Key points
- Planning obligations are legal agreements that make a development acceptable, securing things such as affordable homes, school places or open space.
- England and Wales use Section 106 agreements, Scotland uses Section 75 agreements and Northern Ireland uses Section 76 planning agreements.
- The Community Infrastructure Levy is a separate fixed charge that applies only where a council in England or Wales has adopted it.
- Affordable housing is usually the largest obligation on a housing scheme and is normally reflected in what a developer can pay for land.
- Obligations bind the land, so landowners are often asked to sign them and should take independent legal advice first.
What is a Section 106 agreement?
A Section 106 agreement is a legal agreement between a council and the people who own or have an interest in land, made under section 106 of the Town and Country Planning Act 1990. It secures what a development needs to be acceptable, such as affordable homes or school contributions, and it binds the land.
Section 106 applies in England and Wales. An obligation can restrict how land is used, require works, or require payments to the council. Because it runs with the land, it can be enforced against later owners. A developer can also offer a unilateral undertaking, which binds the land without the council signing.
In England and Wales, an obligation should only be a reason to grant permission if it meets three legal tests: it must be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related to it in scale and kind.
Why would I, as the landowner, be asked to sign?
Because obligations bind the land, councils normally want everyone with a legal interest in it to sign. That usually means the freehold owner, any mortgage lender and anyone with an option or promotion agreement over the land. If you still own the land when planning is granted, you will often be a party, even though the developer will carry out the obligations.
That makes it important to understand what you are agreeing to: who pays, when payments fall due, and what happens if the land is sold before development starts. Your solicitor should check that liability passes to the developer or buyer and that you are released once you no longer own the land. On option and promotion agreements with Land to Homes, we pay your reasonable legal fees, with the amount agreed up front in the heads of terms.
What is the Community Infrastructure Levy, and how is it different?
The Community Infrastructure Levy (CIL) is a charge on new development that a council can set in a published charging schedule. Unlike Section 106, it is not negotiated site by site. Rates are set per square metre of new floorspace, and payment normally becomes due when development starts.
- Where it applies: CIL operates in England and Wales, but only where a council has adopted a charging schedule. Many areas rely on Section 106 alone. CIL does not apply in Scotland or Northern Ireland.
- Who is liable: GOV.UK guidance says liability defaults to landowners if nobody else assumes it, so make sure the developer formally assumes liability.
- Reliefs: there are reliefs and exemptions, including for qualifying social housing and for self-build homes where the exemption is obtained before work starts.
Where CIL applies, councils tend to use Section 106 mainly for affordable housing and site-specific needs, so the two can sit side by side on the same scheme.
How are affordable housing requirements set in each nation?
Affordable housing is usually the largest planning obligation on a housing scheme. Each nation sets its own framework, and the detail is in the council's local or development plan.
| Nation | Legal agreement | Where the affordable housing policy comes from |
|---|---|---|
| England | Section 106, plus CIL where adopted | The National Planning Policy Framework and the council's Local Plan. Planning guidance says affordable housing should normally only be sought from major developments of 10 or more homes or sites of 0.5 hectares or more, with lower thresholds possible in designated rural areas. |
| Wales | Section 106, plus CIL where adopted | Planning Policy Wales and the council's Local Development Plan. |
| Scotland | Section 75 agreement | NPF4 Policy 16 expects the affordable contribution on market housing sites to be at least 25% of the homes, unless the Local Development Plan sets out other locations or circumstances. |
| Northern Ireland | Section 76 planning agreement | The council's Local Development Plan. Social housing secured this way is known as social housing via planning gain and is secured by a Section 76 agreement or a planning condition. |
In England, a revised National Planning Policy Framework was published on 17 August 2026, and the government has said it will consult on a standard Section 106 template for medium-sized sites. Practice is likely to keep changing, so check the latest position with a planning consultant.
How do Section 75 and Section 76 agreements work?
In Scotland, planning obligations are made under section 75 of the Town and Country Planning (Scotland) Act 1997. Once the agreement is recorded in the Register of Sasines or registered in the Land Register of Scotland, the planning authority can generally enforce it against later owners. Like Section 106, it can cover affordable housing, infrastructure contributions and restrictions on use.
