Explained: What Is a Section 106 Agreement & How It Affects Supported Living Projects

Section 106 (often called “S106”) agreements are a key tool in UK planning law that can have a big impact (positive or challenging) for supported living and affordable housing projects.

What Is a Section 106 Agreement?

• Under Section 106 of the Town and Country Planning Act 1990, local planning authorities (LPAs) can make legally binding agreements with developers when granting planning permission.

• These obligations (or planning obligations) are meant to mitigate the impact of new developments, ensuring developers contribute to community needs—such as affordable housing, infrastructure, public open spaces, and sometimes local amenities.

How Section 106 Works in Practice

• It’s part of the planning permission process. Developers agree to certain obligations before they get approval.

• The agreement is enforceable on the developer and future owners of the land or buildings, so obligations can carry through after the initial developer.

• Obligations can include providing a certain percentage of affordable homes on-site or paying contributions off-site. “Affordable” may also include supported housing.

Impacts on Supported Living Projects

Supported living projects aim to provide housing with support services for people with special care or support needs (e.g., people with disabilities, older adults, mental health needs). S106 agreements affect these projects in multiple ways:

Effects and What It Looks Like

Positive Access to Land & Affordable Units - LPAs may require developers to include affordable or supported housing units as part of S106. This can reduce land acquisition costs and help investors access opportunities otherwise restricted by high market values.

Viability Pressures - The cost of delivering S106 obligations (affordable housing, infrastructure contributions) can make some supported living project proposals more expensive or harder to make financially viable—especially for smaller developers.

Delivery Delays or Blockages - Negotiations over S106 terms, or difficulties in finding partners (e.g., housing associations) to take on the obligation or afford the cost, can delay supported living developments.

Legal Compliance & Terms - Supported housing developers need to be aware of the detailed wording of S106 agreements—e.g. whether units need to be “affordable rent,” shared ownership, or designated for specific uses. Also, whether obligations can be modified or discharged under certain conditions. Norton Rose Fulbright+1

Risks & Things to Watch Out For

• Threshold changes: If thresholds (number of homes or size of development requiring S106) are increased, fewer developments may need to include affordable or supported units. Housing Today

• Financial strain on housing associations: Some providers might not be able to purchase or maintain S106-affordable or S106-supported housing units due to funding shortages or high build/land costs. The Guardian+1

• Unspent contributions: Sometimes developments have S106 obligations but the financial contributions or affordable housing units are not delivered, or delayed. Monitoring is important. London City Hall+1

Best Practices for Using Section 106 in Supported Living Investment

• Start negotiating early with LPAs and planning officers to understand what obligations will apply.

• Work with experienced legal/planning advice to ensure S106 obligations are understood fully (terms, obligations, restrictions).

• Assess viability thoroughly—funding, ongoing management, support services, and whether the obligations (costs) leave enough margin.

• Consider partnerships with housing associations or providers who already work in supported housing—they may help with credibility and delivery capacity.

Final Thought

Section 106 agreements are a powerful tool—they can unlock land, reduce costs, and help ensure supported living units are part of new developments. But they also introduce complexity, costs, and legal risk. For investors or developers in supported housing, these obligations are not just a checkbox—they are a key factor in designing viable, impactful, and sustainable projects.

Sources & References:

• UKSupportedHousing “Section 106 Planning Obligations” Supported Housing

• Blandy Legal “What is a Section 106 Agreement?” Blandy & Blandy Solicitors

• Homes England – Section 106 Affordable Housing Clearing Service GOV.UK

• Simply Law – “Affordable Housing and S106 obligations for small developers” simply.law

• London Assembly – Section 106 contributions for affordable housing London City Hall