Historic section 106 agreements: challenging unexpected council enforcement

For example, developing multiple houses in a small village will significantly impact the local community, so the property developer may be required to meet specific obligations (such as providing affordable housing or contributing to education or community facilities).

It is important to note that a section 106 agreement runs with and binds the land, rather than the individual landowner or developer who initially entered into the agreement.

In this article, our planning law team examines the risks associated with historic Section 106 agreements, using a recent successful challenge to a local authority demand as a case study, and highlights the importance of understanding when planning obligations are triggered and keeping clear records of developments.

We recently acted for a client in successfully challenging a Section 106 demand for contributions under a historic Section 106 agreement.

Our client had initially obtained planning permission to convert and extend an office building into a four-bedroom dwelling. To obtain the permission, she had entered a Section 106 agreement involving the payment of financial contributions.

She later decided to convert the offices into two residential flats instead so she could rely on permitted development rights (a national grant of planning permission for minor development) rather than implementing the planning permission. The planning permission was ultimately never implemented.

More than 11 years later, the Council sought just under £20,000 in contributions under the historic Section 106 agreement.

We were able to challenge the demand notice by providing evidence to the Council that the planning permission had never been implemented. The evidence which we provided included:

a) satellite images of the exterior of the property during and after the development

b) council tax records for both flats

c) contractor correspondence

d) occupancy documents evidencing that the property had been leased as two flats

This evidence demonstrated clearly that the development was not carried out under the planning permission.

As a result, the Council accepted that our client was not liable for the financial contributions under the Section 106 agreement.

Our client’s experience demonstrates that Section 106 agreements do not expire and even after many years, local authorities may try to enforce the obligations.

I am planning a development which may need a Section 106 agreement to be put into place, how can I avoid future issues?

The first step is to determine whether your proposed development requires planning permission. Many types of development fall within the scope of the permitted development rights.

If planning permission is required, ensure any Section 106 agreement clearly defines:

• the development permitted

• what constitutes “implementation”

• when financial contributions become payable

Keep clear records of any works which you undertake to your property. If the two schemes are similar and the evidence would not necessarily differentiate which scheme had been implemented you can notify the Council which scheme has been implemented and ask it is kept on the planning file for that application. Also, often there will be Community Infrastructure Levy payable and that has its own set of notification forms in particular a commencement notice. Alternatively, Building Control certificates can refer to a specific planning permission/prior approval that has been constructed.

I am planning to develop my property, but there is a historic Section 106 agreement in place - what should I do?

If, like our client, you or a previous owner previously entered into a Section 106 agreement to obtain planning permission (permission A) but later developed the property using permitted development rights or under an alternative planning permission (permission B), it is crucial to keep clear and comprehensive records of what has been built and which scheme was ultimately implemented.

Documents such as council tax records, photographs of the property before and after development and utility bills may assist.

If the new scheme, permission B, requires a s.106 agreement then it could be recorded in the same that permission A was not going to be implemented and its associated s106 agreement was no longer of any effect.

I am buying a property with a Section 106 agreement attached, what should I look out for?

If your pre-completion searches reveal a Section 106 agreement binding the property, it’s important to find out if the planning permission linked to the agreement was ever implemented and whether any obligations under the Section 106 are outstanding.

If there is any doubt about whether a planning permission has been implemented or whether there may be outstanding Section 106 obligations, seek professional advice. Remember that Section 106 agreements do not expire; if a future development on the land implements the relevant planning permission, the obligations may be triggered.

The law surrounding Section 106 agreements is complex. Russell-Cooke has extensive experience advising clients in relation to Section 106 agreements. We can help you assess your position, determine your next steps, and we can liaise with the local authority on your behalf.

If you have any queries regarding the issues discussed above, or find yourself in a similar position, please do get in touch to seek expert legal advice.

Alex Ground is a partner in the real estate, planning and construction team, advising on all aspects of planning, highways and compulsory purchase including planning applications, appeals, negotiating s106 agreements, challenges and enforcement.

Hebe Robinson is an associate in the real estate, planning and construction team and works on a wide range of planning law matters. Alex Ground is a partner.

Madeleine is a trainee in the Real estate, planning and construction team.