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Unilateral Undertaking - an alternative to a Section 106 Agreement

Our Land Development expert, James Macdonald answers your questions.


· What are Section 106 Agreements?


As part of the planning process, the Council and a developer seeking planning permission may enter into a legal agreement that will set out the terms for the developer to provide, or fund, the provision of infrastructure, services, or other impact mitigation measures or planning controls on or off the development site.


This agreement is referred to as a “Section 106 Agreement or Planning Obligation”.


· What are Unilateral Undertakings?


A unilateral undertaking, like a Section 106 agreement, is a legal deed where developers covenant to perform planning obligations however unlike S.106 agreements they don’t have to be entered into by the council. A unilateral undertaking comes into effect when planning permission to which they are linked is granted.


· What are the benefits of a Unilateral Undertaking?


As unilateral undertakings follow a standard form, they can help to avoid potentially lengthy prior negotiation with the Council in securing planning obligations. This can both speed up the planning process and therefore completion of the disposal of the site and can also help to reduce fees in connection with securing the planning permission itself.


· When should Unilateral Undertakings be used?


Where financial contributions are known at an early stage and the package of planning obligations is relatively straight forward, applicants are encouraged to submit a unilateral undertaking with their application. The intention is that the unilateral undertaking can be included with the suite of documents associated with the planning application. Unilateral undertakings will not usually be appropriate for major applications including applications for 10 or more new dwellings or where the land is subject to a mortgage.


· Will the Unilateral Undertaking require payments?


It will require the developer to pay financial contributions.


· When will the financial contributions become payable?


The usual Council templates state payment of financial contributions will be 50% upon commencement of development and 50% within 365 days or on first occupation, whichever is sooner.


In S.106 agreements and undertakings, commencement usually is when building works start on the site; after site preparation, clearance and demolition has commenced. Monitoring and legal fees will need to be paid before the unilateral undertaking is accepted and (any) grant of planning permission.


If you are considering buying or selling land for development, contact James Macdonald on 023 8254 7600.


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