Apportioning obligations across a mixed use scheme

A mixed use section 106 apportionment clause is the difference between selling a completed phase and explaining to a buyer's solicitor why the whole site is still bound by an obligation to deliver a health contribution from the residential element. Obligations under section 106 of the Town and Country Planning Act 1990 are local land charges that run with the land and bind successors in title. Without apportionment, every part of the site carries every obligation.

That is a conveyancing problem long before it is a planning one, and it is usually discovered at the worst possible moment.

Why apportionment matters on sale

Section 106 obligations are enforceable against the person with an interest in the land. On a single-phase scheme with one owner, that is simple. On a mixed use site sold in parcels, with a commercial block forward-funded to an investor and residential plots sold to a housebuilder, it is not.

Three consequences follow from unapportioned drafting. A purchaser of the commercial parcel takes land charged with obligations relating to housing it will never build. A lender funding that parcel requires certainty on the extent of liability and will not accept joint exposure to someone else's unperformed obligation. And the council, holding one agreement, has no obligation to carve anything out later unless the deed says it must.

Section 106(4) does help. A person is not liable for a breach occurring after they cease to hold an interest in the land. That protects a seller going forward. It does nothing for a buyer who takes land still charged with obligations relating to another part of the site.

So apportionment is drafted at the outset, in the agreement, by reference to the development parcels as they are expected to be sold.

Identifying which use triggers which obligation

Start by mapping each obligation to the use that generates the need for it. The exercise takes an afternoon and it determines every later clause.

Two categories resist a clean split. Highway works, where the junction improvement is needed because of the combined trips and neither use would trigger it alone. And anything scheme-wide, such as a new street or a park serving the whole development.

For those, apportion by a stated formula with the inputs fixed in the agreement rather than left to later agreement. Trip-based apportionment for highway works is the usual answer, with the trip numbers taken from the transport assessment and recited in the deed. Our note on highway works costs in a development appraisal covers how those costs are built up before anyone argues about splitting them.

Floorspace and unit based splits

Residential obligations are almost always measured per unit, or per habitable room, or per bedroom. Commercial obligations are almost always measured per square metre of floorspace, and the floorspace definition matters because gross internal and gross external areas differ by several per cent.

Four drafting points that save arguments:

• define the measure once, in the definitions, and use that defined term everywhere
• state whether floorspace is gross internal or gross external, and name the measuring standard
• fix the unit schedule as a plan or schedule annexed to the deed, with a mechanism for variation within tolerances
• deal with what happens if the mix changes, since a section 73 application to vary unit numbers should not require a new agreement

The last point is the one most often omitted. A deed drafted around 112 dwellings and 2,400 square metres of commercial floorspace becomes an obstacle when the scheme is varied to 118 dwellings. Drafting the obligation as a rate per unit, with a recalculation clause, avoids a supplemental deed.

Separate titles and separate triggers

Apportionment works through the title structure. Where the parcels will be sold separately, define them in the agreement as separate development parcels with plans, and tie each obligation to the parcel that generates it.

Then tie each obligation to a trigger within that parcel. Start of works on the residential parcel, occupation of the commercial parcel, practical completion of a particular phase. A trigger expressed as the start of the development, where development is defined as the whole scheme, defeats the apportionment, because one spade in the ground on any parcel engages every obligation.

Three triggers worth separating explicitly:

1. Payment triggers, which should sit in the parcel whose use generates the payment
2. Delivery triggers for physical works, which should sit with the parcel that will build them
3. Occupation restrictions, which should bite only on the parcel they relate to

Where a trigger really has to be scheme-wide, say so and make it measurable. Occupation of the fiftieth dwelling across the development is enforceable. Substantial completion of the development is not.

Release provisions for completed phases

A release provision takes a parcel out of the charge once its obligations have been performed. Without one, the charge sits on the title indefinitely and every subsequent sale raises the same enquiry.

What a workable release clause does:

It states that on performance of the obligations relating to a parcel, the council will, on request and at the owner's cost, enter into a deed of release or provide written confirmation that the obligations relating to that parcel have been discharged. It sets a period within which the council must respond. And it provides that the release does not affect obligations relating to other parcels.

Two carve-outs are standard and worth insisting on. Individual purchasers of completed dwellings should never be bound, so the deed should exclude transferees of a single dwelling, their mortgagees and any management company. And a mortgagee in possession should be bound only to the extent of obligations capable of performance by it.

Statutory undertakers taking small parcels for substations and pumping stations are usually excluded too, which sounds trivial until a distribution network operator refuses to take a transfer of charged land three weeks before energisation.

Certificates of compliance

A certificate of compliance is the document a purchaser's solicitor actually wants. It is a written statement from the council that the obligations relating to a defined parcel have been performed to date, or are not yet triggered.

Build the mechanism into the deed rather than relying on goodwill. Three elements: an obligation on the council to issue a certificate on request within a stated period, a fee that is stated rather than open-ended, and a form of certificate annexed to the deed so there is no argument about wording.

Then keep the evidence as you go. Councils issue certificates against their own records, and a contribution paid three years ago to an officer who has since left is harder to evidence than it should be. Keep payment confirmations, discharge correspondence and monitoring returns in one place, parcel by parcel.

Drafting to avoid a stalled phase

The failure mode on mixed use sites is cross-dependency. A commercial parcel that cannot be occupied until a residential obligation is performed is hostage to a housebuilder's programme, and vice versa.

Four rules reduce it.

No cross-default. A breach in one parcel should not restrict occupation or trigger enforcement in another. The council will resist this on scheme-wide infrastructure, and that resistance is reasonable, so negotiate the exception narrowly rather than conceding the principle.

No obligation performable only by someone else. If the commercial owner is obliged to deliver a play space inside the residential parcel, the obligation is unperformable from the moment the parcels separate.

Index payments from a stated base date, with the index named, so a contribution calculated in year one and paid in year five is not argued over.

And deal with the levy separately. Community Infrastructure Levy liability is apportioned between material interests under the levy regulations by reference to land area, which is a different mechanism from the section 106 split and produces different answers. Make sure the two are reconciled, and that affordable housing relief and any other relief is claimed by the right party before work starts.

A final note on the policy horizon. The Levelling-up and Regeneration Act 2023 contains powers for an Infrastructure Levy intended to replace much of this machinery, and as at October 2026 those powers have not been brought into force in a way that changes how a mixed use agreement should be drafted. Draft for the current regime and check the position on gov.uk before assuming otherwise.

Where the obligations are reduced on viability grounds, the arithmetic belongs in the Viability Assessment and the explanation in the Affordable Housing Statement, with the review mechanism drafted to match the parcel structure. Our note on independent review of a viability appraisal covers what happens when the council appoints its own reviewer.

Browse the report types to see which documents a mixed use application usually carries.

This is general guidance, not legal advice. Section 106 agreements should be drafted and negotiated by a qualified planning solicitor. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.