Commuted sums, bonds and deposits across planning consents

Commuted sums planning practice runs on a distinction that catches people out repeatedly: a planning condition cannot require you to pay money, but a planning obligation can, and a highway agreement can require both a payment and a surety. The Planning Practice Guidance on the use of planning conditions is clear that a condition requiring a financial contribution or other payment will not normally be lawful, applying the tests derived from the Newbury case. So every financial guarantee attached to a consent sits in a section 106 obligation, a section 38 or 278 agreement, or a separate permitting regime.

Knowing which instrument holds the money tells you who can release it, and that is the part that goes wrong years later.

Where a financial guarantee can lawfully be required

Four routes carry money or security in practice.

A planning obligation under section 106 of the Town and Country Planning Act 1990 can require a payment, a bond, a deposit or a parent company guarantee, provided the obligation meets the statutory tests of being necessary to make the development acceptable, directly related to the development and fairly and reasonably related in scale and kind.

A highway agreement under section 38 or section 278 of the Highways Act 1980 can require a surety for the construction works and a commuted sum for future maintenance. These are contractual rather than planning instruments, and the highway authority holds them.

A separate regulatory regime can require financial provision in its own right. Landfill and some waste operations carry financial provision requirements under the Environmental Permitting Regulations 2016, which is why a planning bond for the same liability would be duplication.

And the Community Infrastructure Levy is a charge, not a guarantee. It becomes payable when development starts, under the Community Infrastructure Levy Regulations 2010, with instalments where the authority has adopted a policy. Our note on budgeting for CIL and the exemption paperwork covers how that liability behaves, and it should never be confused with a bond.

Restoration bonds on mineral and temporary uses

Mineral extraction and some temporary uses are the clearest case for a restoration bond, because the liability outlasts the revenue.

National guidance treats these as the rare case rather than the norm. The Planning Practice Guidance on minerals indicates that financial guarantees for restoration should only be sought in exceptional cases, giving examples such as very long-term operations, a high risk of long-term environmental damage, or an operator whose financial standing is unproven. An authority asking for a bond on an ordinary short-term quarry extension is going beyond that steer and should be asked to justify it.

Temporary uses raise the same question at a smaller scale. A temporary car park, a meanwhile use on a development site, a temporary classroom block: each carries an obligation to remove and restore, and an authority may want security for it. The usual negotiation is whether a bond is proportionate where the applicant is a public body or a substantial covenant.

Highway commuted sums for non-standard materials

This is the commuted sum most developers meet first, and the arithmetic is rarely explained.

Where a street is offered for adoption under section 38, the highway authority takes on perpetual maintenance. Standard materials are priced into that assumption. Anything non-standard, whether block paving, a feature surface, street trees, uplighters or a drainage feature the authority does not normally maintain, costs more to maintain over its life, and the authority asks for a capital sum representing the difference.

Three points to hold onto. The sum is calculated from the authority's own published maintenance assumptions, so ask for the calculation rather than accepting a figure. Designing out the non-standard element often costs less than paying the sum, and that trade-off should be made at the layout stage rather than at the agreement stage. And a street that is not offered for adoption carries no commuted sum at all, but it does need a management company and a service charge, which has its own planning and sales consequences.

Utility diversions interact with this, and our note on budgeting utility connections and diversions explains why those estimates should be obtained before the layout is fixed.

Landscape and management bonds

Open space, play areas and landscape planting generate the second common family of guarantees.

Where the authority will adopt the open space, it may seek a commuted sum representing a period of future maintenance, often expressed as a number of years at a stated rate per square metre. Where the space stays in private management, the authority may instead want a bond securing establishment of the planting and replacement of failures over a defined period, typically five years, with the bond released on certification.

The valuation question is the same in both cases. What would it cost a third party to do the work if the developer disappeared, including procurement and supervision, and with an allowance for inflation over the bond period. Build the landscape strategy so that the maintenance regime, the species schedule and the replacement standard are all stated, because a bond calculated against a vague specification will be calculated generously against you.

How a bond is valued, held and released

Three drafting points decide whether a guarantee is manageable.

The trigger for release should be an objective event, certified by a named person, within a stated period. "On completion of the works to the authority's satisfaction" invites indefinite delay; "on issue of a certificate of practical completion by the project's appointed engineer, the authority to respond within 20 working days" does not.

The sum should be capped and should step down as the works are delivered, rather than remaining at the full figure until the last tree is planted.

And the obligation should name what happens on a sale of the land, because a bond that cannot be assigned becomes a problem at the point of disposal rather than at the point of default.

Conditions that purport to require a bond

You will still see them. A condition stating that no development shall take place until a bond has been provided to the authority's satisfaction is, on the ordinary reading of the guidance, requiring a payment by condition.

The lawful alternatives are narrower than the drafting suggests. A negatively worded condition preventing development until a specified scheme has been approved is acceptable where the scheme itself is a technical matter. Where the substance of what is required is money, the obligation belongs in a section 106.

If such a condition is imposed, the options are to accept it and comply, to apply under section 73 to vary it, or to appeal it under section 78 within the appeal period. Raise it before the decision is issued if you can, because an officer will usually move the requirement into the agreement rather than defend the condition. Where the sum is large enough to affect deliverability, the point belongs in the viability assessment rather than being argued in correspondence.

Tracking guarantees through to release

Bonds outlive the people who negotiated them. A five-year landscape bond on a scheme built in phases can sit unreleased for a decade because nobody asked.

Keep one register per scheme, with a row for each guarantee, recording the instrument, the holder, the sum, the trigger for release, the expiry date, the responsible person and the renewal fee. Review it quarterly. Then diarise the release triggers in the construction programme rather than the legal file, since the event that releases the money is almost always a site event.

One more point on reform. The Levelling-up and Regeneration Act 2023 contains powers for an Infrastructure Levy intended to replace much of the current system. As at October 2026 those powers have not been brought fully into force, and the current section 106 and CIL arrangements continue. Verify the position before relying on it in a cash-flow model.

See PlanScope pricing if you want a drafted set of supporting documents in place before the section 106 negotiation starts.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.