Section 106 monitoring fees: what a council may charge

Monitoring fees in section 106 agreements were argued about for years, and the argument has narrowed. The Levelling-up and Regeneration Act 2023 amended section 106 of the Town and Country Planning Act 1990 to put the charge on an express statutory footing, allowing an obligation to require a sum to be paid towards the cost of monitoring compliance, provided it is fairly and reasonably related in scale and kind to the development. So the question is no longer whether a council may charge. It is how much, on what basis, and whether the figure in front of you bears any relationship to the work involved.

Where the power comes from

Before the 2023 Act, authorities relied on the general obligation-making power and on national guidance, and applicants argued that a monitoring fee could not satisfy the tests in regulation 122 of the Community Infrastructure Levy Regulations 2010, because a fee to administer the agreement is not itself necessary to make the development acceptable in planning terms.

That argument has been overtaken. The amendment to section 106 provides the express power, and national guidance on planning obligations addresses monitoring fees directly, expecting them to be proportionate and reasonable and not to be used to fund the wider planning service.

Check the current text of section 106 rather than working from a précis, because the drafting matters when you are negotiating the figure.

How councils justify the amount

Two approaches dominate, and they behave very differently.

A fixed fee per obligation, or per monitoring event, is built from an estimate of officer time: so many hours per year to check a trigger, chase a payment, or verify a submitted report, multiplied by an hourly rate. It is transparent, it is capable of being tested, and it produces figures that are usually modest.

A percentage of the total value of the obligations is built from nothing at all. It scales with the size of the contributions rather than with the work involved, so a scheme paying a large education contribution in a single payment is charged far more than a scheme with a dozen small obligations requiring annual reports, even though the second one takes ten times the monitoring effort.

Where a council uses a percentage, ask for the methodology document that supports it. Some authorities have one, adopted after consultation, and it will name an hourly rate and an estimate of officer time. Others do not, and that absence is worth pointing out politely.

What monitoring should actually involve

It helps to know what you are paying for. Monitoring a section 106 agreement means checking that each trigger has been reached, that payments have been made on time and indexed correctly, that affordable housing has been transferred to the nominated provider on the agreed terms, that travel plan monitoring reports have been submitted and reviewed, and that any construction or employment obligations have been complied with.

Some obligations require almost no monitoring. A single payment due on start on site is either paid or it is not, and the authority's finance system tells them. Others require sustained attention: a Travel Plan with annual surveys and modal share targets really does take officer time, year after year.

That distinction is the strongest negotiating point available. Ask for the fee to be built up obligation by obligation, and offer to accept a higher figure for the ones that need real monitoring in exchange for nothing on the ones that do not.

Challenging a fee as unreasonable

An excessive monitoring fee is rarely worth litigating, and it is often worth negotiating. The approach that works:

1. Ask for the written methodology or charging schedule, and whether it was consulted on.
2. Ask for the fee to be broken down by obligation, with hours and rate stated.
3. Compare the figure against the authority's published Infrastructure Funding Statement, which reports monitoring fee income and spending.
4. Point out any obligations in the draft that require no ongoing monitoring.
5. Propose a cap on the total, expressed in cash rather than as a percentage.
6. Propose that unspent monitoring fees are repayable after a defined period.

The Infrastructure Funding Statement is the underused document here. Authorities must publish one annually, reporting obligation income, spending and the amounts held. An authority whose statement shows several years of monitoring fee income and very little spending has a harder time explaining why the figure in your draft is proportionate.

Payment terms are as negotiable as the amount

The headline figure gets the attention and the payment terms carry the cash flow.

Resist payment of the whole monitoring fee on completion of the agreement. The monitoring work happens over the life of the obligations, and the fee can reasonably be paid in the same rhythm: on start on site, on occupation of a proportion of units, or annually for obligations with annual reporting.

Check whether the fee is indexed and from what date. A monitoring fee indexed from a base date years before the agreement is completed is a quiet increase.

Check whether the fee survives a section 73 variation. Where a deed of variation is required for a new permission, some authorities take the opportunity to charge a fresh monitoring fee for obligations already being monitored under the original agreement. Ask for the position to be stated expressly.

Practical points when the draft arrives

Read the monitoring clause alongside the schedule of obligations rather than on its own. Most of the negotiation is really about the schedule.

Look for obligations that duplicate conditions. Where a construction management plan is secured by condition and also appears as an obligation, the monitoring fee is being charged for work the condition regime already covers, and one of the two should go.

Look for reporting obligations with no end date. An annual monitoring report required in perpetuity generates a monitoring fee calculated in perpetuity, and a defined period, often five years after full occupation, is usually acceptable to an authority once asked.

Set out the obligations package clearly in the Planning Statement so the committee report reflects what was agreed rather than what was first drafted. Where affordable housing is involved, the Affordable Housing Statement should describe the delivery mechanism that the monitoring provisions then track.

One honest uncertainty: practice varies widely between authorities, and there is no national scale for these fees. A figure that one council would never seek is standard in the borough next door. That variation is not evidence of unlawfulness on its own, which is why the productive route is the methodology and the breakdown rather than a comparison with the neighbours.

This is general guidance, not legal advice. Section 106 drafting has legal consequences, so take advice from a qualified professional and check the position with your local planning authority 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. Enter your postcode on PlanScope to see which documents a scheme with planning obligations is likely to need.