Section 106 Agreement: What Sellers Need to Know

If your property was built as part of a larger development, there is a good chance a Section 106 agreement exists against it. These planning obligations are a routine feature of residential development in the UK, yet many sellers only discover them when a buyer's solicitor raises them as a conveyancing issue. Understanding what the agreement contains — and what it means for your sale — will help you deal with buyer enquiries confidently and avoid unnecessary delays.

This guide explains what a Section 106 agreement is, how it is disclosed during the sale process, the types of obligations it commonly imposes, and what you need to do (or disclose) before exchange. It also covers the specific issues that arise with affordable housing restrictions, ongoing maintenance obligations, and occupation conditions.

What is a Section 106 agreement?

A Section 106 agreement takes its name from section 106 of the Town and Country Planning Act 1990. It is a legal contract between a developer and the local planning authority (LPA), entered into as a condition of granting planning permission for a development. Its purpose is to make development acceptable in planning terms by securing obligations that mitigate its impact on local infrastructure, affordable housing supply, or the natural environment.

The agreement is a local land charge: it is registered against the title to the land and binds not only the developer who signed it but every subsequent owner of the property. This is known as running with the land. It means that when you sell, the buyer inherits all outstanding obligations under the agreement, just as you inherited them when you bought.

Section 106 agreements are distinct from the Community Infrastructure Levy (CIL), which is a separate charge levied by some councils on new development. Both may apply to the same property; both are typically paid by the original developer before individual units are sold to the public.

How Section 106 agreements are discovered during a sale

There are two main routes by which a Section 106 agreement comes to light in a conveyancing transaction.

The local authority search

The buyer's solicitor will commission a local authority search as part of their standard due diligence. The search results include a list of all registered local land charges affecting the property, of which a Section 106 agreement is one. The search will show that an agreement exists and may give a brief description of its nature. The buyer's solicitor will then need to obtain and review the full document.

Your title deeds and the TA6 form

When you bought the property, your solicitor should have reported on any Section 106 agreement as part of their investigation of title. The agreement may have been included in your title deeds or summarised in your solicitor's report on title. When you come to sell, you are required to disclose the agreement on the TA6 Property Information Form, which asks about any obligations affecting the property. Your solicitor will also include a copy of the agreement (or a summary of its terms) in the pre-contract package sent to the buyer's solicitor.

Types of obligations in Section 106 agreements

Section 106 agreements can contain a wide variety of obligations. The ones most relevant to sellers fall into the following categories.

Financial contributions

The most common form of Section 106 obligation is a financial contribution from the developer towards local infrastructure — for example, contributions to school places, highway improvements, public open space, or healthcare facilities. These are usually expressed as a sum of money payable on commencement of development or when a certain number of units are occupied. In virtually all cases, these payments are made by the original developer before individual homes are sold and are irrelevant to subsequent owners.

However, some agreements provide for staged payments triggered by occupation of later phases. If your property is in a phased development, it is worth confirming with your solicitor that all relevant contributions have been paid and that no liability attaches to your specific plot.

Affordable housing obligations

Where a development includes affordable housing units (shared ownership, affordable rent, discounted market sale, or other tenures), the Section 106 agreement will set out the requirements in detail. For market-sale properties on the same development, these obligations are typically met by the developer and housing association and do not affect the individual market-sale buyer or subsequent seller.

However, if your property itself was originally sold as affordable housing — for example, as a discounted market sale unit or under a rural exception scheme — the Section 106 agreement will restrict who may buy it on resale, at what price it may be sold, and whether a housing association has a right of first refusal. These clauses are sometimes called an affordable housing cascade or resale restriction. Selling outside those restrictions would be a breach of the planning obligation and could expose you to enforcement action by the LPA.

Occupation restrictions

Some Section 106 agreements restrict who may occupy a property. Common examples include:

• Local connection requirements — often used in rural exception sites, requiring occupiers to have a qualifying connection to the local area (for example, having lived or worked in the parish for a specified period).
• Principal residence conditions — preventing use of the property as a second home or holiday let, common in areas with high second-home ownership.
• Key worker or employment conditions — restricting occupation to people employed in a specified sector or by a named employer, often used for homes built under employment-related planning permissions.
• Age restrictions — for example, limiting occupation to those aged 55 or over, common in retirement developments.

If your property is subject to an occupation restriction, you must disclose it clearly. It will affect the pool of eligible buyers and may affect the price your property can achieve.

Maintenance and management obligations

Some Section 106 agreements require the owner of a property to contribute to the ongoing maintenance of shared amenities — for example, a communal garden, a play area, a SUDS drainage system, or an ecological mitigation area. This may be administered through a management company (with an annual service charge) or directly through an obligation in the agreement. If there are ongoing maintenance obligations, you must disclose these to the buyer as they represent a recurring cost.

Ecological and habitat conditions

Larger developments often include Section 106 obligations relating to biodiversity net gain, habitat management, or the maintenance of green infrastructure. These are usually managed at the development level rather than the individual plot level, but in some cases they impose obligations on landowners within the site boundary.

