Amending/Modifying s106 agreements; Viability and a Developer’s balance sheet – do the sums add up?

A Planning Inspector has rejected most of a major developer bid to dilute or remove Section 106 obligations at Chilmington Green, ruling that viability concerns cannot be used to sidestep the statutory test for discharging or modifying planning obligations.

In a decision dated 20 January 2026, the inspector determined two linked appeals by Hodson Developments and associated companies against Ashford Borough Council (ABC) and Kent County Council (KCC). The appeals followed the councils’ failure to determine applications seeking wide-ranging changes to the 2017 s106 agreement supporting the outline consent for up to 5,750 homes and associated infrastructure.

Developer: obligations block delivery

Hodson argued that changed circumstances since the agreement was signed—rising build costs, higher interest rates, inflation, Covid-related disruption and funding constraints, had created critical viability and deliverability challenges. The developer sought to discharge or amend a large package of obligations, describing some as “blockers” that slowed progress or made the scheme financially unworkable.

Evidence submitted included scheme-wide viability appraisals suggesting a substantial negative land value under the existing s106 package, improving but still negative even if many requested changes were granted. The developer also cited difficulties in securing financial instruments such as large “on-demand” bonds.

Inspector: wrong legal route for a viability renegotiation

The inspector said this approach misapplied the law. Under s106A/106B, the question is not whether obligations make a scheme harder to deliver, but whether each obligation still serves a “useful purpose” and, if modified, whether it would serve that purpose “equally well”.

He rejected the argument that obligations can be discharged simply because—alone or in combination—they affect viability or stall delivery. Introducing a “planning balance” about the benefits of housing delivery versus the costs of obligations would, he said, turn the s106A process into something it is not: a mechanism to re-open the merits of the original permission.

Viability evidence criticised

While acknowledging the developer’s viability case was central to the applications, the inspector raised concerns about how it was presented and evidenced. He noted:

• the absence of “open book” transparency despite reliance on viability;
• limited comparable sales evidence and late submission of some infrastructure cost material; and
• a lack of clarity on what level of obligation change would actually move the scheme from unviable to viable.

He also pointed out that on the developer’s own figures the scheme could remain technically unviable even after the proposed changes, making it difficult to rely on viability as a decisive factor.

Councils: obligations’ purpose is infrastructure, not viability

ABC and KCC argued that the obligations were designed to secure infrastructure, services and mitigation needed for a new settlement, and that “viable delivery” was not itself a purpose of the obligations. The inspector broadly agreed, stating that negative obligations, such as occupation limits until highways works or school funding are secured, can have a useful purpose even if they constrain progress.

Result: most requests dismissed

The inspector allowed only a handful of limited amendments (mainly minor drafting changes and discharge of outdated energy-related requirements). The vast majority of the developer’s 122 requested changes were dismissed, including major viability-driven proposals affecting:

• affordable housing triggers and tenure changes,
• the viability review mechanism,
• community facility delivery timing and scope,
• transport obligations, and
• large financial security mechanisms such as bonds and contingency bank accounts.

On the contentious issue of bonds, the inspector said the claimed difficulty in obtaining them did not show the obligations had no useful purpose, if anything, it underlined why councils sought security to protect the public purse from the risk of non-delivery.

Bottom line

The decision signals that developers seeking relief from s106 burdens on viability grounds face a high bar under s106A/106B. The inspector’s message was clear: if viability has shifted, the appropriate route is not to “rewrite” obligations through s106 discharge tests, but to pursue changes through other planning mechanisms, because under s106A the legal focus remains whether an obligation still serves a useful purpose, not whether it helps a developer’s balance sheet.

If you require land and property advice, our Planning Law specialists can guide you through the correct legal route.