You ran the residual. The numbers stack — just.
The developer is keen to move. You have a lender in mind. The planning permission is in, the viability statement is attached, and somewhere on page 47 of a 120-page Section 106 agreement there is a schedule that nobody has read properly.
That is where development finance deals die.
Not because the GDV was wrong. Not because the sponsor was weak.
Because S106 sat in the viability appendix until the credit committee found it.
This post is for brokers who have already qualified the site on residual — post one in this series — and now need to read the obligations before they place the loan.
What S106 is (in broker language)
Section 106 is a planning obligation — a legally binding agreement between the developer and the local planning authority (LPA), tied to the grant of planning permission.
It is not a tax. It is not CIL. It is not optional.
For development finance, S106 matters because it creates:
- Cash liabilities — contributions payable on triggers (commencement, occupation, etc.)
- Programme risk — works that must be completed before lawful occupation
- GDV impact — affordable housing quantum reduces open-market sales
- Hard gates — obligations that block drawdown or completion certificate
A lender does not need the full deed. They need a structured summary that answers: what must be paid, when, to whom, and on what evidence.
If your submission cannot answer that, you are not ready to place the loan.
Why brokers get caught
S106 errors rarely show up at qualification. They show up at credit committee — or worse, at first drawdown.
The same mistakes repeat:
1. Per-dwelling rate recorded as the total
The deed says £4,975 per dwelling. The viability appendix says £4,975.
On a 150-unit scheme the real exposure is £746,250 — before indexation.
This is the most common single error in development finance S106 analysis. It is also the easiest for a credit analyst to spot.
2. Indexation ignored
Most financial obligations index from agreement date to payment trigger — typically BCIS, RPI, or CPI.
A rate stated in 2022 and paid at commencement in 2026 is not the stated rate. Modelling at consent-date value understates exposure by 15–25% on typical BCIS movements.
3. S106 buried in "planning costs"
Brokers see a single line: "Planning / S106: £200,000."
No breakdown. No triggers. No clause references. No separation of affordable housing from cash contributions.
Credit committees treat that as unverified — which means they haircut it or reject the viability.
4. Non-financial obligations omitted
Highways works, ecological mitigation, open space delivery — obligations with no direct invoice that still block occupation.
These do not hit the cost stack as cash on day one. They hit the programme — and programme slippage hits interest roll-up and exit.
5. Affordable housing treated as a footnote
Affordable quantum is not a planning nicety. It is a GDV line item.
If the viability assumes 100% open-market sales and the S106 requires 30% affordable, the GDV in the residual was wrong before you opened the lender panel.
The five things a broker must extract before submission
You do not need to read 120 pages of deed. You need five structured outputs.
1. Financial obligations table
Every cash obligation as a row:
| Field | Why the lender cares | |-------|---------------------| | Obligation type | Education, highways, open space, monitoring, etc. | | Stated amount | As written in the deed (rate or lump sum) | | Basis | Per dwelling, per sqm, lump sum | | Unit count | Consented dwellings applied | | Computed total | Rate × units (or capped lump sum) | | Indexation | Index, base date, method | | Trigger | Commencement, Nth occupation, prior to first occupation | | Clause reference | Where in the deed the figure comes from |
Without computed total and clause reference, the summary is not lender-ready.
2. Trigger map
Group obligations by when they fall due:
- Pre-commencement — can block start on site
- On commencement — hits early cashflow, often before first draw
- On occupation thresholds — staged payments tied to unit delivery
- On completion — back-ended, but still in the facility term
A lender underwriting drawdown needs to see what hits cashflow in months 1–6, not just the total liability.
3. Hard gates
Flag anything that prevents lawful commencement or occupation until discharged:
- "No occupation until highway works complete"
- "Affordable units must be occupied before market units"
- "Ecological mitigation must be in place prior to first occupation"
Hard gates stop draws. If you miss one, the lender finds out at monitoring survey — not at credit committee.
4. Affordable housing schedule
Separate from cash contributions:
- Unit count and tenure split
- Pricing basis (discount to market, fixed rent, etc.)
