensure all “proof of title” documents and appropriate evidence is ready to avoid stalling at the finish line.

3. Integrated Biodiversity Planning

S106 is now the primary vehicle for securing Biodiversity Net Gain. If your biodiversity net gain survey reveals you cannot meet the 10% BNG target on-site, you will be required to provide units off site or pay for “credits”. Knowing these costs during the due diligence phase allows you to adjust your land purchase price accordingly.

Our Expert Team Can Help Satisfy Your Planning Obligations

Whether you are a property owner dealing with a small-scale conversion, a new dwelling, residential development or major developments, you are potentially liable for financial contributions, making accurate cost planning essential.

At Arbtech, our expert team can provide information and the appropriate evidence required in ecology surveys and BNG surveys to satisfy your Section 106 s106 and Community Infrastructure Levy regulations and ensure effective delivery of your project through the planning process.

We have wide-ranging experience of working on planning applications for smaller developments and major projects relating to residential, commercial and mixed-use sites across the UK. We understand what local authorities expect when it comes to developer contributions and planning obligations.

Whether you have a proposed development or a project that is underway and you need to satisfy planning obligations, we can help.

Contact our experts who can provide further information about our services, or fill in the form at the top of this page for a quote.