A notice arrives — 1,500 homes proposed on land at the edge of town — and the questions that follow are rarely about the houses themselves. Where does the extra traffic go? The primary school is already full. Can the GP surgery cope with hundreds more patients? Does the sewage system have the capacity? And, underneath all of it: who actually pays for any of this, and can developers really just build the houses without it?
These are legitimate questions, not simply reflexive objection to change. They also don’t have a single simple answer, because the honest answer to “who pays?” is several different parties, through several different mechanisms, at different stages of the development — and not always in the way people assume.
This article focuses on England, where the Section 106 and Community Infrastructure Levy system discussed below applies.
Policy and funding arrangements last checked: 15 September 2026.
Section 106: obligations tied to the specific site
A Section 106 agreement — named after section 106 of the Town and Country Planning Act 1990 — is a legally binding planning obligation used to secure things needed to make a particular development acceptable in planning terms. That can include affordable housing within the scheme, financial contributions towards additional local capacity, land for facilities, or mitigation directly connected to the development’s effects.
There are limits on what can simply be demanded. Planning obligations must be necessary to make the development acceptable, directly related to it, and fairly and reasonably related in scale and kind. The government’s guidance on planning obligations sets out those tests.
For a major housing development this might mean affordable homes, money towards extra school capacity, transport improvements, open space or healthcare facilities, depending on what the evidence says that particular scheme requires. The package therefore varies between developments rather than being a standard infrastructure bill attached to every new home.
Section 106 is also an important route through which affordable housing is actually delivered. Official figures show that in England in 2024/25, affordable homes delivered through Section 106 agreements without government grant accounted for 36% of all affordable homes delivered. Affordable housing supply in England, 2024/25
That is worth remembering before developer obligations are described simply as money extracted by the planning system. Some of what is secured appears as cash contributions, but much of it can appear instead as affordable homes, land, infrastructure or works forming part of the development itself.
Community Infrastructure Levy: broader, more standardised, infrastructure-only
The Community Infrastructure Levy, or CIL, works differently. Where a local authority has adopted it — and not every authority has — CIL is generally charged according to a published charging schedule, usually expressed as a rate per square metre of qualifying development and capable of varying by location and development type.
Rather than being negotiated around the specific effects of one development, CIL is intended to help fund the broader infrastructure needed to support development across an area. Authorities can pool receipts from multiple schemes and use them towards infrastructure including transport, education, health facilities, flood and water management and other local provision. The government’s Community Infrastructure Levy guidance explains the system in detail.
CIL cannot directly fund affordable housing, which remains principally the territory of Section 106. The two mechanisms therefore do different jobs and can operate alongside each other, while areas that have not adopted CIL rely more heavily on Section 106 and other funding arrangements.
That distinction becomes important when residents ask what money from a particular development is actually being spent on. A Section 106 obligation may be tied closely to a specific impact or facility; CIL money can be pooled for wider infrastructure priorities.
Roads
Responsibility for road infrastructure is usually shared according to what is actually being built or altered.
Roads inside the development itself will normally form part of the developer’s construction programme. Where the scheme requires changes to an existing public highway — perhaps a new junction, roundabout, crossing, turning lane or traffic lights — those works are commonly dealt with through a Section 278 agreement under the Highways Act 1980, alongside any relevant Section 106 obligations.
The local highway authority assesses effects on the local network, while National Highways can become involved where the strategic road network is affected. Transport assessments and modelling are intended to establish what extra traffic the development is expected to generate and what mitigation is necessary.
None of this guarantees that residents will notice no change. A town absorbing 1,500 additional households is likely to experience more journeys even after new junctions or road improvements have been provided. The planning test is generally whether the resulting network can operate acceptably and whether necessary mitigation has been secured, rather than whether growth can somehow occur without anybody noticing additional traffic.
Schools
School provision depends less on the raw number of homes than on the number of additional pupils those homes are expected to generate and the capacity already available locally.
Education authorities forecast pupil numbers across their areas and assess the effect of planned development on the schools likely to serve it. Where a development creates a genuine requirement for additional places, developer contributions can help fund an extension to an existing school, additional capacity elsewhere or, on sufficiently large schemes, land and funding towards an entirely new school. Both Section 106 and CIL can play a part depending on the local arrangements and the nature of the infrastructure required. Government guidance on delivering schools to support housing growth
A development in an area with spare school places can therefore have a very different infrastructure requirement from the same number of homes proposed somewhere where every nearby school is already full.
