Section 106 Bond Agreements

A Section 106 Bond Agreement is a financial guarantee required by a local planning authority to ensure a developer fulfils their obligations under a Section 106 planning agreement.

At CG Bonds Surety, we specialise in arranging Section 106 Bonds for residential, commercial and mixed-use developments across the UK. We work alongside developers, landowners, planning consultants and solicitors to ensure the Bond structure, wording, and value meet local authority requirements while remaining commercially proportionate.

If a Section 106 obligation is delaying planning approval or development commencement, we help put the Bond in place efficiently and on competitive terms.

Section 106 Bond Agreements

A Section 106 Bond Agreement is a financial guarantee required by a local planning authority to ensure a developer fulfils their obligations under a Section 106 planning agreement.

At CG Bonds Surety, we specialise in arranging Section 106 Bonds for residential, commercial and mixed-use developments across the UK. We work alongside developers, landowners, planning consultants and solicitors to ensure the Bond structure, wording, and value meet local authority requirements while remaining commercially proportionate.

If a Section 106 obligation is delaying planning approval or development commencement, we help put the Bond in place efficiently and on competitive terms.

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What Is a Section 106 Bond Agreement?

A Section 106 Bond is not the Section 106 legal agreement itself.

Instead, it is a financial security that:

  • Guarantees the delivery of agreed planning obligations
  • Protects the local authority if obligations are not met
  • Allows development to proceed without upfront payments

If the developer fails to deliver the agreed obligations, the local authority can call on the bond to fund the works or contributions directly.

When Is a Section 106 Bond Required?

Local planning authorities typically require a Section 106 bond where:

  • Obligations are phased or delivered post-completion
  • Contributions are deferred over time
  • Infrastructure delivery presents a delivery risk
  • The authority needs certainty before granting permission

A bond is often requested as a condition of planning approval, meaning development cannot lawfully commence until it is in place.

When Is a Section 106 Bond Required?

Local planning authorities typically require a Section 106 bond where:

  • Obligations are phased or delivered post-completion
  • Contributions are deferred over time
  • Infrastructure delivery presents a delivery risk
  • The authority needs certainty before granting permission

A bond is often requested as a condition of planning approval, meaning development cannot lawfully commence until it is in place.

What Obligations Are Commonly Secured by Section 106 Bonds?

Section 106 bonds commonly secure obligations such as:

  • Affordable housing delivery
  • Highway and transport improvements
  • Education or healthcare contributions
  • Open space, landscaping or public realm works
  • Environmental or ecological mitigation

Each bond is tailored to the specific planning agreement and local authority requirements.

Section 106 Bond Agreements Costs

The primary cost associated with Section 106 Bond Agreements fluctuates depending on the financial contributions or obligations that the developer or landowner must fulfil. This can include funding for affordable housing, infrastructure improvements, environmental mitigation, or community amenities. The magnitude of these contributions varies based on the project’s size, impact, and local requirements.

CG Bonds leverages its deep-rooted technical knowledge and expertise on bond idiosyncrasies to ensure our clients receive the most competitive terms available in the market. Additionally, our broad and exclusive underwriting panel empowers CG Bonds to provide a Best Price Guarantee policy, assuring our clients receive the most favourable terms.

At CG Bonds Surety, our unparalleled technical knowledge within the procurement of Section 106 Bond Agreements sets us apart. We possess a profound understanding of the unique intricacies of an array of bonds, including Section 106 Bond Agreements, allowing us to provide informative customer service by simplifying the complexities associated with them.

How CG Bonds Surety Can Help You With Section 106 Bond Agreements

At CG Bonds Surety, we have unrivalled specialist acumen on various Bond types stemming from our technical and construction background, placing us in a unique position to offer technical knowledge on Section 106 Bond Agreements. In addition to this, our 100% track record in fulfilling Bond requirements assures our clients that they will receive favourable terms, even within the current risk-averse surety market.

A dedicated account manager will assist you through the entire application process, ensuring a smooth and hassle-free experience. If you require immediate price indications for tender applications, we can provide them promptly to expedite the process.

How Long Does A Section 106 Bond Agreement Last?

The duration of a Section 106 Bond Agreement can vary and is typically determined during negotiations between the developer and the local planning authority. The agreement’s length depends on the specific terms and obligations outlined within it, which are tailored to the needs of the development and the local area.

In many cases, Section 106 Bond Agreements cover obligations that must be fulfilled during the construction and development phase, as well as responsibilities that extend into the post-development phase. This can range from several years to decades, depending on the complexity and scope of the development and the long-term impact it may have on the local area.

Benefits of Choosing CG Bonds for Section 106 Bond Agreements

Best Price Guarantee – Already got a quote? We will beat it and offer you a lower price.

100% Track Record – We secure bonds for all our clients, regardless of their financial strength or size.

Low Admin Fees – £195 admin fee.

Fast Turnaround – Most quotes are sourced within 5-7 days of completing the application form.

Bond Finance Options – We can help you cover the bond, even if you don’t have capital right away.

Exceptional Service – From start to finish, our experts will walk you through the process.

How To Secure A Section 106 Bond Agreement

To obtain a Section 106 Bond Agreement from CG Bonds Surety, our dedicated client account management team is here to support you every step of the way. To kick-start the application process, we will ask for the essential information outlined here:

Completed and Signed Application Form

Most Recent Audited Financial Accounts

Additional Project Details and Specifications (if available)

Latest Management Accounts (if available)

Copy of Bond Wording (if available)

Contact Us For Section 106 Bond Agreements

Reach out to CG Bonds Surety today for further information surrounding Section 106 Agreements. Our dedicated client account managers will provide their technical expertise, ensuring a seamless experience when obtaining your bond.

Section 106 Agreements FAQs

What happens if Section 106 obligations are delayed?

If Section 106 obligations are delayed, the outcome depends on the terms of the planning agreement and bond wording.

In most cases, delays do not automatically trigger a bond claim. Local authorities will typically review the reason for the delay, assess whether revised delivery times are acceptable, and consider formal variations to the Section 106 agreement if appropriate.

A bond is usually only called if obligations are not delivered within the agreed timeframe and no extension or variation has been formally agreed. Early engagement with the local authority is critical where delays arise.

Can a Section 106 bond be reduced over time?

Yes, a Section 106 bond can often be reduced, provided this is agreed within the bond and planning agreement.

Where obligations are delivered in stages, the bond value may:

  • Reduce as individual obligations are completed
  • Be partially released following certification by the local authority
  • Reflect only the remaining outstanding obligations

Reducing bonds are common for phased developments, but the reduction mechanism must be clearly defined in the bond wording and formally acknowledged by the local authority.

Can Section 106 bonds cover phased developments?

Yes, Section 106 bonds are commonly used for phased developments. In these cases, the bond can be structured to:

  • Secure obligations linked to specific phases
  • Allow partial release as phases are completed
  • Align bond exposure with the development programme

This approach provides reassurance to the local authority while avoiding over-securing obligations that are not yet due.

Can Section 106 obligations be secured without tying up capital?

Yes, this is one of the key advantages of a Section 106 bond. Rather than making upfront payments or placing funds in escrow, a bond allows developers to preserve working capital, maintain cash flow throughout the project, and deliver obligations in line with the agreed programme.

The bond acts as a financial guarantee without removing capital from the development, making it a commercially efficient solution.