What you need to disclose when selling

Your primary disclosure obligation is to provide the buyer's solicitor with a copy of the full Section 106 agreement. Your solicitor will usually obtain this from the title deeds or, if necessary, by requesting a copy from the local planning authority under the Environmental Information Regulations or by searching the council's planning portal.

In addition, your solicitor may prepare a short summary of the agreement and confirm in the pre-contract replies to enquiries:

• Which obligations have been discharged by the developer
• Which obligations (if any) are ongoing and binding on the owner
• Whether any financial sums under the agreement remain outstanding
• Whether the property is subject to any occupation restriction or resale condition

If you are unsure of the current status of the obligations, your solicitor can write to the LPA to request confirmation. Some local authorities issue a formal letter of discharge or compliance confirmation for obligations that have been met.

You should also review the property certificate pack that will form part of your sale documentation. This is the set of documents your solicitor assembles to satisfy the buyer's due diligence enquiries, and it should include all planning-related documents including the Section 106 agreement.

Section 106 agreements and new-build properties

If you are selling a new-build property that you bought directly from a developer, the Section 106 agreement will almost certainly exist against your title. However, in most cases the obligations that directly affect individual purchasers will already have been addressed: the developer will have paid the infrastructure contributions, the affordable housing units will have been transferred to a registered provider, and any communal facilities will have been handed over to a management company.

The most common issue on resale of a new-build is not an outstanding obligation but simply the need to provide the buyer's solicitor with a copy of the agreement and confirmation that the developer obligations have been met. If you cannot locate your copy of the agreement, your solicitor can obtain one from the LPA or from Land Registry.

For more detail on the specific conveyancing issues that arise on new-build resales, see our guide on selling a new-build property.

Can a Section 106 agreement be modified or removed?

Section 106A of the Town and Country Planning Act 1990 allows any person against whom an obligation is enforceable to apply to the LPA to discharge or modify the obligation, but only after five years have elapsed from the date the agreement was entered into.

The LPA must agree to modify or discharge the obligation if it is satisfied that the obligation is no longer necessary to achieve a planning purpose, or that a modification would achieve the same purpose equally well. The application is treated in a similar way to a planning application, including the right of appeal to the Planning Inspectorate if the LPA refuses.

In practice, applications to modify Section 106 agreements are most commonly made by developers (for example, to vary affordable housing requirements in changed market conditions) rather than by individual homeowners. For most sellers, the more practical question is not whether the agreement can be removed but whether the obligations in it have already been discharged.

If a specific obligation is causing a problem with your sale — for example, an occupation restriction that is preventing you from finding an eligible buyer — you should seek specialist planning law advice. Modifying a Section 106 agreement takes time and is not guaranteed, so you will need to factor this into your sale timeline.

How Section 106 obligations interact with your costs

For the majority of sellers, a Section 106 agreement does not create any additional financial liability on sale. The developer's obligations will have been discharged, and the buyer simply inherits the agreement as a background document in the title. However, there are circumstances where a Section 106 agreement can create costs:

For a full picture of what selling a house can cost, including conveyancing fees and the cost of dealing with pre-contract issues, see our guide on the hidden costs of selling a house.

Practical steps for sellers

1. Locate your Section 106 agreement. Check your title deeds and any documents from when you bought the property. Your solicitor's original report on title should have summarised any planning obligations. If you cannot find a copy, your solicitor can obtain one from the LPA or Land Registry.
2. Review the obligations. Identify which obligations were the developer's responsibility (and have therefore been discharged) and which, if any, are ongoing and binding on the current owner.
3. Check for occupation or resale restrictions. If your property was originally sold as affordable housing or is subject to a local connection, principal residence, or age restriction, you need to understand those terms before marketing. They will limit your pool of buyers.
4. Instruct your solicitor early. The earlier your solicitor can prepare the pre-contract package — including a copy of the agreement and a summary of the position on each obligation — the fewer delays you will experience when a buyer's solicitor raises enquiries.
5. Answer the TA6 accurately. The TA6 Property Information Form asks about planning obligations. Disclose the agreement and summarise its key terms honestly. Failure to disclose a material planning obligation could give rise to a misrepresentation claim after completion.
6. Seek specialist advice for complex cases. If the agreement contains unusual conditions, an unmet obligation, or an occupation restriction that is causing difficulty, take specialist planning law or conveyancing advice before listing.

Sources

• Town and Country Planning Act 1990, sections 106, 106A, and 106B — legislation.gov.uk
• Planning Practice Guidance: Planning obligations — gov.uk/guidance/planning-obligations
• Planning Practice Guidance: Affordable housing — gov.uk/guidance/affordable-housing-and-community-infrastructure-levy
• Community Infrastructure Levy (CIL) guidance — gov.uk/guidance/community-infrastructure-levy
• Law Society Conveyancing Protocol, 5th edition — lawsociety.org.uk
• UK Finance Mortgage Lenders' Handbook (section on planning obligations) — ukfinance.org.uk
• Planning Portal: Understanding planning obligations — planningportal.co.uk

Frequently asked questions