What is Section 106? A Complete Guide to Developer Contributions

What is a Section 106 agreement?

A Section 106 agreement is a legally binding contract between a developer and a local planning authority (LPA). It sits alongside a planning permission and imposes obligations on the developer that go beyond what standard planning conditions can achieve. The name comes from Section 106 of the Town and Country Planning Act 1990, though you will also hear them called “planning obligations” or simply “S106 agreements.”

The mechanism works like this. A developer submits a planning application for, say, 300 homes on the edge of Exeter. Devon County Council’s education team calculates that 300 new households will generate roughly 75 primary-school-age children, and the nearest school is already full. The developer cannot simply build the homes and leave the council to cope. Instead, the LPA negotiates a Section 106 agreement requiring the developer to fund £2.4 million toward a new primary school, provide 90 affordable homes on-site, and lay out two hectares of public open space. Only then does the planning permission get granted.

Crucially, S106 obligations “run with the land.” That means if the original developer sells the site to another housebuilder, the new owner inherits the same obligations. The council does not need to renegotiate. This is what makes them enforceable over long build-out periods—a large site might take a decade to complete.

Not every planning application triggers a Section 106 agreement. Small developments—an extension, a single dwelling, a change of use—rarely involve them. The threshold varies by council, but as a rule of thumb, developments of 10 or more dwellings (or sites of 0.5 hectares or more) are where S106 obligations start to apply. Major commercial developments, supermarkets, and large industrial schemes may also attract them.

Who pays Section 106 contributions?

The developer signs the agreement, and the developer writes the cheques. But the question of who really pays is more nuanced than it appears.

Planning policy in England operates on the principle that Section 106 costs are borne by the landowner, not the housebuyer. Here is the logic. A farmer’s field with no planning permission might be worth £25,000 per acre as agricultural land. With residential planning permission, that same acre could be worth £1.5 million or more. The difference—the “planning gain”—is vast. Section 106 contributions are supposed to come out of that uplift. In theory, the developer factors in S106 costs when deciding how much to pay for the land, and the landowner receives a lower price as a result.

In practice, the picture is messier. Developers conduct viability assessments—financial appraisals submitted to the council showing what they can afford to contribute without making the scheme undeliverable. These assessments are contentious. Developers argue that construction costs, abnormal ground conditions, or market downturns mean they cannot afford the full S106 package. Councils push back, sometimes commissioning independent reviews. The negotiation can drag on for months.

The tension is real. Wandsworth Council, for example, has historically secured some of the highest per-unit affordable housing contributions in London, while neighbouring Lambeth has at times accepted lower percentages after viability challenges. Whether a community gets a well-funded park or a token landscaping strip often depends on the quality of this negotiation.

One persistent myth: that Section 106 costs are simply passed on to homebuyers through higher house prices. Economists generally reject this. House prices are set by what buyers are willing and able to pay, which is driven by mortgage availability, interest rates, and local demand—not by the developer’s cost base. If a developer could charge more, they would do so regardless of S106 obligations.

What can Section 106 money be spent on?

Not anything the council fancies. The legal tests are set out in Regulation 122 of the Community Infrastructure Levy Regulations 2010 and mirrored in paragraph 57 of the National Planning Policy Framework. A planning obligation must be:

1. Necessary to make the development acceptable in planning terms
2. Directly related to the development
3. Fairly and reasonably related in scale and kind to the development

These three tests matter. A council cannot use a 50-home scheme in Harrogate to fund a bypass on the other side of the district. The obligation must fix or mitigate something that the specific development causes or worsens.

Within those constraints, the main categories of S106 spending are:

Affordable housing.By far the largest category. Most councils require 20–40% of homes on major sites to be affordable—either social rent, affordable rent, shared ownership, or First Homes. In 2022–23, around 49,000 affordable homes were delivered through Section 106 across England. That is more than half of all new affordable housing supply. A typical agreement might require a 200-home scheme in Bristol to include 60 affordable units, split between social rent and shared ownership, with pepper-potting throughout the site so they are indistinguishable from market homes. See affordable housing contributions by council.