In Northern Ireland, section 76 of the Planning Act (Northern Ireland) 2011 allows anyone with an estate in land to enter a planning agreement with the council, or with the Department for Infrastructure where it decides the application. The agreement binds anyone who later takes title from that person, unless it says otherwise.
In both nations the practical points for landowners match those in England and Wales: understand what you sign, who pays and when, and how you are released once the land is sold.
How do affordable housing obligations affect land value?
Developers usually work out what they can pay for land using a residual approach. They estimate what the finished homes will be worth, then deduct build costs, fees, finance, a profit margin and the cost of planning obligations. What is left is what the land can support. Affordable homes are normally sold to a housing association or council for less than open-market homes, so a higher affordable requirement usually means a lower land value.
In England, planning guidance on viability says the price paid for land is not a relevant reason for failing to meet plan policies. Where a viability assessment is used, the benchmark land value is based on the existing use value of the land plus a premium for the landowner. In other words, policy costs are meant to be reflected in the land price, not the other way round. Our guide to how development land is valued explains the residual method in more detail.
Can obligations change after planning is granted?
Sometimes. Councils and developers can agree to vary an obligation, and there are formal procedures to apply to modify or discharge one, with rules that differ between the nations. Whether affordable housing can be reduced on viability grounds depends on local and national policy and on the evidence. If you signed the original agreement, a variation may need your involvement too, so keep your solicitor informed.
What should landowners look for in heads of terms?
- How planning obligations and CIL are treated when your price or share of proceeds is worked out.
- Whether there is a minimum price, and how affordable housing requirements affect it.
- Whether you must sign the Section 106, 75 or 76 agreement, and how you are released afterwards.
- Who pays the legal costs of negotiating the agreement.
- What happens if requirements change between signing and sale.
Our guide to who pays for land promotion covers how costs are usually deducted from sale proceeds. If you would like a view on your own land, start with a free site appraisal.
Frequently asked questions
Does every housing development need a Section 106 agreement?
No. Many small schemes are approved with planning conditions alone, and in England affordable housing contributions are normally only sought from major developments, although lower thresholds can apply in designated rural areas. Larger schemes, and schemes needing contributions to roads, schools or open space, usually need an agreement. Scotland and Northern Ireland use Section 75 and Section 76 agreements in a similar way.
Who pays Section 106 contributions?
The developer normally carries out the obligations and makes the payments, usually at trigger points such as the start of work or the occupation of a set number of homes. Because obligations bind the land, though, their cost is reflected in what a developer can pay for it, so landowners effectively share the cost through the price. Your agreement should make clear that liability passes to the developer.
Can the Community Infrastructure Levy be negotiated?
Generally not. CIL rates are fixed in the council's published charging schedule and applied to the new floorspace. There are set reliefs and exemptions, for example for qualifying social housing, but they must be claimed correctly and, for self-build, before work starts. CIL applies only in England and in Welsh council areas with a charging schedule. It does not apply in Scotland or Northern Ireland.
What happens to the affordable homes once they are built?
They are usually sold to a housing association or council, which lets them at social or affordable rents or offers them for shared ownership, depending on what the agreement requires. The obligation normally fixes the number, type and tenure of the homes and how they will be allocated. Our guide to how affordable and social homes are delivered explains the routes and grant programmes in each nation.
Sources
- Planning obligations: planning practice guidance (GOV.UK)
- Community Infrastructure Levy: guidance (GOV.UK)
- Viability: planning practice guidance (GOV.UK)
- Creating a clear, rules-based planning system (GOV.UK, August 2026)
- Town and Country Planning (Scotland) Act 1997, section 75
- Planning Act (Northern Ireland) 2011, section 76
- National Planning Framework 4, Part 2: national planning policy (gov.scot)
- Department for Communities: housing association scheme types
This guide is general information about how land and housing processes usually work. It is not legal, tax or financial advice. Rules differ between England, Wales, Scotland and Northern Ireland and change over time, so take advice from a solicitor, accountant or land agent on your own situation.