Heads of terms for a planning obligation
Heads of terms are the schedule members vote on and the solicitors draft from. Here is what belongs in them, how to set triggers and indices, and which omissions hold up the deed after resolution.
Heads of terms are the short schedule of obligations that a council and an applicant agree before the planning obligation itself is drafted. They are not the deed. They are the list the case officer takes to committee, and the instruction the solicitors work from afterwards, which is why a loose set of section 106 heads of terms costs more time at the engrossment stage than almost anything else on a major application. Get them specific and the deed follows in weeks. Leave them vague and the resolution sits unimplemented while the parties argue about what was agreed.
What heads of terms are for
They do three jobs at once. They tell members what the scheme will deliver beyond the drawings, they give the officer the basis for the recommendation, and they fix the scope for the legal drafting that follows.
Each obligation has to pass the tests in regulation 122 of the Community Infrastructure Levy Regulations 2010. An obligation may only be taken into account in deciding an application where it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it. The heads of terms should make the case for each item against those three limbs, in a line or two, rather than presenting a bare shopping list. Where an item fails a limb, it fails whether or not the applicant is willing to pay.
Pooling of contributions from more than five obligations towards a single item of infrastructure stopped being a restriction in September 2019, so the old scramble to avoid the sixth contribution is gone. The regulation 122 tests remain.
Content that should always appear
A workable schedule names the obligation, the amount or the deliverable, the trigger, the payment or delivery mechanism and the party bound. For affordable housing it also needs tenure, mix by bedroom count, transfer values or the basis for them, nomination rights and the mortgagee in possession provisions, because leaving those to the deed is how a three-month drafting job becomes a nine-month one.
- The parties, including any mortgagee or chargee whose consent is needed to bind the land
- The land, by title number and plan, with any phasing boundaries identified
- Each financial contribution, with the sum, the trigger and the index
- Each in-kind deliverable, with the specification and the standard it must meet
- Transfer and nomination arrangements for any affordable units
- Monitoring, administration and the authority's legal costs
- Any review mechanism, clawback or repayment provision
- The circumstances in which an obligation falls away
Where contributions are justified by viability, the supporting Viability Assessment needs to be in the officer's hands before the heads of terms are settled, not after. Councils usually expect a suitably qualified author for that work and professional review is strongly advised, because the numbers in it drive the whole schedule.
Trigger points and indexation
A contribution without a trigger is unenforceable in practice and a contribution without an index loses value through the build programme. Both get skipped more often than they should.
| Trigger | Typical use | What to watch |
|---|---|---|
| Start on site | Highway works, construction management items | Define the start by reference to material operations, and say what happens on a phased start |
| Prior to occupation of a stated unit | Education, open space, travel plan sums | Pick a unit number that lands before the infrastructure is needed, and define occupation |
| Practical completion of a phase | Affordable housing transfer, play space | Tie it to a certificate someone actually issues |
| A fixed date | Rare, and usually a mistake | Delay in the programme breaches the obligation through no fault of either party |
For indexation, say which index and from what base date. Construction cost indices and the Consumer Prices Index behave differently over a five-year build, and "indexed in line with inflation" is an invitation to a dispute. State the index, the base date, the review date and whether the index can fall as well as rise.
Monitoring, administration and legal costs
Most authorities now charge a monitoring fee, and section 106 monitoring charges have to meet the same necessity and proportionality logic as anything else in the deed. Ask what the fee covers, how it is calculated and whether it is a fixed sum per obligation or a percentage. Ask also whether it is payable where the obligation is delivered in kind.
The authority's legal costs are normally paid by the applicant and are usually uncapped unless you cap them. A cap with a mechanism for raising it by agreement is reasonable and worth proposing at the heads of terms stage rather than at engrossment.
Drafting to survive a change of scheme
Schemes change. A section 73 application to vary a condition, a section 96A non-material amendment or a reserved matters submission that lands differently from the outline can all leave a deed that no longer fits the development it binds.
