When a Section 106 agreement states "£4,974.72 per dwelling", the number that matters to a lender is not £4,974. It is £746,208 — the total liability on a 150-unit scheme.
This distinction is obvious in principle and routinely missed in practice.
Why totals get missed
S106 schedules are structured around individual clauses, not financial summaries. A typical deed lists obligations in sequence: open space contribution, education contribution, highways contribution. Each clause states either a lump sum or a per-unit rate.
The per-unit clauses require multiplication by the consented dwelling count, which is stated elsewhere in the agreement — usually in the recitals or the development context schedule.
When someone reads the schedule clause-by-clause and records each stated amount, they record the rate. The multiplication step is left implicit.
On a 150-unit scheme with three per-dwelling obligations at £5,000 each, the headline number in the file is £15,000. The correct total is £2,250,000.
This is not a theoretical risk. It is the most common single error in S106 financial analysis for development finance.
Indexation compounds the problem
Most S106 agreements specify that contributions are indexed from completion of the planning agreement to the trigger date (typically commencement of development or first occupation). Common indexation bases:
- BCIS All-in Tender Price Index (construction costs)
- RPI (Retail Price Index)
- CPI (Consumer Prices Index)
- Fixed percentage uplift (less common, more predictable)
A contribution stated at £5,000 per dwelling in 2022, indexed to BCIS from execution date, on a site that commences in 2026, carries approximately 18–22% accumulated indexation based on BCIS movements over that period.
The correct per-unit figure is not £5,000. It is £5,900–£6,100.
On 150 units, the difference between the stated rate and the indexed rate is £135,000–£165,000 — before accounting for any delay between commencement and the specific trigger event.
What lenders need in the credit file
A compliant S106 financial summary for a development finance credit file should state:
- Obligation description — what the payment is for (education, highways, affordable housing cash in lieu, etc.)
- Payment trigger — which event triggers the obligation (commencement, first occupation, N-th occupation)
- Stated rate — the per-dwelling figure or lump sum as written in the deed
- Dwelling count — the consented unit count applied
- Computed total — stated rate × dwelling count
- Indexation method — which index, from which date
- Indexed total estimate — best estimate of the liability at the expected trigger date
- Clause reference — the specific schedule entry or clause number
Without items 4 and 5, the summary is incomplete. Without items 6 and 7, the liability is understated.
The clause reference matters
S106 agreements are legal documents. When a surveyor, solicitor, or lender queries a figure in the credit file, they need to locate the source clause. A summary without clause references cannot be verified without re-reading the entire deed.
The standard for development finance is that every financial obligation in the summary can be traced to a specific clause or schedule entry in the underlying agreement.
PlanSureAI extracts S106 obligations from signed agreements, identifies per-dwelling structures, applies dwelling counts, and outputs clause-referenced summaries in the format lenders require.