Section 106 heads of terms on a nine-unit scheme

A nine-unit scheme sits one home below the major development threshold, and that single unit changes what a council can lawfully ask for. Section 106 obligations on small development are still common at nine homes, but they are narrower than on a major: no on-site affordable housing in most authorities, and usually a short list of contributions tied to named infrastructure. Every obligation has to pass the three tests in regulation 122 of the Community Infrastructure Levy Regulations 2010. If a request fails one of them, it cannot lawfully be taken into account, whatever the council's supplementary planning document says.

When a nine-unit scheme still attracts obligations

Major development for a residential scheme means 10 or more dwellings, or a site area of 0.5 hectares or more where the number of homes is not known. That definition sits in the Town and Country Planning (Development Management Procedure) (England) Order 2015. Nine homes on a 0.6 hectare paddock is still a major application, which catches out more small developers than the unit count does.

Below 10 homes, national policy has for years discouraged councils from seeking affordable housing contributions, with a lower threshold available in designated rural areas. Check the position in the current National Planning Policy Framework (August 2026 edition), then check your adopted local plan, which is the document that will actually decide it. Some authorities in designated rural areas apply a five-unit trigger and a few seek commuted sums from single dwellings.

Affordable housing is only one head of terms. Biodiversity net gain, nutrient mitigation, highway works and open space contributions all reach down to schemes of two or three homes when the site conditions call for them. A nutrient catchment is the clearest example: mitigation there has nothing to do with scale and everything to do with whether the site drains to a designated catchment, which is why nutrient neutrality catchments generate obligations on schemes of any size.

The heads of terms you are likely to see below 10 homes

The list on a nine-unit application is usually short enough to fit on one page. What follows is the pattern that recurs, not a checklist any particular council will use.

Two things are worth pinning down early. First, ask the case officer for the actual policy or formula behind each contribution, and read it. Second, check whether the same infrastructure is already funded by the Community Infrastructure Levy in that authority, because a contribution for something on the charging schedule fails the regulation 122 test of necessity.

Monitoring fees and the council's legal costs

Since the Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019, a council may charge a monitoring fee through a section 106 agreement, provided the sum is proportionate and reasonable to the monitoring actually required. That is a real statutory basis, so there is no point arguing the principle. There is every point in asking how the figure was reached.

Fees are usually set per obligation or as a percentage of the contributions, published in a fees schedule or an SPD. On a nine-unit scheme with three financial heads of terms and a management obligation, a per-obligation scale can produce a bill out of proportion to the officer time involved. Ask for the scale, ask whether monitoring is charged on obligations that are discharged at completion, and ask for the fee to be capped.

Separately, you will sign an undertaking to pay the council's legal costs whether or not the application is approved. Get the estimate in writing before your solicitor starts drafting. And build the sum into the appraisal alongside the application fee, not as a contingency.

Unilateral undertaking or bilateral agreement

Section 106(9) of the Town and Country Planning Act 1990 allows an obligation to be entered into by deed by anyone with an interest in the land, with no council signature. That is a unilateral undertaking, and it is the faster route where the obligations are all one-way promises from you: pay a sum, build the affordable units, manage the habitat.

A bilateral agreement is needed when the council has to promise something back. The commonest example is a clause repaying unspent contributions after a fixed period, which is a covenant by the authority and cannot sit in a unilateral undertaking. Some councils prefer bilateral agreements as standard, and some legal teams simply will not use undertakings outside appeals.

Whichever form you use, everyone with a legal interest in the land must be bound. That means the freeholder, any leaseholder, any option or promotion agreement holder, and any mortgagee. Pull an official copy of the title from HM Land Registry at the point you submit, not the week the deed is due. Mortgagee consent is the single most common reason a deed sits unsigned, because a lender's legal team works to its own timetable.

Where CIL takes over and where it does not

The Community Infrastructure Levy is a charge fixed by the charging authority's schedule and indexed annually. It is not negotiable, it is not subject to viability argument at the application stage, and it is payable by the person who assumes liability. Section 106 covers what CIL cannot: site-specific mitigation, affordable housing, and anything the charging schedule does not fund.

The pooling restriction that once limited councils to five obligations for any one infrastructure project was removed in September 2019, and the regulation 123 list went with it. Councils now report receipts and spending through annual infrastructure funding statements. So the old argument that a council had already pooled five contributions no longer works, and the honest test is regulation 122 alone.

For a self-builder the exemptions matter more than the mechanics. Self-build housing, residential annexes and residential extensions can be exempt from CIL, but the exemption has to be claimed and granted before development starts, and the council must then be told in writing, on the levy's prescribed notice, before the first spadeful. Miss either step and the full charge crystallises with no discretion to put it right. This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it.

Illustrative example

An illustrative case: nine homes on a former haulage yard, 0.42 hectares, in a district with a CIL charging schedule and no nutrient constraint. The heads of terms come to biodiversity net gain (off-site units, because the yard has almost no baseline habitat), a play space contribution under a per-bedroom formula, and a management company for the private drive and attenuation basin. CIL covers education and highways capacity. Affordable housing is not sought. That is three heads of terms, a monitoring fee and a legal costs undertaking, and it is a realistic shape for a scheme of this size.

Building the drafting time into your programme

Councils do not issue a decision notice until the deed is completed, so the section 106 timetable, not the eight-week determination period, sets your date. The sequence that works:

1. Instruct your solicitor when the application is validated, not when the officer sends draft heads of terms.
2. Send the official copy of the title, the plan, and details of every lender and interest holder to the council's legal team early.
3. Agree the heads of terms in writing with the case officer before any drafting starts.
4. Ask for the council's model deed rather than starting from your own.
5. Chase mortgagee consent in parallel, from week one.
6. Sign, date and complete the engrossment, then confirm in writing to the case officer that it is done.

Expect the officer to ask for an extension of time. Agreeing one is normal and is usually better than a refusal on the ground that the obligations are not secured, because a refusal takes you to appeal over something procedural. If the delay is on the council's side, ask for the decision to be reported and the deed completed after resolution, which is how most committee and delegated decisions on small schemes are handled in practice.

One more thing that saves a fortnight. Councils publish their local validation requirements alongside their section 106 protocol, and the two documents often contradict each other on what has to be submitted with the application. Reading the validation checklist before you submit will tell you which supporting documents the legal team expects to see attached to the deed.

Enter your postcode on PlanScope to see which reports your nine-unit site is likely to need before you start the section 106 conversation.

PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.