Development Agreements

Development Agreements

When a developer builds on local authority land they must get planning permission from that local authority. This planning permissions may be granted subject to requirements made by the local authority through a ‘section 106 agreement’. Once the property has been built the developer may seek to have the local authority adopt responsibility for the infrastructure such as roads and drainage – this would be done by section 38 and 104 agreements.

Each agreement can affect the responsibility you have to maintain your property. They will affect whether you have to pay maintenance costs and may place restrictions upon what you can do with your land. Therefore, it is important that you discover which, if any, of these agreements apply to your home.

This article will provide an outline of each of the three agreements.

Section 106 Agreement

Where a developer hopes to build on local authority land they will have to obtain planning permission. According to s.106 Town and Country Planning Act 1990, the local authority can come to a binding agreement with the developer to grant planning permission subject to various conditions. These conditions can stipulate requirements about the use of the land, and the quality and manner of the development.

The Act provides the following list of conditions which the agreement may include:

  • ‘Restricting their development or use of the land in any specified way;
  • Requiring specified operations or activities to be carried out in, on, under or over the land;
  • Requiring the land to be used in any specified way; or,
  • Requiring a sum or sums to be paid to the authority’

S.106(1) Town and Country Planning Act 1990

Through these restriction and obligations relating to the land, the agreement mitigates the potentially detrimental effects of development, thus making it more acceptable for planning permission.

Section 38 Agreement

Usually a homeowner will be liable for the upkeep and maintenance of privately owned roads which serve their property. However s.38 Highways Act 1980 provides that the developer can come to arrangement with the highway authority where the roads are adopted after completion thus making the highway authority liable for their maintenance, rather than the owner.

The aim of this, from a developer’s point of view, is improve the property’s marketability by relieving potential buyers of maintenance costs which they would otherwise incur. Equally, the highway authority can dictate quality standards as conditions for the roads being adopted.

Once a road has been adopted the highway authority will be liable to maintain, not just the surface of the road, but also drains, lighting and any other infrastructure associated with that section of road.

In order to guarantee that the road is built to the required standard the developer will provide a sum of money to be held at the bank as a security to guarantee the developer fulfils the agreed conditions.

Roads on a building site may still be used as an access way for construction traffic. Therefore, there may be a period, usually of around 12 months, before they are adopted by the highway authority. This will to prevent the Highway Authority from incurring costs as a result of ongoing construction.

Section 104 Agreement

This is very similar to the section 38 agreement, but relates specifically to sewerage serving the property. By an agreement under s.104 Water Industry Act 1991, the Sewerage Authority will adopt the sewerage serving a given property and take on responsibility for their maintenance.

Adoption of the sewerage will be on condition that it is built to a set of required standards. Like the section 38 agreement a bond will be held as a security to ensure the developer meets the conditions of the agreement.

Once adoption has taken place the homeowner need not worry about any expenses related to maintenance of the sewerage, thus this helps make the properties more marketable.


If you wish to know more about any of these agreements or would like to discuss your situation in relation to one of them, please don’t hesitate to contact Campions Solicitors.

By |Conveyancing|Comments Off on Development Agreements

About the Author:

Ben Green
Ben recently completed the Graduate Diploma in Law (GDL), a qualifying conversion course. Before this he graduated in English Literature and Philosophy at the University of Sheffield. In the summer since leaving University Ben worked at a legal technology start-up developing contract review and risk analysis technology. He now works as a paralegal at the software design company Arm in Cambridge.