- In-kind delivery vs commuted sum
- Impact on GDV and sales profile
If affordable is in-kind, the GDV model must reflect reduced open-market units. If commuted, it is a cash line in the cost stack.
5. Provenance
Every figure traceable to a clause or schedule entry.
When the lender's surveyor queries a number, "it's in the S106 somewhere" is not an answer.
S106 vs CIL — do not conflate them
Brokers routinely lump S106 and CIL into one "planning costs" line. Lenders do not.
| | CIL | S106 | |---|-----|------| | Basis | Charging schedule (formulaic) | Negotiated (policy-framed) | | Calculation | Net additional floorspace × zone rate | Per agreement — site-specific | | Certainty | High — published schedule | Medium — precedent-informed range | | Where it sits | Viability cost stack | Viability cost stack + credit file annex |
CIL belongs in the residual as a defined line item.
S106 belongs in the residual and in a structured annex the credit committee can underwrite.
More on the distinction: CIL vs S106: what's predictable.
How to structure the credit case
Once you have extracted the five outputs, the broker submission should present S106 in three layers:
Layer 1: Executive summary (one paragraph)
Factual, not promotional:
- Number of financial obligations identified
- Total computed exposure (indexed estimate)
- Any hard gates present (yes/no)
- Affordable housing quantum and GDV impact
Avoid "low risk." Credit committees want structure, not tone.
Layer 2: Financial obligations table
The core annex. Every row with stated amount, computed total, indexation, trigger, and clause reference.
This is what separates a broker submission from a developer's planning PDF.
Layer 3: Cashflow alignment
Map triggers to the development programme and drawdown schedule.
- What is due before first draw?
- What stages with unit sales?
- What is back-ended against practical completion?
A lender underwrites timing as much as total exposure.
What to do when S106 is not yet agreed
Not every site has an executed S106 at enquiry stage. That is normal.
Your options:
- Use precedent range — comparable agreements in the same LPA, similar use class and unit band. Present as low / mid / high per-dwelling range, not a single figure.
- Mark as unverified — state explicitly in the submission that S106 is assumed pending negotiation. Lenders will haircut.
- Park the deal — if the residual only works with a zero S106 assumption, it does not work. Do not place it.
What you must not do: assume the developer's "expected" S106 contribution with no comparable evidence and present it as agreed.
That is how residuals that looked fine at qualification get killed at credit committee.
The broker checklist before you place
Run this before you send the pack to the lender:
- [ ] Financial obligations broken out by type — not one lump sum
- [ ] Per-dwelling rates multiplied by consented unit count
- [ ] Indexation basis and base date recorded
- [ ] Triggers mapped to programme / drawdown
- [ ] Hard gates identified and flagged
- [ ] Affordable housing impact on GDV stated separately
- [ ] Clause references on every financial figure
- [ ] S106 separated from CIL in the viability
If you cannot tick six of eight, you are not ready to place.
What this sets up for the lender conversation
S106 is step two. Once the obligations are structured, the lender will still ask about LTGDV — how much debt against GDV, and whether the facility size survives the true cost stack.
That is post three in this series.
But LTGDV is meaningless if S106 exposure is wrong. Get the obligations right first. The loan-to-GDV conversation follows from a cost stack the credit committee can trust.
How PlanSureAI handles this
PlanSureAI extracts S106 obligations from executed agreements and structures them into a lender-ready annex:
- Per-dwelling rates multiplied correctly
- Indexation identified and base dates recorded
- Triggers normalised to a cashflow map
- Hard gates and non-financial obligations flagged
- Every figure clause-referenced
The annex sits in the evidence pack — not buried in a viability appendix the credit committee will not read.
The broker's job is to qualify the site, structure the case, and place the loan. Reading 120 pages of deed is not your job. Getting the right summary in front of the lender is.
The series
- Residual land value — qualify the site in 10 minutes
- S106 for brokers — read the obligations before they kill the deal (this post)
- LTGDV for lenders — speak the credit committee's language on day one