Two drafting moves help. First, express obligations by reference to the scheme as permitted and amended from time to time rather than to a single drawing number, so a later variation does not orphan the deed. Second, build in a mechanism for recalculating per-unit contributions if unit numbers change, with a floor and a ceiling.
Where the scheme has already moved beyond the deed, a deed of variation under section 106A is the formal route, and it needs the same discipline as the original heads of terms.
An illustrative example. A 48-unit scheme agrees a £180,000 education contribution payable before occupation of the twenty-fourth dwelling, indexed from the date of the resolution. A later section 73 application reduces the scheme to 41 units. If the heads of terms expressed the sum as a lump figure with no per-unit basis, the parties have to renegotiate from scratch. If they expressed it as a rate per family-sized dwelling with a stated cap, the recalculation is arithmetic. The figures here are illustrative and not drawn from any particular authority's schedule.
Timing against the committee resolution
The usual sequence is that the officer report sets out the heads of terms, members resolve to grant permission subject to completion of the agreement, and the decision notice issues once the deed is signed. Many authorities attach a deadline to that resolution and delegate authority to refuse if the deed is not completed in time, so read the resolution wording rather than assuming an open-ended window.
Practical sequencing for a major application:
- Raise obligations at pre-application and ask for the authority's standard heads of terms and monitoring fee schedule.
- Settle the viability position and the affordable housing offer before the report is drafted.
- Agree the schedule in writing with the case officer, including triggers and indices, and circulate it to your solicitor at the same time.
- Instruct title work and mortgagee consents early, because absent consents are the most common cause of delay after resolution.
- Diarise the resolution deadline and the first trigger date on the same programme as the build.
Common omissions that cause delay
The recurring ones are the mortgagee who was never asked, the affordable transfer value left as "to be agreed", the index with no base date, an obligation on land the applicant does not control, and a trigger that refers to a certificate nobody issues. Each of them is quicker to fix in a single line of the heads of terms than in four rounds of engrossment correspondence.
Supporting documents matter here too. An Affordable Housing Statement that states tenure and mix in the same terms as the schedule, and a Travel Plan whose targets match the monitoring obligation, stop the deed and the application pack from contradicting each other. Officers notice when they do.
And if the obligation is really a condition in disguise, say so. A Grampian condition or a negative condition can do the work of a short obligation without the legal costs, and officers will often accept that where the matter is within the applicant's control.
Enter your postcode on PlanScope to see which reports your site needs, and draft the supporting statements as a starting point for your own review.
This is general guidance, not legal advice. Check the position with your local planning authority or a solicitor 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.
Frequently asked questions
Are heads of terms legally binding?
No. They record what the parties intend to agree and form the basis of the officer recommendation and the committee resolution. The binding obligation is the deed completed under section 106 of the Town and Country Planning Act 1990. Until that deed is signed and the decision notice issues, nothing in the schedule is enforceable against the land.
What are the regulation 122 tests?
Regulation 122 of the Community Infrastructure Levy Regulations 2010 allows an obligation to be taken into account in a planning decision only where it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. Each item in the heads of terms should be justified against all three.
Who pays the council's legal costs?
The applicant normally pays the authority's legal costs of preparing and completing the agreement, and those costs are usually uncapped unless you negotiate a cap. Propose a cap with a mechanism for raising it by agreement at the heads of terms stage. Ask separately about monitoring fees, which are charged on top and calculated differently by different authorities.
Can heads of terms change after committee?
Minor drafting refinements usually can, under the delegated authority given in the resolution. A change to the substance, such as a lower contribution or a different affordable tenure, generally has to go back to members. Read the resolution wording, because it also often sets a deadline after which officers may refuse the application.
How should indexation be expressed?
Name the index, the base date and the review date, and say whether the figure can fall as well as rise. A phrase such as indexed in line with inflation leaves too much open over a five year build. Construction cost indices and the Consumer Prices Index move differently, so the choice has a real effect on the sum eventually paid.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.