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Local planning authorities use Section 106 (S106) agreements to secure site-specific obligations — such as affordable housing, highways works or educational contributions — tied to a planning permission. The Community Infrastructure Levy (CIL) is a standardised charge applied to new development in charging authority areas to fund infrastructure. Both S106 and CIL increase development cost and can affect whether a scheme meets required returns or triggers lender covenants.
S106 obligations are negotiated as part of the planning process and often include complex delivery and payment triggers: for example, on occupation, at practical completion, or staged to phases. Viability assessments submitted to planning authorities may recommend reduced contributions where abnormal costs or site constraints exist; these assessments are scrutinised but can be commercially sensitive. CIL rates are set in charging schedules and apply more predictably, but reliefs and indexing mechanisms vary by area.
Cashflow timing is critical: an obligation payable on occupation can compress liquidity if pre-sales and handovers fall behind projections. Legal title and restrictive covenants can also carry ongoing costs for future owners. For fractional investors exposed to redevelopment SPVs or funds, modelled assumptions about S106 and CIL, the robustness of viability evidence, and any conditionality in planning consents should be transparent in offering materials.
In the context of fractional digital share investing, clear disclosure of planning obligations, payment schedules and their sensitivity to build-cost or market timing helps everyday savers understand how planning risk flows through to NAV and distributions.