The three statutory tests a section 106 obligation must meet
Regulation 122 of the CIL Regulations 2010 makes the three obligation tests statutory, so an obligation that fails a limb cannot be a reason for granting permission. How to evidence each one, and how to challenge a contribution request.
The section 106 statutory tests are in regulation 122 of the Community Infrastructure Levy Regulations 2010. A planning obligation may only constitute a reason for granting planning permission if it is necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it. All three limbs, every time, for every obligation in the deed.
The wording repays attention. The test is not whether the obligation is lawful or whether the parties may enter into it. It is whether the authority may treat it as a reason for granting permission. An obligation that fails cannot be relied on, and a permission granted in reliance on it is vulnerable.
Where the tests come from
The three tests began life as policy, in a circular and then in the National Planning Policy Framework, which still carries them. Regulation 122 made them statutory in April 2010, which changed their force. A decision-maker can depart from policy with reasons. A decision-maker cannot depart from a statutory restriction.
Section 106 of the Town and Country Planning Act 1990 sets out what an obligation may do: restrict the development or use of the land, require specified operations or activities, require the land to be used in a specified way, or require payment of money. Regulation 122 then limits which of those obligations can support a grant of permission.
Two Supreme Court decisions frame the practical application. In the Aberdeen case the court held that a pooled contribution to a strategic transport fund, which was not necessary to make the particular development acceptable, could not lawfully be taken into account. In the Resilient Energy case a community fund offered by the developer was held not to be a material consideration at all, because it served no planning purpose. Both are worth reading before you offer anything generous.
Necessary to make the development acceptable
This is the limb that does most of the work, and the word is necessary rather than desirable.
The question is whether, without the obligation, permission would have to be refused. If the scheme is acceptable without the contribution, the contribution is not necessary and the authority cannot count it. That is why the sequence matters: identify the harm first, then the mitigation, then the obligation that secures it.
Three things it rules out in practice. Contributions towards an existing deficiency the development does not worsen. Contributions to a project already fully funded from another source. And payments offered by an applicant as a general community benefit, however welcome locally.
Where an authority's supplementary planning document sets a formula, the formula is a starting point rather than the answer. Planning practice guidance on planning obligations expects contributions to rest on up-to-date evidence and to be applied with regard to the particular scheme. A standard charge applied to a development that generates none of the need it funds fails this limb whatever the document says.
Directly related to the development
The obligation has to address an impact of this development, at a place and in a way that connects to it.
Education contributions towards the catchment schools that will take the children from the scheme are directly related. The same sum towards a school on the other side of the authority, with no catchment connection, is not. A bus service improvement on the route serving the site is directly related. A contribution to a borough-wide fund with no identified project is usually not.
The test also constrains what you can be asked to fund in time. An obligation towards infrastructure that will be delivered irrespective of the development, on a programme unaffected by it, struggles here. Ask what the development changes.
Geography and causation together make the argument. Where an authority cannot name the project, the location and the mechanism by which your scheme creates the need, the obligation has a problem on this limb.
Fairly and reasonably related in scale and kind
Scale is arithmetic. Kind is category.
On scale, the contribution should reflect the proportion of the need the development creates. A scheme of one-bedroom flats generating minimal child yield should not pay an education contribution calculated on a per-dwelling average derived from family housing. Where an authority uses a yield multiplier, ask for the multiplier and apply it to your actual unit mix.
On kind, the obligation should be of the same type as the impact. Open space impact is mitigated by open space provision or improvement, not by a payment towards something unrelated. Highway capacity impact is mitigated by highway works or sustainable transport measures.
Both parts of this limb benefit from a worked calculation in the heads of terms. An officer who has to construct the arithmetic themselves will use the authority's default, which is rarely the lower figure.
Evidencing each test in the heads of terms
Set the heads of terms out as a table with a row for each obligation and the same five columns throughout.
| Column | What goes in it |
|---|---|
| Obligation | What is being secured, in a sentence |
| Policy basis | The adopted plan policy and any supplementary document |
| Evidence of need | The document showing the impact and the capacity position |
| Calculation | The formula, the inputs and the result |
| Trigger | When it is paid or performed, and any index |
That table is the regulation 122 justification, and it belongs in the planning statement as well as in the draft deed. It also makes the officer's report easier to write, which is not a small advantage when you are looking for a recommendation.
