Phasing a scheme to manage section 106 triggers

Phasing a scheme changes the obligation profile rather than the obligation total. A section 106 agreement on a single-phase scheme can tie everything to one commencement and one first occupation. On a phased scheme the same heads of terms have to be allocated across phases, triggered within each phase, and drafted so that a change to the phasing plan three years later does not require a deed of variation for every clause. Getting that structure right is worth more to cash flow than arguing the contribution figures down.

Start with the phase plan, not the heads of terms.

Why phasing changes the obligation profile

Two things happen when a scheme is phased. Payment timing moves, and the risk of a trigger being missed multiplies.

Take an illustrative education contribution of £900,000, used here only to show the shape of the problem. On an unphased scheme, payable on commencement, it is a single predictable cost. Split the same scheme into four phases and the question becomes whether each phase pays a quarter, whether the whole sum falls due on first commencement, or whether payment follows occupation across the scheme. The three answers produce materially different appraisals, and the difference is usually larger than anything a viability assessment will recover by adjusting benchmark land value.

The second effect is administrative. A four-phase scheme with eight obligations and three triggers each carries almost a hundred discrete compliance events. Each one needs someone to notice it, evidence it and tell the council. Most obligation disputes start as missed notifications rather than as refusals to pay.

Defining phases in the agreement

Define phases by reference to a plan, and give yourself a route to change that plan.

The drafting that works has three elements. A Phasing Plan annexed to the agreement and identified by drawing number and revision. A definition of each Phase by reference to the land edged in a stated colour on that plan. And a mechanism allowing the owner to submit a Revised Phasing Plan for the authority's approval, with approval not to be unreasonably withheld and a deemed approval period if the authority does not respond.

Without that third element a phasing change means a deed of variation, which means solicitors, a council fee and several months. With it, a change is an administrative approval.

Two definitional traps recur. First, phases defined by unit numbers rather than by land parcels, which breaks the moment a reserved matters approval changes the mix. Second, phases defined so that a shared access or a spine road sits inside one phase, which gives the first developer the whole infrastructure bill and the later phases a free ride. Put shared infrastructure in its own phase, or define it as Enabling Works outside the phase structure.

Triggers tied to units, floorspace or dates

Three trigger families exist, and they behave differently under stress.

Authorities prefer date-based triggers for anything they have to programme themselves, such as a school place or a bus service subsidy. Developers prefer event or quantum triggers. The usual landing point is an event trigger with a long-stop date, which gives the council certainty and the developer the benefit of its own programme until the long stop bites.

Definitions matter more than the trigger type. "Commencement" should exclude the operations that developers need to carry out early without triggering payment: site clearance, archaeological investigation, remediation, ecological mitigation, service diversions, demolition, erection of hoarding and site set-up. "Occupation" should exclude marketing suites, show homes, security accommodation and occupation for construction purposes. Both exclusions are standard and both are routinely left out of first drafts.

Affordable housing delivery across phases

Affordable housing is the obligation most likely to be structured badly on a phased scheme, because the council wants it early and evenly and the developer wants it late.

The mechanism that holds is a linked occupation restriction rather than a flat percentage per phase. Something along the lines of no more than a stated proportion of market dwellings in a phase being occupied until a stated proportion of the affordable dwellings in that phase have reached practical completion and been transferred. That ties delivery to sales progress within the phase and removes the argument about whether the affordable units are being pushed to the end.

Three supporting clauses earn their place.

A cascade for the event that no registered provider will take the units at the agreed transfer price, moving to an alternative provider, then to a different tenure mix, then to a commuted payment calculated by a stated formula. Without a cascade a stalled transfer stalls the whole phase.

A tenure mix stated per phase rather than scheme-wide, so that the social rent does not all land in phase four.

A distribution requirement, usually expressed as clusters of a maximum size rather than as strict pepper-potting, which is deliverable for a registered provider managing the stock.

Where viability is tight at the outset, a review mechanism tested at phase level is more useful than a single scheme-wide review. The mechanics are set out in affordable housing review mechanisms in section 106, and the Affordable Housing Statement is where the phase-by-phase position gets explained to the authority.

Infrastructure sequencing and front loading

Councils front-load. Developers back-load. The reconciliation is to separate obligations by who needs them and when.

Infrastructure that serves occupiers of a particular phase belongs in that phase and should be triggered before first occupation of it: the access, the drainage, the play space within walking distance, the bin stores. Infrastructure that serves the whole scheme belongs outside the phase structure, triggered at a defined point and funded proportionately, with a reconciliation clause so that a phase which does not proceed does not leave a funding gap.

Highway works are a separate regime. A section 278 agreement with the highway authority delivers works on the public highway, a section 38 agreement adopts new estate roads, and the section 106 secures the planning obligation to enter into them. Which instrument does what is set out in section 278, section 38 and section 106. Trigger the section 278 by reference to entering into the agreement rather than to completing the works, because completion depends on the highway authority's own programme.

Where a council asks for a bond or a financial guarantee on phased infrastructure, negotiate the release mechanism as hard as the amount. A bond with no stated release trigger stays in place for years.

Variation when phasing changes

Phasing changes. Plan for three routes.

The Revised Phasing Plan mechanism described above handles the simple case. A deed of variation handles anything that changes the substance of an obligation, and it needs every party with an interest in the land to join, which is why mortgagee and future plot-owner provisions belong in the original agreement.

Section 106A of the Town and Country Planning Act 1990 allows an obligation to be modified or discharged by agreement at any time, and by application to the authority after five years from the date it was entered into, with an appeal to the Secretary of State. Five years is a long time on a stalled phase, so the contractual routes matter more than the statutory one. The practical considerations are covered in discharging a section 106 obligation that no longer serves.

A section 73 application to vary conditions does not automatically carry the original obligations across, because it produces a new planning permission. The agreement should be drafted to bind any subsequent permission for the development, which saves a deed of variation each time the layout is amended.

Drafting that survives a change of plan

Six drafting habits make a phased agreement durable.

1. Express obligations as formulae applied to actual delivery rather than as fixed sums tied to an assumed schedule, so that a reduced phase pays a reduced contribution without a variation.
2. Index contributions from the date of the agreement and state the index and the base date in the clause itself.
3. Put all notification duties in one schedule with a single clause specifying form, address and timescale, rather than spreading them through the document.
4. Define Practical Completion once, by reference to a stated certificate, and use that definition everywhere.
5. Include a mechanism for partial release of land from the obligation on completion of a phase, which is what mortgagees and plot purchasers will ask for.
6. Keep obligation tests against regulation 122 of the Community Infrastructure Levy Regulations 2010 in mind throughout, because an obligation that is not necessary, directly related and fairly related in scale and kind cannot lawfully be taken into account.

A short covering note submitted with the draft agreement, setting out the phase plan, the trigger table and the rationale, shortens negotiation more than any amount of mark-up. PlanScope drafts that narrative and the supporting statements around it, structured to UK planning policy, with the figures you supply. Browse all 66 PlanScope report types to see which ones a phased major scheme normally needs.

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.