Testing a section 106 monitoring fee that looks high

A monitoring fee in a section 106 agreement has to pass two tests: it cannot exceed the authority's own estimate of what monitoring the development will cost over the lifetime of the obligation, and it has to be fairly and reasonably related in scale and kind to the development. That is the whole of the power, and it is narrower than many draft agreements assume. A fee calculated as a flat percentage of the total contribution package, with no reference to officer time or the number of monitoring events, does not obviously satisfy either test.

Whether it is worth arguing about is a separate question, and the answer depends on the number rather than the principle.

Where the power to charge comes from

Monitoring fees were put on a statutory footing by an amendment to regulation 122 of the Community Infrastructure Levy Regulations 2010, which took effect in September 2019. Before that, authorities charged them anyway and applicants argued about whether they were lawful.

The amended regulation permits a planning obligation to provide for the payment of a monitoring fee, subject to the sum being an amount that does not exceed the authority's estimate of its cost of monitoring the development over the lifetime of the planning obligation, and to the fee being fairly and reasonably related in scale and kind to the development.

Read those words carefully, because they do two things. They tie the fee to a cost estimate rather than to the value of the obligations. And they tie it to monitoring of the development, over the period the obligations run, rather than to the authority's general planning obligations function.

The same regulations require authorities to report monitoring fee income and expenditure in their annual infrastructure funding statement, which means the information you need to test the figure is usually published somewhere.

What proportionate means in practice

Monitoring costs what it costs: officer time to check whether a trigger has been reached, whether a payment has arrived, whether affordable units have been transferred, whether a travel plan has been submitted and reviewed.

That produces a few sensible propositions.

A one-off financial contribution payable on a single trigger needs very little monitoring. The payment either arrives or it does not, and the authority's finance system flags it. A fee of several hundred pounds for monitoring a single payment is hard to justify against an actual cost estimate.

An affordable housing obligation with nomination rights, tenure requirements, a cascade mechanism and a 30-year management commitment needs real monitoring over a long period, and a substantial fee for it is defensible.

A travel plan obligation requiring annual surveys, review and remedial measures over five years needs monitoring every year, and the fee should reflect five review cycles rather than one.

So the proportionality argument is almost always about the mix of obligations rather than about the total sum. Price each obligation and the total takes care of itself.

Per obligation against a percentage of the contribution

Two methodologies are in common use, and they are not equally defensible.

The percentage approach is the one worth challenging. Two schemes can have identical obligation structures and very different contribution totals, and the monitoring cost is the same in both. Where the percentage produces a figure far above what a per-obligation calculation would give, the authority is being asked to explain how the figure relates to its estimated cost.

The counter-argument authorities make is that larger schemes have more obligations and longer build programmes, so the percentage is a proxy. That is reasonable up to a point and it collapses where a single large payment drives the total.

Evidence an authority should be able to produce

Ask for the basis of the figure in writing, early, and ask for specific things rather than for justification in general.

• The published monitoring fee schedule or the relevant part of the section 106 supplementary planning document, with its adoption date
• The breakdown of the fee for this agreement, obligation by obligation
• The assumed number of monitoring events for each obligation and the period over which they run
• The officer grade and hourly rate assumed, or the cost basis used
• Confirmation of what the fee covers and what it does not, particularly whether it includes the legal costs of the agreement, which are charged separately

Most authorities produce the first two without difficulty. Fewer produce the third and fourth, and where they cannot, the fee rests on an assertion rather than an estimate.

One point to raise if it applies. Where the scheme is also liable for the Community Infrastructure Levy, the levy regulations permit the authority to apply a proportion of levy receipts to administrative expenses. Ask whether any part of the monitoring activity is already funded that way, because paying twice for the same officer time is not fairly related to the development.

Comparing published monitoring schedules

Comparison is useful and has limits.

Many authorities publish their monitoring fee basis in a section 106 or planning obligations supplementary planning document, and those documents are public. Reading three or four from comparable authorities tells you quickly whether the figure you have been given is at the top of the range, and a figure well outside the range is worth a question.

The limit is that another authority's schedule is not evidence about your authority's costs. The regulation ties the fee to this authority's estimate of its cost for this development. A comparison is a prompt for the authority to explain itself, not an argument that it must charge what its neighbour charges.

Where a published schedule exists and the drafted fee departs from it, that is a stronger point. Ask why the agreement differs from the authority's own adopted basis.

Negotiating the figure in the draft agreement

Deal with it at heads of terms stage, before the solicitors engross anything. Four moves work.

1. Ask for the breakdown and then query the individual lines rather than the total. A line for monitoring a single payment is easier to remove than a global reduction is to win.
2. Propose a per-obligation calculation where a percentage has been applied, with your own figures based on the number of monitoring events each obligation needs.
3. Ask for monitoring fees on obligations that require no ongoing monitoring at all to be removed, naming them.
4. Where the scheme is phased, ask for the fee to be payable in phases alongside the obligations rather than in full on commencement, which is a cash flow improvement even where the total stands.

Something to accept honestly: the authority holds the stronger position. The agreement has to be completed before the permission issues, the applicant usually has a programme, and the officer knows it. A negotiation that threatens the programme to save a four-figure sum is a poor trade.

The one route that carries real weight is an appeal. Where an application goes to appeal, the inspector tests each obligation against regulation 122, and an obligation that fails the tests is given no weight. That means an unjustified monitoring fee can be stripped out at appeal, and authorities know it. It is a slow and expensive way to make the point, so it works better as context in the negotiation than as a plan.

When to accept and move on

Set a threshold before you start. On most schemes the monitoring fee is a small fraction of the obligation package and a smaller fraction of the development cost, and the professional time spent arguing about it can exceed the saving within a fortnight.

Three situations justify pushing properly. Where the fee is a percentage figure that has produced a number out of all proportion to the obligations. Where it duplicates something already charged, whether through levy administration or through the legal costs undertaking. And where the agreement sets a precedent across a phased scheme or a series of applications on the same site, so the figure recurs.

Otherwise, record your query and the authority's answer, pay it, and put the time into the obligations that actually cost money. The arithmetic on a development appraisal is dominated by the affordable housing and infrastructure contributions, and the monitoring fee rarely moves a decision.

Budget it alongside the other fees that land at the same time. The application fee itself follows a national schedule based on floorspace and site area, is indexed each April, and works differently again on a phased outline and reserved matters scheme.

See PlanScope pricing if you are costing the supporting document pack at the same time, or browse the report types to scope the evidence base.

This is general guidance and not legal advice. Check the position with your local planning authority or a qualified professional 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.