The Two Legal Routes for Modifying Planning Obligations
Section 106 of the Town and Country Planning Act 1990 allows local planning authorities and landowners to enter into legally binding planning obligations to secure infrastructure contributions, highways improvements, and affordable housing.
When economic conditions change, development costs increase, or mortgage lenders require amended wording, developers must modify the agreement under Section 106A. The law provides two distinct statutory pathways: voluntary Deeds of Variation under Section 106A(1)(a) at any time, or formal unilateral applications under Section 106A(1)(b) once the 5-year statutory period has expired.
The 5-Year Rule and Section 106B Planning Appeals
Under Section 106A(4)(b), the 'relevant period' after which a landowner can compel a local planning authority to formally review an obligation is 5 years from the date the deed was executed.
Once the 5-year threshold is crossed, the landowner submits a formal application under the Town and Country Planning (Modification and Discharge of Planning Obligations) Regulations 1992. The LPA has a strict statutory determination window of 8 weeks. If the council refuses to modify the obligation, or fails to make a decision within 8 weeks, the applicant has a statutory right of appeal to the Planning Inspectorate under Section 106B.
Lender Security & The Mortgagee Exclusion Clause (MEC)
One of the most frequent reasons for negotiating a Deed of Variation is to satisfy high-street mortgage lenders. Where a Section 106 agreement imposes affordable housing covenants, lenders require a 'Mortgagee Exclusion Clause' (MEC).
An effective MEC exempts a mortgage lender (and any receiver appointed by the lender) from the Section 106 affordable housing restrictions if the borrower defaults and the lender takes possession of the development. Without an MEC conforming to UK Finance and National Housing Federation guidance, banks will refuse to finance residential development schemes.