Section 106 monitoring fee or an infrastructure contribution

A section 106 monitoring fee and an infrastructure contribution do different jobs. The contribution funds something: a bus stop, a play area, an off-site drainage upgrade, a sum towards school places. The monitoring fee funds the council's own administrative work in checking that you did what the agreement says, and in reporting on it. One is capped by the cost of the thing. The other is capped by the cost of the checking.

For a self-builder putting up one or two houses, the second one is often the surprise, because it arrives as a line item in a draft agreement with no explanation of how it was calculated.

What a monitoring fee pays for

Officer time, essentially. Diarising a payment trigger, writing to you when it falls due, inspecting a landscape scheme after the first planting season, checking that an affordable unit was transferred, confirming a travel plan was submitted, and reporting all of it in the authority's annual infrastructure funding statement.

That is real work, and before 2019 councils were charging for it on a contested legal basis. Some agreements contained fees, some did not, and challenges succeeded often enough to make the practice uneven.

What a contribution pays for

Mitigation of the development's effects, or infrastructure that the development makes necessary. The usual heads of terms on a small residential scheme: open space or play space provision, highway works, a travel plan, education where the unit count is high enough, biodiversity management, and affordable housing on larger sites.

A contribution is a payment towards a specific purpose, and the agreement normally names the purpose, sets a timescale within which the authority must spend it, and provides for repayment if it does not. Check those clauses. An agreement with no spend deadline and no repayment provision is worse for you than one that has both.

Where highway works are in play, establish early which highway authority is asking, because a contribution demanded by a county highway authority and one demanded by National Highways are negotiated very differently.

The statutory basis for each

The 2019 amendment to the Community Infrastructure Levy Regulations did two things that matter here. It put monitoring fees on a clear footing, subject to the requirement that the amount reflects the authority's estimated cost of monitoring and reporting over the lifetime of the obligation and is proportionate. And it removed the pooling restriction that had previously limited the number of obligations that could be pooled towards a single infrastructure project, which widened what authorities can ask for through section 106.

It also introduced the requirement for authorities to publish annual infrastructure funding statements, which is the document to read before accepting that a contribution is needed.

Reasonableness and proportionality

This is where the argument happens on small sites.

A fee calculated as a percentage of the total contributions is not, on its own, a calculation of monitoring cost. A scheme paying a large education contribution as a single payment on implementation takes almost no monitoring, while a scheme with a modest biodiversity management obligation running for 30 years takes considerably more. A percentage reverses that relationship.

What a defensible fee looks like: a schedule listing each obligation, the monitoring actions required, the officer grade and the estimated hours, and a total. Authorities that publish a methodology of that kind are straightforward to deal with, because you can test the assumptions.

What to ask when the figure looks arbitrary:

1. Which obligations in the draft agreement does the fee relate to, individually?
2. What monitoring actions are assumed for each, and over what period?
3. Is the fee charged per obligation or as a single sum, and how was it derived?
4. Does the authority have a published monitoring fee methodology, and is this figure consistent with it?
5. Are any of the obligations ones that will be discharged by a single payment, needing minimal monitoring?

Put the questions in writing and ask for a written answer. On a one or two unit scheme the monitoring work is usually slight, and a fee set by reference to actual tasks tends to come out lower than one set by formula.

Index linking and payment triggers

Both contributions and fees are commonly index-linked, usually to a construction cost index for infrastructure and sometimes to a general index for fees. Over a long build period that matters.

Read the mechanism rather than the headline figure. The base date, the index named, the date at which indexation is applied, and whether indexation runs from the date of the agreement or the date of the permission all change the sum you eventually pay.

Payment triggers are the other half of the cash flow question. A contribution payable on commencement is harder for a self-builder to fund than one payable on first occupation, and authorities will sometimes agree to move a trigger or to phase a payment where the reason is explained. Ask before the agreement is engrossed, not after.

Monitoring fees are usually payable on completion of the agreement or on commencement. That is the one sum you will pay before anything is built, so it is worth getting right.

Challenging a fee

There is no direct appeal against a term in a draft agreement, because you are not obliged to enter into it. The practical routes:

Negotiate before signing, with the questions above and your own estimate of the monitoring work. This resolves most disputes.

Refuse the agreement and accept a refusal, then appeal the refusal under section 78 and argue that the obligation or fee fails the regulation 122 tests. Inspectors do decline to give weight to obligations that fail those tests, and the authority then has to defend its reasons for refusal without them. This is slow, and on a two-unit scheme it is rarely worth it for the fee alone.

Where the whole obligations package makes the scheme undeliverable, a Viability Assessment is the mechanism for arguing for a reduced package. Councils usually expect a suitably qualified author for viability work, and professional review is strongly advised, because the methodology is contested and the authority will instruct its own reviewer.

A note on the alternative instrument: obligations are not the only thing that can bind land, and it is worth understanding how a covenant differs from a condition before agreeing to secure something by section 106 that a condition could achieve. Conditions carry no monitoring fee.

Budgeting both on a small site

A workable approach for a self-builder:

Ask for the authority's draft heads of terms at pre-application stage, before you have spent money on a full application. Most planning officers will provide them, and they are the single most useful cost input you will get.

Separate the levy from the obligations in your budget. The Community Infrastructure Levy is a charge per square metre set by the charging schedule, is not negotiable, and is indexed annually. Self-builders can claim exemption, but the exemption must be claimed before commencement, with the commencement notice served, and evidence submitted within six months of completion. Miss either step and the full charge becomes payable. That is the single most expensive administrative error available to a self-builder.

Then budget the section 106 package, the monitoring fee, the legal costs of the agreement including the authority's own legal fees, and the discharge of conditions fees. The agreement's legal costs catch people out as often as the monitoring fee does.

Set the planning case out properly in a Planning Statement that addresses the regulation 122 tests head on for each proposed obligation, rather than leaving the authority to assert them. It is much easier to argue that a contribution is not necessary before it appears in a draft agreement.

If you are costing the document side of the application, you can see what a PlanScope report costs before you commission anything.

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