Section 106 legal and monitoring costs explained
The council's legal bill is only one part of a section 106 agreement's cost. Monitoring fees, variation costs and the carrying cost of delay usually matter more.
The applicant pays for the council's legal work on a section 106 agreement, and that bill is only part of the cost. On a scheme of any size the transaction costs of a planning obligation under section 106 of the Town and Country Planning Act 1990 fall into four buckets: the council's legal fees, your own solicitor's fees, monitoring fees written into the deed, and the cost of the delay while the document is negotiated. The last of those is usually the largest, and it is the one nobody budgets for.
Who pays for the council's legal work
Almost every local planning authority requires an undertaking to pay its reasonable legal costs before it will instruct its legal team. The undertaking is signed at the start, not the end, and it normally bites whether or not the agreement completes.
That last point deserves attention. If the scheme is sold, the design changes beyond recognition or the applicant walks away mid-negotiation, the abortive costs are still payable. Councils publish scales for this in their pre-application and planning service charges, and the scale is the place to look rather than asking the case officer for an estimate.
Some authorities use external solicitors for larger schemes, charged at private practice rates. Where that happens, ask early which firm is instructed and whether the council will agree a cap. A cap is easier to negotiate before instruction than after the first invoice.
What the costs undertaking actually commits you to
A typical undertaking covers the council's time in drafting and negotiating the deed, searches against the title, engrossment and completion. It does not usually cover the council's officer time in negotiating the heads of terms, which sits inside the application fee, or the monitoring of the obligations once they are live.
Read the wording for three things. First, whether costs are payable on an abortive basis. Second, whether there is a cap and what happens when it is reached. Third, whether the council requires payment on account before engrossment, which affects cash flow at the worst possible moment in a programme.
Your own side has costs too. A property solicitor needs to check title, deal with any mortgagee, obtain consents from lenders and freeholders, and certify title to the council. On a site with a charge over it, the lender's consent to be bound by the obligation is a standard cause of a two-week slip.
Monitoring fees and what they may lawfully cover
Monitoring fees pay for the council's time in checking that obligations are delivered: that the affordable units are transferred, that the travel plan is submitted, that the play space is laid out before occupation of the fiftieth dwelling.
Two rules govern them. Obligations relied on as a reason for granting permission must meet the tests in regulation 122 of the Community Infrastructure Levy Regulations 2010, which require them to be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. Separately, the Levelling-up and Regeneration Act 2023 addressed monitoring fees in planning obligations, and the current wording of section 106 on legislation.gov.uk is what to check before arguing about them.
In practice, the arguments that work are about proportionality rather than principle. A fee calculated per obligation, per year, over the life of a long phased scheme adds up quickly. Ask the council to show its calculation, ask how the sum relates to actual officer time, and ask for the fee to stop once each obligation has been discharged.
| Cost element | Who bears it | When payable |
|---|---|---|
| Council legal fees | Applicant | On completion, or on account, or abortive |
| Applicant's solicitor | Applicant | Through the negotiation |
| Monitoring fees | Applicant or successor | On commencement or at stated triggers |
| Modification later | Whoever applies | At the point of variation |
Unilateral undertakings as the lower cost route
A unilateral undertaking is given by the owner alone. The council does not sign it, so there is no engrossment to agree and no negotiation over the council's covenants. On a small site with a single obligation, such as a contribution towards off-site play space or a restriction on occupation, it is the cheaper instrument by some margin.
It is also the instrument of choice at appeal, where an inspector needs the obligation in place before the decision and there is no time for a bilateral negotiation.
The limits are real. A unilateral undertaking cannot bind the council to do anything, so it cannot include repayment provisions, indexation mechanisms agreed with the authority, or anything requiring the council's cooperation. Where the obligation needs the council to accept a transfer of land, a bilateral agreement is unavoidable.
The cost of varying an agreement later
Schemes change. Tenure mixes shift, a registered provider pulls out, the viability position moves. Section 106A allows an obligation to be modified or discharged by agreement between the authority and the person bound at any time, and allows an application to the authority after the relevant period, which is five years from completion unless the deed says otherwise.
An application to vary costs the same in kind as the original: council legal fees, your own solicitor, and officer time assessing whether the obligation still serves a useful purpose. On affordable housing, the council will usually want an updated viability appraisal, and that appraisal will be reviewed by a consultant whose fee you also pay. Budget for a variation on any scheme that will take more than a couple of years to build out, because the odds of needing one are not low. The related cost pattern shows up in the cost of a planning condition you did not negotiate.
Delay is the dominant cost
Count the carrying cost of the site for each month the deed is not completed: interest, professional fees running on, an option or contract deadline moving closer. On most schemes that figure dwarfs the legal fees being argued about.
Three habits shorten the timeline. Agree heads of terms in writing during the application rather than after committee. Send your solicitor's details to the council's legal team the week the resolution is passed, not a month later. Deal with title issues, lender consents and third party interests in parallel with drafting rather than in sequence.
An illustrative example: a resolution to grant is passed in March on a scheme of 30 homes. Heads of terms were never written down, the applicant's lender takes six weeks to consent, and the affordable housing clause is redrafted three times over the tenure split. Completion lands in September. Nothing in that sequence was inevitable, and the legal fees were the smallest line in it.
Controlling the drafting process
Ask for the council's model agreement at the start. Most authorities have one, and most of the negotiation is about departures from the model rather than the model itself. Marking up a familiar document is faster than arguing from first principles.
Keep a single schedule of obligations agreed between the planning officer, your planning consultant and both solicitors, and refuse to let the planning discussion continue inside the legal drafting. Obligations that were never in the heads of terms have a way of appearing in a first draft.
Where the scheme budget is being assembled, treat the section 106 line as three numbers rather than one: the contributions themselves, the transaction costs described here, and the monitoring fees over the build period. Fold that into the wider picture alongside planning fees where an application covers more than one category and the survey costs in budgeting a contaminated land investigation.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it.
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Frequently asked questions
Do I have to pay the council's legal costs if the agreement never completes?
Usually yes. Most costs undertakings are drafted to cover abortive work, so if the scheme is sold, redesigned or abandoned during negotiation the council's time is still chargeable. Ask for a cap before the legal team is instructed, and check whether the council uses external solicitors at private practice rates on larger schemes.
Are monitoring fees lawful?
Councils charge them widely and the Levelling-up and Regeneration Act 2023 addressed them in the planning obligations regime. The arguments that succeed are about proportionality rather than principle: ask the authority to show the calculation, relate it to actual officer time, and agree that the fee stops once each obligation has been discharged.
When is a unilateral undertaking better than an agreement?
On a small site with one or two obligations, and at appeal where the inspector needs the obligation in place before a decision. The owner signs alone, so there is no negotiation over the council's covenants. It cannot bind the council to do anything, so it does not suit obligations needing a land transfer or repayment mechanism.
How long does a section 106 agreement take to complete?
It varies with the number of obligations and the state of the title. The controllable parts are writing heads of terms during the application, instructing solicitors the week the resolution is passed, and clearing lender and third party consents in parallel with drafting. Sites with charges over them routinely lose two weeks to consent alone.
Can a section 106 obligation be changed after permission?
Yes. Section 106A allows modification or discharge by agreement at any time, and an application to the authority after the relevant period, normally five years from completion. Expect council legal fees, your own solicitor's costs and, on affordable housing, an updated viability appraisal reviewed at your expense.
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.