Developer contributions

Updated: 29.04.22

Section 106 obligations and planning application requirements

Under Section 106 of the Town and Country Planning Act 1990 a Local Planning Authority can seek obligations, both physically on-site and contributions for off-site, when it is considered that a development will have negative impacts that cannot be dealt with through conditions in the planning permission. Policy 12 of Local Plan Part 2 on Developer Contributions is most relevant.

For example, new residential developments place additional pressure on existing social, physical and economic infrastructure in the surrounding area. Planning obligations aim to balance this extra pressure with improvements to the surrounding area to ensure that a development makes a positive contribution to the local area.

The obligations may be provided by the developer building or directly providing the matters necessary to fulfil the obligation. This might be to build a certain number of affordable homes or create new public open spaces on-site, for example. Alternatively, planning obligations can be met in the form of financial payments to the Council to provide off-site infrastructure works.

When a Section 106 obligation will be sought

Blackburn with Darwen Borough Council will only seek contributions in relation to major planning applications, i.e. where 10 or more homes will be provided, or a proposed residential site has an area of 0.5 hectares or more. For non-residential development this means additional floorspace of 1,000 square metres or more, or a site of 1 hectare or more.

The financial contribution requirement for off-site green infrastructure provision is set via the Green Infrastructure & Ecological Networks Supplementary Planning Document, and the Affordable Housing Developers Guide sets the tariff for off-site affordable housing contributions. These documents can be accessed in the Planning policies, strategies and guides section.

Contributions towards other infrastructure works as a result of new development, such as highways, education or health are agreed on a case by case basis, evidenced by an assessment of the impact the specific development will have. The final decision is usually made by the Planning and Highways Committee in accordance with Council’s Constitution.

The Community Infrastructure Levy (Amendment)(England)(No.2) Regulations 2019 allow Local Authorities to charge a monitoring fee through Section 106 planning obligations, to cover the cost of the monitoring and reporting on delivery of that Section 106 obligation as described above.

Further details on monitoring fees and the process for agreeing and spending Section 106 contributions.

Applicants are encouraged to utilise the pre-application advice service to allow Section 106 requirements to be identified prior to submitting a planning application.

Development Viability

Policy 12 of the Local Plan Part 2 confirms that in setting the level of any financial contribution, the Council will take into account the total contribution liability incurred by developments arising from all policy and site specific requirements. Its objective will be to ensure that the overall level of contribution required will allow developments to remain viable, wherever this is compatible with securing essential works that are fundamental to the acceptability of the proposal.

Furthermore, Policy 7 sets out how the Council will work proactively with developers to identify ways in which their schemes can be made financially viable.

Where a developer seeks to negotiate a reduction in standards that would normally apply to development, or a form of development that would not normally be acceptable, on grounds of financial viability, the Council will require the developer to supply evidence as to the financial viability of the development. This will normally take the form of an open book financial appraisal of the proposed development, demonstrating the full range of costs to be incurred by the development including the initial purchase of the land, the financial return expected to be realised, and the profit expected to be released. The level of detail required in such an appraisal will always be proportionate to the scale and complexity of the development proposed.

Further guidance at GOV.UK.

Viability Appraisals which are submitted with planning applications in order to negotiate a reduction in contributions will be independently assessed, with costs borne by the applicant.

The following fees for reviews of viability appraisals apply from 1st April 2021:

Section 106 Viability Appraisals
Appraisal type Fee
Number of Units 1-24 £2,000
Number of Units 25-99 £2,800.00
Number of Units 100-400 £3,800.00
Number of Units 400+ £4,800.00
Non-residential £3,200.00

Following the independent assessment, any further advice required from the Councils appointed Viability Consultant would be charged at a cost of £185 per hour (at the applicants cost).

In assessing the information supplied in a financial appraisal, the Council will always seek to ensure that its decision represents the appropriate balance between the desirability of securing early delivery of the development, and that of providing in full for the standards set out in planning policy.

Following the independent assessment, any further advice required from the Councils appointed Viability Consultant would be charged at a cost of £175 per hour (at the applicants cost).

Once finalised, a summary of the viability appraisal (template attached) will be published to the planning application file. The summary template is shown here.

What to submit with a relevant planning application

All applicants should complete and submit the Planning Obligations / Section 106 Statement with their planning applications. In addition, if a reduction in Section 106 contributions is being sought, a Viability Appraisal must be submitted as described above.