--- title: Planning Obligations, S106, CIL, and the Policy Costs That Shape Your Return description: "When the Math Don’t Math — The Costs That Can Sink an Uplift Deal\nThere’s a moment in every development project where you look at the numbers — the land cost, the build cost, the sale value — and you realise:\n“These numbers don’t work. The math don’t math.”\nIt’s not always because the idea is bad. Often, it’s because of planning obligations — hidden costs imposed by policy that eat into your uplift.\nIn this article, we break down: - What S106, CIL, and other obligations actually are - How they’re calculated in Oxfordshire - What that means for your returns - And how OLD-Homes navigates these challenges to protect investor capital" image: https://old-homes.co.uk/hubfs/hero4.jpg --- [Skip to content](https://old-homes.co.uk/insights-blog/planning-obligations-s106-cil-and-the-policy-costs-that-shape-your-return#main-content) ![logo-joomla](https://old-homes.co.uk/hs-fs/hubfs/logo-joomla.png?width=300&height=93&name=logo-joomla.png)Homepage - [Home](https://old-homes.co.uk) - [About](https://old-homes.co.uk/about) - [Invest](https://old-homes.co.uk/invest) - [Portfolio](https://old-homes.co.uk/portfolio) - [Partner](https://old-homes.co.uk/partner) - [Contact](https://old-homes.co.uk/contact) [Insights Blog](https://old-homes.co.uk/insights-blog) - [Home](https://old-homes.co.uk) - [About](https://old-homes.co.uk/about) - [Invest](https://old-homes.co.uk/invest) - [Portfolio](https://old-homes.co.uk/portfolio) - [Partner](https://old-homes.co.uk/partner) - [Contact](https://old-homes.co.uk/contact) [Insights Blog](https://old-homes.co.uk/insights-blog) ![](https://old-homes.co.uk/hs-fs/hubfs/hero4.jpg?width=728&height=508&name=hero4.jpg) Planning # Planning Obligations, S106, CIL, and the Policy Costs That Shape Your Return ![Will Mallard](https://7528315.fs1.hubspotusercontent-na1.net/hub/7528315/hubfs/raw_assets/public/mV0_d-cms-elevate-theme_hubspot/elevate/images/avatar-placeholder.jpg?width=48&height=48&name=avatar-placeholder.jpg) Will Mallard December 1, 2025   **When the Math Don’t Math — The Costs That Can Sink an Uplift Deal** There’s a moment in every development project where you look at the numbers — the land cost, the build cost, the sale value — and you realise: *“These numbers don’t work. The math don’t math.”* It’s not always because the idea is bad. Often, it’s because of **planning obligations** — hidden costs imposed by policy that eat into your uplift. In this article, we break down: - What S106, CIL, and other obligations actually are - How they’re calculated in Oxfordshire - What that means for your returns - And how OLD-Homes navigates these challenges to protect investor capital --- ### 1. What Are Planning Obligations? Planning obligations are contributions that developers must make to get planning permission. They fall into three main categories: #### *1. Section 106 (S106) Agreements* These are negotiated, site-specific commitments. They can include: - Affordable housing quotas - Highway improvements - School or healthcare contributions - Public open space or play areas #### *2. Community Infrastructure Levy (CIL)* A flat-rate charge per square metre of new development — varies by council and zone. For example: - In parts of South Oxfordshire, **CIL is £150–£200/m²** for residential - That’s **£20,000–£30,000 per flat**, just for the privilege of building it #### *3. Emerging Policy Costs* From 2024, developers in England must also account for: - **Biodiversity Net Gain (BNG)**: New habitats or offset credits - **Sustainable construction standards** - **Carbon and water neutrality contributions** These aren’t optional extras. They’re part of planning consent — and they affect viability. --- ### 2. Oxfordshire-Specific Examples According to the **2024 Joint Viability Study for South Oxfordshire and Vale of White Horse**, these policy costs can erode profit significantly: - In higher-value areas, uplift can usually absorb these obligations - In marginal zones, even a modest CIL charge or 20% affordable quota can push schemes below viability They modelled dozens of site types — small infill plots, conversions, strategic sites — and found: > *“Sites under 10 units with full policy compliance were often unviable without reductions in affordable housing or cost inputs.”* In plain English: **if you’re not watching the policy line items, you’re building an investment on fantasy.** --- ### 3. Why This Matters for Private Investors From your perspective, this matters for one big reason: **Planning obligations don’t show up in glossy brochures — but they can kill your return or the project for the developer.