How many times have I had to argue that not every legal interest in a site has to be bound by a section 106 agreement for it to be valid? Too many. At last here is a recent High Court decision I can point to confirming that this is indeed the case - although this challenge was brought by the party whose land was not included, not the local planning authority.
So here's my point: there are no rules or laws as to how much land covered by a planning application must be included in any related section 106 agreement. Instead it is a matter of common sense for the local planning authority to decide. Yes, common sense, which on some occasions is in short supply. The point of the agreement is to secure that particular benefits are provided, be they financial obligations, on site obligations or other forms of section 106 obligation.
If the agreement relates to the provision of on site obligations then I would say that ordinarily any land that is specifically required to deliver that obligation should be bound by the agreement: although it might be possible to devise an agreement that prevents certain development from proceeding until that particular land is later bound.
If the obligations are financial then the point of the agreement is to ensure that the development cannot proceed without being obliged to provide the financial payments.
To my mind that test is met if the excluded land is insufficient on its own to carry out beneficial development without the need for any land that is bound by the section 106 agreement. That will vary according to the type of development - for example if its a single development such as a block of flats it might be possible to exclude a significant part of the site from the 106, but if the development is separate dwellings then the planning authority will probably not want to exclude any land which is sufficient in size to construct independent dwellings.
Inevitably when land is being assembled for development there will be occasions when the applicant is unable to secure that all of the land can be bound by a section 106 agreement, simply due to the state or timing of the negotiations. In some instances that might be fatal, but that is not always the position as this case demonstrates.
Third party exclusion from planning agreement upheld