Q&As

In what circumstances is a local authority required to repay a developer their section 106 contributions?

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Produced in partnership with Sarah Fitzpatrick of Norton Rose Fulbright
Published on LexisPSL on 21/10/2020

The following Planning Q&A produced in partnership with Sarah Fitzpatrick of Norton Rose Fulbright provides comprehensive and up to date legal information covering:

  • In what circumstances is a local authority required to repay a developer their section 106 contributions?

In what circumstances is a local authority required to repay a developer their section 106 contributions?

A section 106 agreement is a contract entered into under statutory powers pursuant to section 106 of the Town and Country Planning Act 1990. It must be entered into by deed. It is, nonetheless, a contract between parties and the terms of the contract will govern both the payment and repayment of financial contributions. A developer has no statutory right to repayment of section 106 contributions, so it must be specifically negotiated as a term of the contract.

A section 106 agreement will usually include two principal obligations on a local planning authority (LPA) to repay contributions. These are as follows:

  1. in circumstances where the planning permission has been quashed, revoked, modified or varied (except with the developer’s consent), or has expired prior to implementation/commencement

  2. if the contribution has not been spent or committed for expenditure within X years of the date of payment

Example drafting is as follows:

‘1.1. This Agreement shall cease to have any effect (insofar only as it has not already been complied with) if the Planning Permission shall expire prior to Commencement of Development or be quashed or revoked or modified

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