How Section 106 helped to bring in funds

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SECTION 106 agreements were introduced under the Town and Country Planning Act 1990 and have since been heavily used by councils to boost funding for local open space and infrastructure projects.

The agreements allow a local authority to draw up a legally-binding contract with a land developer which agrees to make a contribution in return for planning approval.

It is expected that the contribution will compensate the existing community, and help shape new development, for example, to make sure a certain number of houses are affordable homes.

Another objective is to pay for the requirements of a new development, for example, the need for more school places or additional facilities for the community such as improvements to a village hall.

It can also include building new roads or improving old ones.

The planning obligations may also be non-financial, such as the provision of land for public open space or land to be given to a housing association for affordable homes.

Each agreement is drawn up separately and is the subject of negotiations before lawyers are brought in to draw up what are known as the Heads of Terms of the agreement.

Once the agreement is signed, payments cannot be spent on alternative works unless the developer agrees.

Payments can be made in the form of a lump sum or as instalments over a period of time, related to defined dates known as trigger points.

It is thought that many of the uses of the Section 106 agreement will be superseded by the new Community Infrastructure Levy, which is included in the Government’s Localism Bill.

Under this legislation, communities will be asked about what facilities they need, and a levy will be made on all new developments to provide them.