Introduction

A section 106 (S106) agreement is a legally binding agreement or “planning obligation” between a local planning authority, like us, and a property owner. The purpose of a S106 agreement is to mitigate the impact of the development on the local community and infrastructure. The agreement will set out the terms binding on the owners or developer to provide, facilitate or fund the provision of infrastructure, services or other measures that may be needed for the development to be acceptable in planning terms. The agreement may relate to measures on or off site and may restrict development for example pending the satisfactory performance of measures or development coordination.

S106 is different from the Community Infrastructure Levy

Payments secured under S106 agreements are collected and administered separately to Community Infrastructure Levy (CIL) payments. Liability for CIL payments is automatically triggered by the granting of planning permission.

Affordable housing

In Merton, S106 agreements and undertakings are used to secure contributions to affordable housing in accordance with the Local Plan and London Plan.

Affordable housing contributions (in-kind or financial) are unaffected by the introduction of the Merton CIL and will continue to be required.

The London Plan (together with the Local Plan) forms part of the development plan under which applications are assessed in Merton. The Mayor of London published his Affordable Housing and Viability SPG (London.GOV.UK website) in August 2017 containing accompanying guidance for the affordable housing policies in the London Plan including guidance for S106 agreements.

The Affordable housing financial contributions on small sites (2-9 homes) 2024 provides guidance on how affordable housing requirements for schemes of 2 to 9 residential units set out in policy of Merton’s Local Plan will be implemented. 

Carbon offsetting

In accordance with the Merton Local Plan, cash-in-lieu contributions are secured through S106 agreements and unilateral undertakings to off-set additional carbon savings beyond what must be achieved through sustainable design and construction on site.

Merton’s Explanatory on Approaches to Sustainable Design & Construction and our planning guidance page sets out the associated requirements for Energy Assessments and Carbon Offsetting.

The above note sets out the basis for securing carbon off-set contributions with respect to small sites and the types of schemes that will be captured.

Contributions will be secured using the council’s standard small site unilateral undertaking template. Further information is set out in the Merton Small Housing Sites Approach section below.

Permit free developments

In accordance with the Local Plan (Policy T16.4 Parking and Low Emissions Vehicles) , where development occurs in Controlled Parking Zones (CPZ), it will normally be expected that car free or limited parking is provided and future occupiers are prohibited from being able to acquire permits to park in the CPZ.

These restrictions are included in legal agreements and undertakings.

The S.106 agreement or undertaking have the effect of bringing the development under the control of the borough wide traffic order under which permits can be granted or withheld within our CPZs.

The agreements and undertakings include a requirement for the developer to notify future owners and occupiers that they will not be entitled to parking permits. They also require the restrictions to be included in any lease transfer licence or other disposal of the new units and developers and subsequent landowners of developments are required to notify the council of details of new occupants/owners of units. 

Other obligations

Developers and landowners should be aware that other planning obligations may be secured  to make development acceptable in planning terms and in accordance with the Local Plan or other legal or statutory requirement. Where possible applicants will be made aware of other obligations at pre-application stage or at the validation stage when submitting their planning applications.  There may also be matters identified when the application is being considered that require a planning obligation for development to be acceptable. Various “site specific” or “other obligations” will be required for major schemes and there might be instances where they will be required for smaller developments. 

Small housing sites

In keeping with the strategic objectives of the London Plan and the Local Plan positively and proactively plans for a substantially greater contribution from sites proposing 1 or more new dwellings which we refer to in this guidance as ‘small sites’, towards the borough’s housing objectives.

The following planning obligations will be required for small sites:

• Affordable housing financial contribution:

For proposals involving 2 to 9 new dwellings – refer to the “Small Sites Affordable Housing Guidance Note” above and the Validation Checklist

• Carbon offset financial contribution:

Refer to Merton’s Explanatory Note on Approaches to Sustainable Design & Construction and Merton’s Energy Assessment Template for Minor Residential Schemes and the Validation Checklist

• Permit free developments:

Refer to “Permit free developments” above and the Validation Checklist

• Other obligations:

Refer to the "Other obligations" paragraph above.

Submitting your planning application for a small site

The agreement to complete form is to be completed and submitted with your planning application

The agreement to complete form must be submitted for all residential developments proposing 1-9 dwellings upfront with your planning application.

We have introduced a streamlined approach for small sites to ensure that planning obligations can be secured within statutory processing time targets for planning applications. We require the agreement to complete form to allow for preparation of the s106 unilateral undertaking within these statutory timeframes.

Our Validation Checklist sets out what must be submitted with your planning application. It has been updated to reflect the requirements of the Local Plan including the planning obligations for small sites including the submission of the agreement to complete form.

