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The Government has announced that Commissioners are to be appointed for Nottingham City Council.  For further information, the council’s response and FAQs can be read here.

What are S106 Agreements?

Section 106 (S106) Agreements are legal agreements between developers and the Council for certain types developments consented by major planning permissions. They are also known as planning obligations and are financial and non-financial requirements which have been secured by “Planning Obligations".

S106 agreements are drafted when it is considered that a development will have significant impacts on the local area that cannot be mitigated by means of conditions attached to a planning decision.

Set out below is a summary of the type of S106 contribution that the Council may seek and the relevant Local Plan policies.

Type of Contribution

Policy

Quantum of development/calculations

Employment and training

Policy EE4: Local Employment and Training Opportunities

All schemes with build cost of over £1million. 

Open space

  • Policy EN2: Open Space in New Development
  • Policy EN3: Playing Fields and Sports Grounds
  • relevant site allocations

All major planning applications for residential and B1 commercial developments over 1,000 sq m of floorspace.

On site open space is calculated based on the average number of residents or workers likely to be accommodated on the site based on the size of housing or the type of commercial development. Alternatively, financial contributions are based on the per capita cost of maintaining the City’s main parks, which is annually revised  (see Annual update of Open Space costs). 

Drainage and flood protection

Policy CC3: Water relevant site allocations

Major development where required to make development acceptable in planning terms. The need arising from the development will be determined by the scale and nature of the development on a case by case basis.

Transport

  • Policy TR1: Parking and Travel Planning
  • Policy TR2: The Transport Network
  • relevant site allocations
Major development where required to make development acceptable in planning terms. The need arising from the development will be determined by the scale and nature of the development on a case-by-case basis.

Community facilities including education

Policy LS5: Community Facilities

Major development where required to make development acceptable in planning terms. The need arising from the development will be determined by the scale and nature of the development on a case by case basis.

Residential development (excluding Purpose Built Student Accommodation).  For education on sites of 10 or more dwellings (excluding 1 bed dwellings) the number of primary and secondary school places likely to be required is calculated based on the size and type of housing on the site. This number is then multiplied by the average cost of a school place, plus an additional amount for potential SEN places.  The National School Delivery Cost Benchmarking report: Primary,

Secondary and SEN Schools, June 2019 (or such update or other Department for Education (DfE) recognised report as may replace or supersede it), is used as the basis for calculating Education Contributions. (see also Update of Education costs).

Affordable housing

Policy HO3: Affordable Housing

Non Student - Major planning applications for residential development. 10% of homes on schemes 10-14 properties should be affordable and 20% on schemes of 15+ homes or sites or more than 0.5 Ha. If on site housing isn’t provided a financial contribution can be made based on local house prices (see Updated costs).

Student – same calculations as above but the number of units is calculated by dividing the total number of PBSA bed spaces by 5 (see Updated costs).

Other

Policy IN4: Developer Contributions

Major development where required to make development acceptable in planning terms. The need arising from the development will be determined by the scale and nature of the development on a case by case basis.

The above policies can be found in the Land and Planning Policies Document - LAPP (2020) (Part 2 Local Plan).  

Since the adoption of the Local Plan, the government has made significant changes to the Use Class Order. The Council has prepared this Statement on Use Class Change which sets out how policies in the Local Plan and Supplementary Planning Documents that refer to specific use classes can be applied in light of these changes.

Other planning obligations may be necessary to make developments acceptable in planning terms. The need arising from the development will be determined by the scale and nature of the development on a case by case basis.

In certain instances additional guidance to Local Plan policies is provided in the form of Supplementary Planning Documents and Guidance.  Currently the following documents provide details of how contributions will be determined for the following infrastructure.

 Infrastructure Supplementary Planning Documents and Guidance 
Purpose Built Student Accommodation Affordable Housing Contributions arising from Student Accommodation Supplementary Planning see also Revised S106 Contributions.
Education

Education Contributions from Residential Development see also Revised S106 Contributions

Affordable Housing Affordable Housing and Developer Contributions see also Revised S106 Contributions.
Open Space  The Provision of Open Space in New Residential and Commercial Development see also Revised S106 Contributions

Please view the Adopted Supplementary Planning Documents and Guidance page for further details.  Details of any new Supplementary Planning Documents including all consultations will be set out in our Latest News webpage.

The cost of S106 contributions will be updated when new information is made available.  Details of updates contributions will be set out on the S106 Contributions revised costs page.

S106 Estimator

To help make the process for determining of S106 open and transparent a new tool has been produced to give a summary of likely financial contributions for the following infrastructure;

  • Affordable Housing
  • Open Space
  • Education; and
  • Employment & Training

It should be noted that this is a working tool that will be adapted to changing guidance and will be reviewed as new Supplementary Planning Documents are produced and as contributions are reviewed annually. It is imperative therefore that the latest version of the S106 Estimator is always downloaded.

In order to address and agree issues that would need to be covered by planning obligations at an early stage, the council may require draft heads of terms to be submitted as part of a planning application where planning obligations are required.

The draft heads of terms should set out clearly the obligations that the developer/landowner is willing to be bound by, in order to meet the needs generated by the development that are not going to be met as part of the development scheme itself. The draft heads of terms should also include the agreed timing/triggers for satisfying the obligations.

The starting point for all applications will be that full, policy compliant contributions will be provided in accordance with the adopted local plan unless there is suitable, sufficient and justifiable evidence to depart from this.

If an applicant considers there to be issues of viability due to the level of contributions being sought which would render a proposal undeliverable, they are required to submit robust viability assessment. Where such an assessment is submitted this will be independently reviewed with the applicant required to pay the council’s costs for having this work undertaken. The person or organisation used for the independent review will be at the council’s discretion. 