Education.County councils and unitary authorities calculate the number of school places a development will generate and require a financial contribution per pupil. Oxfordshire County Council, for instance, charges approximately £20,000 per primary pupil place. A 500-home development generating 125 primary pupils would owe around £2.5 million for education alone.

Highways and transport.New junctions, traffic signals, pedestrian crossings, cycle lanes, bus service contributions. A warehouse development near junction 24 of the M1 might be required to fund a £1.8 million roundabout upgrade to handle the additional lorry traffic.

Open space, sport, and recreation.On-site play areas, off-site playing fields, contributions to maintain existing parks that will see increased use. Councils often calculate this per dwelling using a formula in their local plan—perhaps £1,500 per house toward open space maintenance over 25 years.

Health. Contributions toward GP surgery capacity are increasingly common. The NHS calculates that each new home generates roughly 2.4 residents, and a development of 1,000 homes in, say, North Somerset might need to fund an extension to the nearest practice to accommodate the additional patient list.

Other obligations crop up depending on the site: ecological mitigation (building bat boxes, creating newt ponds), flood drainage infrastructure, public art, employment and skills training plans, and travel plan monitoring fees.

How is Section 106 different from CIL?

The Community Infrastructure Levy (CIL) was introduced by the Planning Act 2008 and came into force in 2010. It was designed to complement—not replace—Section 106. The two systems now run side by side, which causes no end of confusion.

The core difference is straightforward. Section 106 is negotiated on a site-by-site basis. Every agreement is bespoke. CIL, by contrast, is a fixed-rate charge set by the council in advance. A council that has adopted CIL publishes a charging schedule—so much per square metre of new floorspace, varying by use (residential, retail, etc.) and sometimes by location within the district. A developer building 5,000 square metres of new housing in a CIL-charging area knows the levy before they submit an application.

Not all councils charge CIL. As of 2025, roughly 160 of England’s 337 LPAs have adopted it. The rest rely entirely on Section 106. Some authorities have concluded that CIL is not viable in their area because land values are too low to support both CIL and affordable housing requirements.

Where both exist, the general rule is that CIL funds strategic, area-wide infrastructure (a new school that serves the whole town, a relief road) while Section 106 handles site-specific mitigation (the affordable housing on that particular development, the access road serving that estate). Before September 2019, there were “pooling restrictions” that limited how many S106 agreements could fund the same piece of infrastructure. Those restrictions were removed by the 2019 amendments to the CIL Regulations, giving councils more flexibility. Read our detailed comparison of S106 and CIL.

The government has signalled its intention to replace both systems with a new Infrastructure Levy under the Levelling Up and Regeneration Act 2023. Pilot areas are expected, but national rollout remains some way off. For now, S106 and CIL continue to operate as normal.

How much Section 106 money is collected nationally?

The last comprehensive government survey of developer contributions, published by DLUHC (then MHCLG) in 2020 covering the 2018–19 financial year, estimated that Section 106 agreements delivered approximately £7 billion in planning obligations annually. That figure includes both financial contributions and the estimated value of in-kind obligations such as affordable housing built on-site.

To put that in context, £7 billion is roughly three times the budget of the Environment Agency, and more than the government spends annually on flood defences. It dwarfs CIL income, which the same survey put at around £900 million.

The distribution is wildly uneven. London boroughs and authorities in the South East collect the lion’s share because land values—and therefore the planning gain—are highest there. Tower Hamlets alone has historically collected over £100 million per year in S106 receipts. Meanwhile, an authority like Burnley or Pendle in East Lancashire might collect under £500,000, because lower land values mean less room for developer contributions after viability is accounted for.

Since 2020, every LPA in England has been required to publish an annual Infrastructure Funding Statement disclosing exactly how much S106 and CIL money it has collected, spent, and retained. For the first time, this makes it possible to track developer contributions council by council, year by year. Search our database to see your council’s figures.

What happens to unspent Section 106 money?

