A section 106 agreement can have a significant impact on the viability, cost and timing of a development site. If you are buying land for development, it is important to understand not only whether planning permission has been granted, but also what obligations come with it. A site that appears development-ready can carry substantial financial and practical commitments that affect your project long after completion.

1) What does the section 106 agreement actually require?

A section 106 agreement is a legally binding agreement between a landowner and the local planning authority. It is commonly used to secure planning obligations that make a development acceptable in planning terms.

These obligations may include affordable housing contributions, highway improvements, open space provision, education contributions or restrictions on how and when development can proceed. The precise obligations vary from site to site, so it is important to review the document itself rather than relying solely on the planning permission.

Key takeaway

A section 106 agreement can be just as important as the planning permission itself. Before buying development land, ensure you understand every obligation, cost and restriction attached to the site and whether they remain enforceable.

2) Who is responsible for complying with the obligations?

Many buyers assume that obligations only affect the original developer. In reality, section 106 obligations often bind the land itself and can therefore pass to future owners.

When buying land for development, it is important to establish which obligations have already been discharged, which remain outstanding and whether any financial contributions are still payable after completion of your purchase.

3) Do the planning conditions and section 106 obligations work together?

The key issue is whether the planning permission conditions and section 106 obligations are consistent and capable of being satisfied in the required sequence. Their respective triggers, approval requirements and restrictions should be mapped against the proposed development programme.

An apparent mismatch—for example, where one document permits occupation but the other requires an obligation to be discharged first—can delay construction or occupation and may require clarification or variation before the project proceeds.

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4) Have any trigger events already occurred?

Section 106 agreements frequently contain trigger points linked to commencement of development, occupation of a certain number of units or completion of particular phases.

A buyer should investigate whether any trigger events have already occurred and whether contributions have been paid when required. If obligations have been missed, liability and enforcement risks may become a concern for a future owner.

5) Is the development still financially viable?

Some section 106 agreements were negotiated many years before development actually proceeds. Market conditions, build costs and sales values may have changed significantly since the agreement was entered into.

Part of the due diligence process should involve considering whether the obligations still allow the scheme to remain commercially viable and whether there may be opportunities to seek modifications through the planning process if appropriate.

6) Has specialist legal due diligence been carried out?

Planning documents, section 106 agreements and title documentation should be reviewed together rather than in isolation. A site may have planning permission, but that does not necessarily mean development can proceed exactly as intended.

Comprehensive due diligence can help identify hidden liabilities, outstanding obligations and practical risks before contracts are exchanged, allowing buyers to make informed decisions and negotiate appropriate protections where necessary.

7) How is a section 106 agreement documented?

A section 106 agreement is a formal legal deed, usually negotiated between the developer or landowner and the local planning authority during the planning process. The developer or landowner will normally instruct solicitors to negotiate the terms on their behalf, while the local authority is typically represented by its own in-house legal team or external lawyers.

The agreement is signed as a deed by the relevant parties and is usually completed before planning permission is formally issued. Once completed, it is registered as a local land charge and can bind future owners of the land, which is why it forms an important part of any development land due diligence exercise.

Section 106 agreements: frequently asked questions

What is a section 106 agreement?

A section 106 agreement is a legally binding planning agreement entered into under section 106 of the Town and Country Planning Act 1990. It is used to secure obligations from a developer or landowner to mitigate the impact of a proposed development and make it acceptable in planning terms.

Do section 106 agreements expire?

Not necessarily. Whether obligations remain enforceable depends on the terms of the agreement and the nature of the obligations. A careful review is required to determine which provisions remain operative and whether certain obligations have already been fulfilled.

Does a section 106 agreement bind future owners?

Usually, yes. A section 106 agreement is typically entered into by the landowner and the local planning authority and is registered as a local land charge. Because the obligations generally attach to the land itself rather than to a particular owner, a purchaser acquiring the site may become responsible for complying with outstanding obligations under the agreement.

However, the extent of any liability will depend on the wording of the agreement and whether particular obligations have already been satisfied or discharged. This is one of the reasons why a review of the section 106 agreement forms an important part of development land due diligence.

What happens if a section 106 agreement is breached?

If a section 106 agreement is breached, the local planning authority has enforcement powers and may take action to secure compliance. Depending on the nature of the breach, this can result in delays to the development, restrictions on occupation of completed units, court proceedings or financial consequences for the party responsible.

For developers and purchasers, a breach can also affect the value and marketability of the site, particularly where outstanding obligations have not been identified before acquisition. Careful investigation of compliance history is therefore essential when buying land for development.

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About the author

Carlos Torres is a solicitor in the Commercial Property team at Grant Saw Solicitors. He has a particular focus on property development work and development land transactions, including conditional contracts, option agreements, overage arrangements, planning-linked transactions and development site acquisitions and disposals. He also advises on wider commercial property matters, including acquisitions, disposals, financing, landlord and tenant work, and corporate support involving the property aspects of business and company transactions.

Carlos graduated in law in 2015 in Brazil and qualified as a solicitor in England and Wales in 2018 via the Qualified Lawyer Transfer Scheme. He is a dual-qualified lawyer, admitted in both England and Wales and Brazil, with over 11 years' experience in legal practice. Carlos Torres is regulated by the Solicitors Regulation Authority. SRA number 638124.

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Disclaimer

This article is for general information only and is not legal advice. Laws and guidance change and outcomes depend on facts. If you need advice on your situation, please contact us. Grant Saw Solicitors LLP is authorised and regulated by the Solicitors Regulation Authority.

Last updated: 22 October 2026