Where it is found the normal requirements (on site provision of infrastructure or financial contribution) would make the scheme unviable and the application is still recommended for approval without a policy compliant S106 agreement, the application will be determined by the Planning Committee with an officer report setting out the reasons for any reduction in contributions.

Monitoring and Administration Fees

All S106 agreements require monitoring on a regular basis to determine whether any triggers for payment have been reached. These trigger points can include for example commencement, completion or occupation of development.  It is only when these triggers are reached that contributes are required to be paid.  Although the onus is on developers informing the Council when these triggers are met, this is not always the case. 

To cover some of the cost of monitoring and administrating S106 agreements, 3% of S106 contributions are currently top-sliced off to a maximum of £6784 (2023) subject to the maximum cost increasing in line with the Retail Price Index on or around 1 April each year. 

Legal Fees

The council's reasonable legal costs associated with the negotiation, preparation and completion of the s106 agreement are recoverable from the developer. These are not part of the planning obligation itself rather a charge for work done by the Council and they do not therefore form part of the planning obligation calculation.

The Council in line with recent changes to Government legislation is required to produce an annual Infrastructure Funding Statement (IFS).

The IFS provides information on developer contributions, which are used to provide infrastructure to support development within the City to help mitigate impacts caused by development.  It includes information on the contributions required, received, how financial payments have been used and retained. 

Further details can be found on the Infrastructure Funding Statement page including the latest IFS.

Infrastructure Funding Statements (IFS)

 

Details of a new nationally set ‘Infrastructure Levy’ were published in 2020 in the government’s White Paper, ‘Planning for the Future’. The government has said that it should see at least as much money raised to pay for local infrastructure and affordable housing as by the existing system of developer contributions in the planning process which would be scrapped.

Instead of negotiated Section 106 Agreements and the separate, locally set CIL, the government is proposing to introduce a single, nationally set ‘Infrastructure Levy’ as a proportion of the sale value of a development, above a minimum threshold. The aim is to raise more money for infrastructure and deliver more affordable housing whilst removing the delay and uncertainty that is considered inherent in negotiated agreements.

Further details of how and when this replacement levy will be introduced are awaited. In the meantime, the current S106 requirements remain. Even when replaced, there will remain the need for the Council to monitor and administer existing S106 Agreements and developers to pay any monies owed or provide agreed infrastructure as part of an agreement.

The statutory tests are set out in regulation 122 (as amended by the 2011 and 2019 Regulations) and as policy tests in the National Planning Policy Framework.

S106 Regulations states that such agreements can only be imposed where;

  • necessary to make the development acceptable in planning terms;
  • directly related to the development; and
  • fairly and reasonably related in scale and kind to the development.

The city council does not currently apply CIL but will continue to keep under consideration the need to introduce charging schedule, having regard to local viability conditions and any future review of the national system.

Set out below are definition of often S106 terms used.

Term

Definition

Agreed

Contributions that have been agreed within a Planning Obligation. Contributions may not have been collected/delivered and if the relevant planning permission is not implemented, they will never be received.

Allocated

Planning Obligations retained by the Council which have, or knowingly will be, used to fund a specific infrastructure project or infrastructure type. ‘Allocated’ also includes sums which will knowingly be passed to an external organisation.

Contribution Receiving Authority

A council to which a sum (or non-monetary contribution) is required to be paid under a Planning Obligation entered during the reported year.

Commuted Sum

A financial payment made, in accordance with a Planning Obligation, by a developer towards the provision of, a Developer Contribution, for example, affordable housing.

Development

The carrying out of building, engineering, mining or other operations in, on, over or under the land; or the making of any material change in the use of any buildings or other land, as defined in the Town and County Planning Act 1990 as amended. Unless it is defined under the Act as ‘permitted development’, Planning Permission is required for the carrying out of any development of land.

Developer Contributions

A collective term used to refer to financial and non-financial requirements which have been secured by a “Planning Obligation".

Infrastructure

Means not only physical infrastructure such as roads but also other provision that is directly required as a result of development and may for example include open space, affordable housing and education provision.

Material Consideration(s)

A factor or factors which a local planning authority may take into account in making a decision on a planning application before it. In certain circumstances, such a factor, or a combination of them, may be sufficient to lead the Council to determine the application other than in accordance with the provisions of the development plan. Where that occurs, the factor or factors involved must, by law, be genuine planning matters, relating to the development and use of land, and must fairly and reasonably relate to the application concerned.

Planning Permission

A written consent to the carrying out of development issued by a local planning authority or, on appeal, by a Planning Inspector or the Secretary of State. The permission is normally subject to conditions and will lapse if the development is not started within a stated period of time. Planning Permission for buildings may be in outline where the principle is approved, subject to the later submission of further applications for the approval of reserved matters.

 Secured/Agreed

Contributions that have been agreed within a signed legal document. These contributions have not been collected and if the planning applications are not implemented or trigger points raised then they will never be received or received in full.

Supplementary Planning Document (SPD)

Adopted policy statements that either elaborate key policies set out in the Local Plan or set out how policies apply to a particular site. They are prepared to cover particular development topics, or area based issues, such as planning briefs. SPDs are a Material Consideration in the determination of planning applications and were formerly known as Supplementary Planning Guidance (SPG).

Trigger

Sets out when a Developer Contribution is to be provided.  For example, employment & training contributions are often required prior to the commencement of development, whereas open space funding may not be required until development is ready for occupation.

Financial Year

Refers to the period 1 April to the following 31 March.

If you have any questions, please direct them in the following ways:

Query Email
General S106 queries planning@nottinghamcity.gov.uk
Technical issues related to the S106 Estimator Tool localplan@nottinghamcity.gov.uk