This is where public frustration with the system runs highest. Across England, councils are collectively sitting on billions of pounds in unspent Section 106 contributions. The money has been paid by developers. It is earmarked for specific purposes. And yet it has not been spent.

There are legitimate reasons for delay. Some contributions are “trigger-linked”—meaning they become payable only when the development reaches a certain stage, such as occupation of the 100th dwelling. Others are held pending the start of a capital project that takes years to design and procure. Building a new school is not quick, even when the money is in the bank.

But there is also genuine mismanagement. Councils sometimes lose track of individual S106 pots, particularly smaller contributions managed across multiple departments. Education money might sit in a county council finance system while the housing team at the district council does not realise it exists. Staff turnover, poor record-keeping, and lack of dedicated S106 monitoring officers all contribute.

The real sting is the clawback clause. Most Section 106 agreements include a provision allowing the developer to reclaim unspent money after a set period—typically five to ten years from the date of payment. If a council fails to spend an education contribution within the agreed timeframe, the developer can demand it back. And they do. In 2019, Basildon Council returned over £1 million to developers after missing spending deadlines. That is money that was supposed to fund local infrastructure, lost because of administrative failure.

Some councils have responded by hiring dedicated S106 monitoring officers, implementing tracking software, and publishing dashboards showing the status of every contribution. Others remain opaque. One purpose of the Infrastructure Funding Statement requirement is to force greater visibility, but the quality of IFS reports varies enormously between councils.

What is an Infrastructure Funding Statement?

The Infrastructure Funding Statement (IFS) is an annual report that every local planning authority in England must publish by 31 December each year. The requirement was introduced by Regulation 121A of the Community Infrastructure Levy Regulations 2010 (as amended by the 2019 regulations) and first applied to the reporting year 2019–20.

Each IFS must disclose, as a minimum:

• The total amount of S106 money received during the reporting year
• The total amount spent, and what it was spent on
• The total amount retained (held but not yet spent), with a summary of what it is allocated for
• Equivalent figures for CIL, if the authority charges it
• Details of any non-monetary obligations (affordable housing delivered on-site, land transfers, etc.)

Before 2020, there was no standardised requirement for councils to publish this information. Some did, voluntarily. Most did not, or buried the data in committee reports that were practically impossible for residents to find. The IFS changed that. For the first time, there is a legal obligation to disclose developer contribution finances in a public document.

The problem is format. The regulations do not specify a template. Some councils publish clear, well-structured PDFs with summary tables. Others produce dense spreadsheets. A few publish the bare minimum in a paragraph buried on page 47 of an Authority Monitoring Report. This inconsistency is exactly why we built s106 Tracker—to collect, standardise, and make searchable the data from all 337 IFS reports. Search IFS data by council.

Your rights as a resident

You do not need to be a planning professional to find out how Section 106 money is being used in your area. Several routes are open to you.

Check your council’s Infrastructure Funding Statement. Every LPA must publish one annually. Start with our council search to find summarised figures, or look for the full document on your council’s planning policy pages.

View the Section 106 agreement itself.Planning applications, including any associated S106 agreements, are public documents. You can view them on your council’s online planning register by searching for the application reference number. If the agreement is not available online, you can request to inspect it at the council offices.

Make a Freedom of Information request.Under the Freedom of Information Act 2000, you can ask your council for details of S106 contributions received, spent, and held. You can ask for specifics: “How much S106 education money has been received from planning application 21/01234/FUL, and has it been spent?” The council must respond within 20 working days.

Report concerns.If you believe a developer is not complying with their S106 obligations—perhaps the affordable homes have not been built, or a promised play area is missing—contact your council’s planning enforcement team. S106 obligations are legally enforceable, and councils have the power to take action, including injunctions, against non-compliant developers.

Engage early. The best time to influence S106 outcomes is during the planning application process, not after permission is granted. When a major application is submitted, the consultation period is your opportunity to raise infrastructure concerns. Parish and town councils often play a key role here, and many have successfully pushed for larger or better-targeted contributions by submitting detailed responses.