Section 106 Agreement Bond

If you are looking to develop a property in the UK, you may have come across the term “Section 106 agreement bond.” This term may be confusing for those who are not familiar with the planning system of the country. In this article, we will explain what a Section 106 agreement bond is and why it is important.

What is a Section 106 agreement bond?

A Section 106 agreement bond, also known as a planning obligation bond or a planning gain bond, is a legal agreement between a developer and a local planning authority. This agreement is a requirement for planning permission and is used to ensure that the development benefits the local community.

The bond acts as a guarantee that the developer will fulfill the obligations agreed upon in the planning permission. Typically, these obligations could include the provision of affordable housing, the creation of new public spaces or parks, and contributions to services such as schools or healthcare facilities.

The bond is a financial security that ensures the developer will complete these obligations. If the developer fails to complete these obligations, the local planning authority can use the bond to pay for the work to be carried out by someone else.

Why is a Section 106 agreement bond important?

A Section 106 agreement bond is important for several reasons. Firstly, it ensures that the developer fulfills their obligations to the local community. The bond acts as a security, meaning that the local community can be assured that the promised benefits will be delivered.

Secondly, the bond acts as a deterrent for developers who may be tempted to avoid fulfilling their obligations. If a developer knows that they will lose a considerable amount of money if they fail to fulfill their obligations, they are more likely to do so.

Finally, the bond ensures that the local planning authority has the funds to complete the obligations if the developer fails to do so. This means that the local community is not left with unfinished projects or facilities that were promised but never delivered.

Conclusion

In conclusion, a Section 106 agreement bond is an important part of the planning process in the UK. It is a legal agreement between a developer and a local planning authority that ensures the developer fulfills their obligations to the local community. The bond acts as a security, a deterrent, and a source of funds for the local planning authority. If you are a developer looking to develop a property, it is important to understand the requirements for a Section 106 agreement bond.