Developer contributions help provide the additional physical capacity generated by growth; they do not permanently replace the wider public funding needed to employ teachers and operate the education system once the facility exists.
GP surgeries and healthcare
Healthcare is one of the areas where public frustration is easiest to understand, because building capacity and providing a service are not the same thing.
Developer contributions can help fund physical healthcare infrastructure. NHS England’s current capital guidance recognises Section 106 and CIL as routes through which housing development can contribute to additional health facilities and encourages NHS organisations to work with planning authorities where development generates a requirement for additional capacity. NHS England capital guidance
That might mean extending an existing surgery, adding consulting rooms or contributing towards a new health centre. But funding the building does not automatically produce more doctors, nurses or appointments. Staffing and the recurring cost of delivering healthcare sit within the NHS and primary-care system rather than a one-off planning obligation.
This is why two statements that appear contradictory can both be true: a developer may have made a substantial healthcare contribution, while local residents may still experience difficulty getting a GP appointment. One concerns physical capacity; the other concerns the workforce and ongoing service operating within it.
Water and sewage: an increasingly serious constraint
Water infrastructure is more complicated again because several distinct systems tend to be bundled together in everyday discussion. New development needs a clean-water supply, foul sewerage capable of taking wastewater to treatment, and surface-water drainage capable of dealing with rainfall without increasing flooding or simply overloading the sewer network.
Developers fund connections and can construct water and sewerage assets that are subsequently adopted by the relevant company. Ofwat’s charging framework also allows infrastructure charges for new connections, intended to contribute towards reinforcement of networks affected by additional demand. Ofwat guidance on new water and wastewater connections
The scale of those contributions has become contentious. Home Builders Federation research estimated that between 2020/21 and 2024/25 the water sector received just over £2.3 billion through a combination of developer infrastructure charges and water or sewerage assets constructed by developers and subsequently adopted by companies. That is an industry estimate rather than an official national funding total, and only around £600 million of the figure represented direct infrastructure charges; much of the remainder was the assessed value of adopted assets. Home Builders Federation: A Drain on the Nation
Despite that investment, treatment capacity has become a genuine constraint in some areas. In July 2026 the government’s Water Delivery Taskforce announced an agreement with Anglian Water intended to move 18,771 homes closer to delivery after wastewater-treatment capacity had contributed to objections to several large developments. Government Water Delivery Taskforce announcement
The disagreement isn’t therefore simply between developers refusing to fund sewers and water companies refusing to connect houses. Developers can fund local infrastructure and network reinforcement, while major treatment works sit within regulated investment programmes serving much wider areas and cannot always be expanded on the timetable a housing developer or local authority would prefer.
A development can consequently have planning permission and money allocated towards its own connections while still depending on larger infrastructure beyond the site that somebody else has to deliver.
Electricity and grid capacity
Large developments can face a similar issue with electricity, particularly as new homes increasingly use electric heating and electric-vehicle charging.
Where existing network capacity is insufficient, the development may require reinforcement or a new connection arrangement with the relevant distribution network operator. Ofgem is itself reforming how major new demand connections are managed as pressure on electricity networks increases. Ofgem guidance on electricity connections
As with water, the difficulty is partly one of money but also of sequencing. The development programme and the wider network investment needed to serve it have to line up closely enough for homes to be occupied when planned.
Why isn’t everything built before the first house is occupied?
This is a fair question, and the answer is more precise than saying infrastructure cannot be funded until houses have been sold.
Some infrastructure clearly has to exist from the beginning: the first occupied homes need road access, drainage, water and electricity. Other infrastructure is deliberately phased alongside a development that may itself take many years to complete.
Section 106 agreements can contain specific trigger points. A road improvement might have to be completed before a defined number of homes are occupied; a school payment might become due at another stage; land for a community facility might have to be transferred before a later phase begins. The agreement should define those requirements legally rather than leave them as an indefinite promise that something will eventually be provided.
CIL follows a different mechanism. Liability generally arises when chargeable development commences, with payment timing determined by the regulations and any instalment policy adopted by the charging authority. Government guidance on CIL payments
There can also be sound practical reasons for later delivery. A facility intended for a completed 1,500-home neighbourhood may neither be necessary nor viable when only the first 100 households are living there. A bus service, community building or final stage of school expansion can reasonably follow the development’s population rather than standing largely unused from day one.
