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.

Merton’s approach

The structure for how planning obligations have been considered and calculated in Merton is set out in the adopted Planning Obligations SPD 2006. Since 1 April 2014 the Council has been charging the Merton CIL. The Community Infrastructure Levy Regulations 2010 (as amended) limits the scope of what can be included in new S106 agreements for infrastructure projects to those that are directly related to the site and prohibits securing S106 agreements for projects included on the Regulation 123 list that the council intends to be the subject of CIL funding.

Merton consulted on a revised draft Planning Obligations SPD (Autumn 2014) setting out how S106 will operate under the Merton CIL and will make a decision on how it considers this should be taken forward alongside developing Merton’s new Local Plan

Developers and landowners should be aware that planning obligations may be secured for purposes that are not covered in the SPD particularly where more bespoke measures (for instance necessitated by site specific or uncommon circumstances) are required to make development acceptable in planning terms.

Affordable housing

In Merton, S106 agreements 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, subject to financial viability and due consideration of paragraph 012 Reference ID: 23b-012-20141128 of National Planning Policy Guidance on planning obligations in balance with other material considerations.

Mayor of London Affordable Housing and Viability SPG

The Mayor of London published his Affordable Housing and Viability SPG (London.GOV.UK website) in August 2017. This SPG introduce a more detailed set of guidelines on affordable housing policies in the London Plan including standards and incentives to increase the amount of affordable housing to be delivered through S106 agreements. To this end the SPG includes a “Threshold Approach” to viability for schemes proposing to meet various affordable housing requirements through waiving the need for viability submissions for applicants justify why their particular scheme cannot afford to meet all the council’s planning policies and still remain economically viable. Applicants for planning permission for sites capable of delivering 10 or more homes are required to demonstrate how their proposals address the requirements of this document.

The New London Plan

The Mayor is consulting on a new London Plan seeking to further increase the proportion and total number of affordable homes delivered in London. In his draft document the Mayor supports the threshold approach to viability testing that is set out in his Affordable Housing and Viability SPG and sets out a higher threshold for specific type of sites including public sector land and industrial sites. It also sets out that the concessions in the threshold approach would not be available to development involving demolition of existing housing (not just demolition of existing affordable housing). Once adopted the new London Plan (together with the Merton Local Plan) will form part of the development plan under which applications are assessed in Merton, applicants will be expected to meet the requirements of this document. In the meantime the draft document is a material consideration and will be taken into account in the planning application decision making process.

Merton Development Viability SPD and Planning Application Validation Checklist

Merton’s Development Viability SPD (adopted 23^rd May 2018) signposts Merton’s expectation that the requirements of the Mayor’s Affordable Housing and Viability SPG are met.

This was prepared and adopted alongside Merton’s Planning Application Validation Checklist comprising revised local requirements with regards to information to be submitted with a planning application. The updated validation checklist includes a section for planning applicants wanting to justify why their particular scheme cannot afford to meet all the council’s planning policies and still remain economically viable setting out what they will be expected to submit upfront before their planning application will be processed.

Merton’s adopted Development Viability SPD and Planning Application Validation Checklist make clear that financial viability assessments that are submitted in association with planning applications will be published in full on the councils website.”

Affordable housing and small sites

(21st November 2017 update)

We will keep the government’s small sites exemption (for sites between 1 and 10 dwellings together comprising up to 1000 square metres gross internal area) in the aforementioned National Planning Policy Guidance under review. This page will be updated when/if Merton’s position becomes firmer (whether through progress of the new Local and London Plans or relevant supporting case law or planning appeal decisions) with respect of favouring the implementation of its affordable housing policies (for such small sites) over the government’s exemption.

Until then applicants can prepare planning applications for such small sites on the assumption that Merton will not require submissions to demonstrate that the affordable housing policy requirements effecting these small sites will be met.

If Merton’s position changes while applications or appeals are being considered then applicants may be expected to provide the additional information and S106 agreements (securing affordable housing contributions) to satisfy us or inspectors that Merton’s policy requirements will be met.

Purchasers of land should be aware that planning permission may be refused for such small sites where development will not support affordable housing in accordance with Merton’s affordable housing policies, irrespective as to the position set out on this website with respect of planning application submission requirements at the time of purchase. Accordingly price paid for land should reflect compliance with Merton’s policy.

The 1 to 9 unit explanatory note provides guidance on how affordable housing requirements for schemes of 1 to 9 residential units set out in policy CS8 (Housing Choice) of Merton’s Core Strategy will be implemented.

The following calculator can be used to assist applicants/agents to calculate financial contributions in accordance with the validation requirements set out on ourvalidation checklists and the The 1 to 9 unit explanatory note referred to above:

Affordable housing contributions calculator

Carbon off-setting

In accordance with the London Plan, cash-in-lieu contributions are secured through S106 agreements to off-set additional carbon savings beyond what must be achieved through sustainable design and construction on site. For more information on sustainable design and construction and cash-in-lieu requirements navigate to our sustainable design and construction guidance and approved recommendation 2 of Agenda Item 4 of Merton’s Cabinet Meeting of 18 September 2017

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