** Let’s say: - You fund a project expecting £250k uplift - CIL = £40k, BNG offset = £20k, affordable quota cuts sales income by £50k Suddenly your £250k margin is **£140k** — and that’s before build or sales exit risks. This is why OLD-Homes front-loads our due diligence: - **We consult viability consultants and planners before acquisition** - **We pre-negotiate obligations where possible** - **We model worst-case policy outcomes AND plan B AND plan C — not best-case dreams** Because we’re not interested in hope. We deal in *reality that returns, that includes fall-back scenarios*. --- ### 4. “Hope vs. Homework” — Managing Uplift Risk When newer developers or their investors get excited about planning gain, they often forget these costs. They assume: - “Planning permission = profit” But unless the **residual value accounts for the obligations**, your planning uplift might be a mirage. Our rule of thumb: > If the deal doesn’t work *after* full policy load — don’t bank on ‘working it out later’. We’ve walked away from many, many more deals than we’ve taken forward. Why? Because **when the math don’t math, you don’t force it.** That’s what protects capital. --- ### 5. Local Knowledge Is the Only Real Edge Here’s the truth: these obligations are often negotiable — *if* you know what you’re doing. Examples: - Some zones have **CIL exemptions** for change-of-use from commercial to residential - Small sites can sometimes negotiate **off-site affordable contributions** instead of onsite units - Strategic discussions with local housing officers can reduce quotas based on viability But these conversations only happen when you’re *in the room* — and when you have a track record. That’s why investing with a **local, Oxfordshire-based team** matters. We don’t just quote policy — we understand how it’s applied in real planning meetings. --- ### 6. What This Means for Your Investment Strategy As a third-party investor, you want projects that: - Have already accounted for obligations *before* you fund - Include **headroom** for changing costs or policy surprises - Are run by teams who’ve done this before, in this area At OLD-Homes, every project appraisal includes: - Line-item modelling of all known and likely obligations - Independent checks with QS, planning consultants, and council policy officers - A strategy for mitigation or adjustment if obligations change That’s how we **protect your capital and maintain the viability of the deal.** --- ### Call to Action Don’t let silent costs erode your expected return. And don’t invest in planning gain projects that haven’t dealt with obligations *head on*. Want to see a real-life planning obligations model and how we stress test deals? [Request a sample viability pack](https://docs.google.com/document/d/1U8PTNiT7xsR2NgyOnTItyDAy3JZoaR0F/edit#bookmark=id.660o0sag764) or [book a planning-focused investor call](https://docs.google.com/document/d/1U8PTNiT7xsR2NgyOnTItyDAy3JZoaR0F/edit#bookmark=id.660o0sag764) today. --- **Next in the Series:** *Case Studies of Value Uplift in Oxfordshire & Comparable Regions* ## Share this post [mailto:https%3A%2F%2Fold-homes.co.uk%2Finsights-blog%2Fplanning-obligations-s106-cil-and-the-policy-costs-that-shape-your-return](mailto:https%3A%2F%2Fold-homes.co.uk%2Finsights-blog%2Fplanning-obligations-s106-cil-and-the-policy-costs-that-shape-your-return) ## Keep reading ### [Planning Investor Structures — How Private Capital Participates in Planning-Led Value Creation](https://old-homes.co.uk/insights-blog/investor-structures-how-private-capital-participates-in-planning-led-value-creation) ### [Planning Risk, Sensitivity & Mitigation in Uplift Deals](https://old-homes.co.uk/insights-blog/risk-sensitivity-mitigation-in-uplift-deals) ![logo-joomla](https://old-homes.co.uk/hs-fs/hubfs/logo-joomla.png?width=300&height=93&name=logo-joomla.png) #### High-Yield, Secure Residential Investments in Oxfordshire. Oxfordshire Living Developments brings over two decades of hands-on experience in UK residential development, with deep roots in construction, planning, and a proven value-creation strategy. **Documents & Disclosures** [Terms & Conditions](https://old-homes.co.uk/hubfs/tnc.pdf) [Cookie Policy](https://old-homes.co.uk/hubfs/cookie-policy.pdf) [Privacy Policy](https://old-homes.co.uk/hubfs/privacy.pdf) ### Investment Risk All investments carry risk. Past performance is not a guarantee of future results. Capital is at risk. Always seek independent financial advice before investing. **How We Mitigate Risk** - Legal due diligence on all acquisitions - Fixed-price build contracts where possible - Multiple exit strategies (sale, refinance, hold) - Independent valuations and conservative GDV assumptions - [Risk Factors Overview PDF](https://old-homes.co.uk/hubfs/risk.pdf) ### Contact Us **Use any of the methods below to contact us:** 📩  **Send us an email:** [nick@old-homes.co.uk](mailto:nick@old-homes.co.uk) 🏚️ **Send us a letter:** 3 Cocklebarrow Farm Cocklebarrow, Aldsworth, Cheltenham, England, GL54 3PU ☎️ **Call us on** [WhatsApp](https://wa.me/447865203492?text=Hello,%20I%20am%20interested%20in%20investing%20) **👔 Registered in England** - Company Number: 15880238 --- © 2025 Oxfordshire Living Developments Ltd. All rights reserved. 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