The agreement to complete form provides the applicant’s written agreement:

• to complete a unilateral undertaking including the small sites obligations
• to meet our costs in the commissioning of an independent assessment or examination of the applicant’s viability report. This applies should you wish to challenge the required planning obligations on viability grounds and to provide additional information to support the carrying out of the assessment or examination.
• to cover our legal and professional fees in preparing and monitoring the unilateral undertaking. The monitoring fees that will be payable will be calculated using the monitoring fee base rates. 

It also requires the following information to be provided:

• legal representative name and contact details
• the applicant’s signature
• the applicant’s name and contact details
• HM Land Registry title number(s) together with an undertaking to provide the land registry, title plan and document
• Planning application reference number (if you have it already)
• planning portal reference number (assigned to the planning application)
• site name or address and post code

The small sites unilateral undertaking template is appended so when you are signing the document you are aware of what the completed unilateral undertaking will look like. As explained below the final undertaking will not be secured until just before application is decided.

Before the small sites planning application can be determined

Our solicitors in consultation with the relevant planning officer(s) will undertake the drafting of the legal deed with the contributions and planning obligations using the small sites unilateral undertaking template.

Signing the small sites unilateral undertaking and HM land registry title documents

HM land registry title documents for the application site identify all individuals, companies, organisations, mortgagees and chargees with a legal interest in the land. All these parties will need to be party to the unilateral undertaking. They all will need to agree its contents including their obligations including financial contributions they will need to pay and sign it for the council to accept the unilateral undertaking before the final decision on the planning application can be made.

The identification of ownership early in the planning process is crucial to achieving a seamless planning application process for all involved.

Major sites

There are many possible heads of terms for planning obligations for major sites where major housing and other strategic development is proposed and the type and scale of obligations will depend on the nature of the proposal and its impacts. Applicants should follow our pre-application process to significantly reduce the time spent on the legal agreements and minimise the risk of the application being delayed at the validation stage.

A list of major site obligations are as follows (not exhaustive):

• art and culture
• car clubs
• climate change and flood alleviation
• community facilities
• construction management
• cycle and pedestrian and other sustainable travel
• development coordination
• economy, employment and job creation
• education and training
• electric vehicle charging points
• green infrastructure
• health infrastructure
• libraries
• on-site affordable housing
• public highways works and network changes
• public liaison
• public realm
• public transport
• sport and leisure facilities
• travel plans
• utilities and digital connectivity
• viability review mechanisms

Please refer to the London Plan, the Merton Local Plan and our Validation Checklist for further information.

Monitoring fees

Planning obligations will be logged and monitored in order to ensure effective delivery of the contributions and to provide information for interested parties on the outcome of any agreement. This will help to ensure that the process is open and transparent. The council charges a base fee for administering and monitoring planning obligations, detailed below, which vary depending on the value of the contribution and the types of heads of terms.

Monitoring fee base charging rates

Financial contributions

Non-financial head of terms

Viability reviews

Surcharges

Uplifting of fees including for major developments and site-specific obligations

In accordance with Regulation 122 (2A) of the Community Infrastructure Levy Regulations fees may be increased to reflect the council’s estimate for administering and monitoring agreements for the lifetime of a development’s planning obligations.

Site specific obligations with bespoke provisions (more common for major developments) and standard obligations for larger major developments may demand such an approach.

We will refer to relevant Planning fees and charges where applicable to inform the final charge. Both the Monitoring Fees and Planning fees and charges will be reviewed and updated periodically.

Viability Assessments

Viability assessments that are submitted in association with planning applications will be published in full on our website.

Financial Viability Assessments will be reviewed by us or our appointed assessors. This review incurs a cost to us. In accordance with our validation checklist the applicant will be expected to make payment to meet this cost for the application to be processed.

For members of the community

Small amounts of money remain available from agreements signed prior to 1 April 2014, in relation to sustainable transport improvements and improvements to open spaces. If you would like to enquire whether any S106 monies might be available in your ward please contact us for a list of available S106 money in your ward. Should you have an idea to spend some of the money then please contact your ward councillor who can discuss the idea with you and get in contact with the relevant council officers to see if a project is viable and within the terms of the S106 agreement under which the monies were received.

Individual S106 agreements associated with planning applications validated since July 2008 and a selection of earlier agreements can be viewed by looking at the record of the planning application to which the S106 Agreement is connected on the Planning Explorer.

Infrastructure funding statements

For financial years 2019-20 onwards local authorities are required to publish annual reports called "Infrastructure Funding Statements" regarding activity during those years with respect to planning obligations and the Community Infrastructure Levy. Merton's Infrastructure Funding Statements are published on our Community Infrastructure Levy webpage.

Monitoring information relevant to S106 from earlier years, including affordable housing, is provided in Annual Monitoring Reports.

Contact us

Email: ci.levy@merton.gov.uk
Telephone: 020 8545 3197