The important question is therefore not whether every piece of infrastructure appears before the first house. It is whether the agreed sequence means the infrastructure is actually available before the development creates the level of demand that required it.
Where residents often have good reason to become frustrated is when those two timelines stop matching.
So who actually pays, in the end?
“The developer pays” is partly true and still too simple.
Developers can build roads and drainage themselves, provide affordable homes, pay Section 106 and CIL contributions, fund highway works and meet utility connection costs. But those costs exist inside the economics of the development rather than in a separate pot detached from the value of the land and homes.
That does not mean every additional £1 of infrastructure cost can simply be added to the asking price of a new house. Buyers still have to be willing and able to pay the resulting market price. As explained in our companion article Why Are New-Build Homes So Expensive?, higher development obligations feed through the viability appraisal and can affect what the scheme can afford to pay for land, the developer’s expected return, the design or density required, or in extreme cases whether the scheme remains financially deliverable.
Other costs sit outside that calculation. Water and electricity companies invest through regulated network programmes as well as receiving developer payments. Once a new school or medical building exists, its teachers, clinicians and ongoing operation require continuing public funding. Central or local government may also contribute towards major infrastructure where the benefits stretch beyond one development.
The real system is therefore shared. Development directly funds a substantial amount of what its own growth requires, while wider networks and public services continue to rely on utility investment and taxation.
That is also why responsibility for inadequate infrastructure doesn’t always sit neatly with one organisation.
What residents can actually check
For someone facing a real planning application nearby, this is where the article becomes practical.
The planning application should normally contain documents dealing with matters such as transport, drainage, flood risk and the infrastructure implications of the proposal. The planning officer’s eventual report and decision notice show how those issues were assessed and what conditions were imposed.
For a major scheme, the final Section 106 agreement is particularly useful because it distinguishes what has actually been secured legally from proposals or promises made earlier in the consultation process. The most important detail is often not merely whether a school contribution, road improvement or healthcare payment appears in the agreement, but the trigger that determines when it must happen.
There is a further distinction worth making because it explains a great deal of later confusion around major developments: promised, secured, paid and spent are not the same thing.
A developer may promise infrastructure during an early consultation. The final planning permission and Section 106 agreement determine what has actually been secured. The trigger points then determine when money or infrastructure becomes due. Only after that can a council receive the contribution and ultimately allocate or spend it.
Local planning authorities are required to publish an Infrastructure Funding Statement at least annually showing their Section 106 and CIL receipts, allocations and expenditure. Government guidance on monitoring developer contributions
That means residents can return to the question later with considerably more precision. Rather than asking only “didn’t the developer promise money for the school?”, they can ask whether the obligation was in the signed agreement, whether its trigger has been reached, whether the contribution has been received and, if so, how the authority says it has been allocated or spent.
Those are much harder questions to answer with vague assurances.
The separate issue of how to formally support or object to a planning application belongs in our Planning Permission coverage; here, the purpose is understanding what the infrastructure documents actually tell you.
Understanding the system before judging a specific scheme
None of this settles whether a particular 1,500-home development near a particular town is well planned, adequately resourced or being pushed through too quickly relative to the infrastructure around it. Those remain site-specific questions, and they deserve scrutiny of the development actually proposed rather than reassurance based on how the system is supposed to work in theory.
A scheme can have substantial contributions attached to it and still have badly judged phasing. A new healthcare facility can be funded without enough clinicians being available to staff it. A junction improvement can be completed while residents still experience heavier traffic. A water company can have an investment programme while treatment capacity remains unavailable on the timetable housing delivery requires.
Understanding the system does, however, make that scrutiny more useful. It allows residents to distinguish infrastructure the development itself is expected to fund from wider capacity problems that existed before it; the capital cost of a new facility from the ongoing service needed to operate it; and a consultation-stage promise from a legally enforceable obligation with a specific trigger.
New development funds a substantial amount of its own infrastructure, but it does not — and realistically cannot — fund the whole public and utility system around it.
The real test is whether all of those responsibilities, funding streams and delivery programmes have been planned well enough to meet in the right place at the right time.
This article provides general information about developer contributions and infrastructure provision in England and is not planning or legal advice for a particular development. Scotland, Wales and Northern Ireland operate different planning and developer-contribution systems. Planning obligations, infrastructure funding arrangements and regulatory requirements can change; check the relevant planning permission, legal agreements and current official guidance for any specific scheme.
