Wales: developer contributions and the levy position

Developer contributions in Wales still run on section 106 of the Town and Country Planning Act 1990 and the Community Infrastructure Levy Regulations 2010. That sounds like England, and the statutory plumbing is shared. The policy framework sitting on top of it is not: Planning Policy Wales, Future Wales: The National Plan 2040 and the Technical Advice Note series govern what an authority may ask for, the Planning (Wales) Act 2015 adds Welsh-specific requirements, and the Infrastructure Levy created by the Levelling-up and Regeneration Act 2023 is an England measure that does not extend to Wales. If you are budgeting a Welsh scheme off an English template, the affordable housing and Welsh language lines are where it will go wrong.

This article deals with Wales only.

The statutory basis for obligations in Wales

Section 106 applies across England and Wales in identical terms. An obligation may restrict development or use of land, require specified operations or activities, require land to be used in a specified way, or require a sum to be paid. It binds the land, not the person, and it runs with the title.

The tests on what an authority may lawfully require also come from the same place. Regulation 122 of the CIL Regulations 2010 makes an obligation a reason for granting permission only where 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. Those three limbs are a statutory test in Wales as much as in England, and an authority cannot contract out of them by local policy.

The pooling restriction that once capped contributions at five obligations per infrastructure project was lifted in September 2019 and applies in neither nation now. So a Welsh authority may collect section 106 sums towards the same school or junction from any number of schemes. In practice that has made obligations the main delivery route in Wales and left the levy a minority instrument.

How Welsh authorities use section 106

Expect the obligation to carry affordable housing, education, open space and recreation, highway and active travel works, ecological mitigation and management, and a monitoring fee. Beyond that, two Welsh additions turn up that English developers do not plan for.

The first is the Welsh language. The Planning (Wales) Act 2015 confirmed that the Welsh language can be a material consideration, and Technical Advice Note 20 sets out how authorities handle it. In designated areas with a high proportion of Welsh speakers, a large residential scheme may be asked for a language impact assessment and then for mitigation secured by obligation, which can include phasing, local marketing or contributions to language infrastructure.

The second is the Well-being of Future Generations (Wales) Act 2015. It does not create a power to require money, but it shapes how authorities frame their asks and how they justify them in committee reports, and heads of terms are routinely written to reference well-being goals. Treat that as the language of the negotiation rather than an extra charge.

Development of National Significance applications are determined by the Welsh Ministers through Planning and Environment Decisions Wales. The obligation is still a section 106 deed, and the local authority remains a party to it, so the negotiation happens with the council even though the decision does not.

Where the levy applies and where it does not

The Community Infrastructure Levy is available to Welsh authorities, but only a minority have adopted a charging schedule, and several that consulted on one did not take it forward. Check the authority's own published charging schedule before you assume either way. Where no schedule exists, there is no levy liability and everything goes through the obligation.

Where a schedule does exist, the familiar mechanics apply: liability attaches when development starts, the assumption of liability notice and the notice telling the authority when works will begin must be served in the right order, and serving that second notice late forfeits any instalment entitlement and any relief.

The England-only status of the Infrastructure Levy is worth confirming on legislation.gov.uk before you rely on it, because the dates on which such provisions take effect can change. What will not change is that Wales has its own primary legislature for planning, so an English reform does not arrive in Wales by default. The same principle explains why Northern Ireland's two-tier system and Scotland's hierarchy of developments look so different from the English procedure despite the shared starting point.

Viability evidence and the appraisal that gets tested

Where a scheme cannot carry policy-compliant contributions, the route is a viability appraisal. Wales has no equivalent of the English Planning Practice Guidance viability chapter, so the evidential standard comes from the authority's own local development plan evidence base and its affordable housing supplementary planning guidance.

Read that supplementary guidance before you build the appraisal. Many Welsh authorities specify the appraisal model they will accept, the benchmark land value approach, the profit range they consider reasonable and whether they will instruct an independent review at your cost. Those four variables decide the outcome far more than the gross development value you put in.

Two further points catch out cross-border developers. Welsh authorities tend to set affordable housing targets at the plan level with a stated viability basis, which makes a site-specific departure harder to argue than in England. And Welsh sales values in much of the country sit well below the English average, so a target that looks modest on paper can still be unachievable, and the appraisal has to show it rather than assert it.

Affordable housing contributions and TAN 2

Technical Advice Note 2, Planning and Affordable Housing, remains the national guidance. It expects authorities to set a target in the development plan, to justify it with a viability study, and to set a site-size threshold below which no contribution is sought.

Three things follow for a developer.

1. Check the threshold in the adopted plan, because it varies between authorities and is sometimes expressed in dwellings and sometimes in site area.
2. Check whether the policy requires on-site provision, and what the commuted sum formula is where off-site payment is accepted.
3. Check the tenure definitions used locally, because social rent, intermediate rent and low-cost home ownership carry very different transfer values and the split drives the appraisal.

Registered social landlord appetite is the practical constraint. A tenure split that the policy requires but no local landlord will buy leaves you with an undeliverable obligation, and the time to establish that is before heads of terms are agreed, not after.

Monitoring fees and administration charges

Welsh authorities charge monitoring fees on section 106 deeds, usually as a percentage of the contribution value or a fixed sum per obligation, capped at a stated maximum. The Regulation 122 tests apply to the fee as much as to the obligation itself, so a fee must relate to the actual cost of monitoring that development rather than funding the service generally.

Ask for the authority's published fee schedule and the basis of calculation. Where the fee is a percentage of a large contribution and bears no relationship to the monitoring work, it is negotiable, and authorities will usually move on it when challenged with the regulation rather than with annoyance.

Negotiating heads of terms in Wales

Start the negotiation before validation, not after the committee report is drafted. The pre-application consultation duty introduced by the Planning (Wales) Act 2015 for major development already forces early engagement, so use that process to table draft heads of terms and to ask which obligations the authority considers necessary.

Then do three things. Get the triggers tied to milestones you control, such as occupation of a numbered plot rather than a calendar date. Get an index named in the deed, with a base date, rather than accepting an open reference to inflation. And get a clawback or review mechanism only where it would work in your favour, because a review clause cuts both ways once values rise.

PlanScope's drafting is grounded in English national policy and English local plans, so a Welsh application needs the reviewer to check Planning Policy Wales, the relevant Technical Advice Notes and the adopted local development plan. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval. This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. You can browse the report types by category or start from a postcode to see what a scheme is likely to need.