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Heads of terms for Section 106 legal agreements

S.106 agreements or planning obligations are private agreements negotiated between the council and persons with an interest in the property or piece of land.

When required

Schemes involving:

  • affordable housing
  • other developments where there are any off-site mitigation measures identified, for example, within a transport assessment
  • the management and maintenance of surface water drainage systems
  • the provision, management and maintenance of open spaces

Guidance

 The Section 106 pro forma must include the following details:

  • details of the proposal
  • details of what the Agreement is for
  • title deeds and Land Registry information
  • names and addresses of the interested parties
  • name and address and contact details of the instructed solicitor

If the developer considers that it is not financially viable to enter into a S.106 Agreement or that they wish to make reduced payments, a financial viability assessment must be submitted.

The Financial Viability Assessment must include the following information:

  • schedule of both gross and net internal floor areas
  • land purchase price, including proof, and the estimated market value of the site
  • date of land purchase
  • schedule of development costs (normal)
  • schedule of development costs (abnormals)
  • proof of development costs (abnormals)
  • reasons why full costs (including abnormals) were not reflected in the purchase price
  • expected sale price of dwellings/buildings, including the expected dates of sale
  • intended profit levels, including profit type in relation to affordable housing provision, the Financial Viability Assessment should include all of the above information and details of the % of affordable housing that could be provided against a diminishing scale of profit levels, up to the level of 100% affordable housing provision.

Viability Appraisals should take into account a land value that reflects the market value of the site at the time of the application, that is, the cost of the land reflecting current planning policy and all development costs, and not the actual price paid.

Only costs that were unforeseeable at the time of purchase will be considered abnormal for the purposes of affordable housing negotiations.

Known costs, such as site clearance, site preparation, piling, erection of retaining walls, infrastructure provision and/or diversion, works to the highway, flood mitigation measures, archaeology, decontamination or remediation will not be considered as abnormals.

Where abnormal costs can be clearly demonstrated, a reduction in the affordable housing provision may be agreed on an individual site basis.

Fee for viability appraisals

  • 1 to 10 dwellings £720 including vat
  • 11+ dwellings £1,440 including vat
  • Others, Minimum £720 including vat

Please note there is a separate fee, payable in addition to the standard planning fee, for applications requiring a viability assessment.

The fee is to cover the council’s costs in appointing an independent professional to evaluate the assessment submitted.