Where the authority asks for an obligation you consider unnecessary, say so in the same table with a reason rather than removing the row silently. A documented disagreement is easier to resolve at committee than a gap.
Obligations that fail, and why
The recurring failures, in the order they appear in practice:
- Tariff-style contributions applied per dwelling without reference to the scheme's actual impact.
- Contributions towards a named project that is already funded, or that has already received its full pooled requirement.
- Monitoring fees set as a percentage of the total contributions rather than by reference to the monitoring task. Monitoring fees were given an express basis in England by the 2019 amendments, provided the sum is fair and reasonable and relates to monitoring the specific obligations.
- Obligations covering infrastructure that the authority's charging schedule was meant to fund, which risks charging twice for the same thing.
- Community benefits offered to improve the planning balance, which are not material at all.
- Affordable housing tenure and products secured in terms the registered provider cannot operate, which is a drafting failure rather than a regulation 122 one but produces the same delay.
On the last of those, the Affordable Housing Statement should be written with the provider's requirements in view, because a deliverable obligation is worth more than an ambitious one.
Challenging a contribution request
Politely, early, and in writing. Ask the authority for five things:
- The policy the contribution relies on, with the paragraph.
- The evidence of the capacity or provision shortfall.
- The specific project the money will fund, with its cost and its delivery programme.
- How much has already been collected and committed towards that project.
- The calculation applied to your scheme, with the inputs.
Where the answers do not come, that is itself informative. Authorities with a properly evidenced obligations regime answer within a week.
If the request survives, the choices are to accept it, to offer a lower figure with your own calculation, or to decline and argue regulation 122 at appeal. Inspectors apply the tests seriously and will decline to take an obligation into account where a limb is not met, so a well-evidenced refusal to pay is a real option rather than a bluff. Where the obligation is affordable, and the dispute is whether the scheme can bear it, that is a viability argument instead, and it runs through a Viability Assessment and the review process our note on independent review of a viability appraisal describes.
Before you sign heads of terms, test every row against the three limbs and write the justification down. The row that cannot be justified is the row to argue about now rather than after the committee resolution. You can browse the report types by category to see which supporting evidence the obligations will rest on.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified planning solicitor 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.
Frequently asked questions
What are the three section 106 tests?
Regulation 122 of the Community Infrastructure Levy Regulations 2010 requires an obligation 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 to it. All three limbs must be satisfied for every obligation in the deed.
Can parties still enter an obligation that fails regulation 122?
The restriction is on treating the obligation as a reason for granting permission, so an obligation can exist without being capable of supporting the decision. The practical consequence is that the authority cannot rely on it, and a permission granted in reliance on a failing obligation is vulnerable to challenge.
Does a formula in a supplementary planning document settle the figure?
No. Planning practice guidance expects contributions to rest on up-to-date evidence and to be applied having regard to the particular scheme. A standard per-dwelling charge applied to a development that generates none of the need it funds fails the necessity limb whatever the document says.
Are monitoring fees allowed?
Yes in England, following the 2019 amendments, provided the sum is fair and reasonable and relates to monitoring the specific obligations in the agreement. A fee set as a flat percentage of total contributions, with no reference to the monitoring task, is open to challenge on that basis.
Can a developer offer a community fund to improve its case?
It will not help. In the Resilient Energy case the Supreme Court held that a community fund offered by a developer was not a material consideration, because it served no planning purpose. Offering money unconnected to the development's impacts adds nothing to the planning balance.
How do I challenge a contribution I think is unjustified?
Ask in writing for the policy relied on, the evidence of the shortfall, the specific project with its cost and programme, how much has already been collected towards it, and the calculation applied to your scheme. If the request survives, regulation 122 can be argued at appeal, where inspectors apply the tests seriously.
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.