Section 278 Highway Agreement and It’s Role in Property and Development Law

In the world of property and development law, the intricate network of agreements between developers and local authorities plays a critical role in ensuring that new developments are supported by the right infrastructure. Among such agreements, the Section 278 Agreement stands as a key component, particularly when it comes to works affecting public highways. In this article, we will explore the legal framework, process, practical implications, and best practices around Section 278 Highway Agreements, providing a comprehensive guide for property developers, investors, and legal practitioners alike.

What is a Section 278 Highway Agreement?

A Section 278 Agreement, commonly referred to as an S278 agreement, is a legal mechanism governed by Section 278 of the Highways Act 1980 in England and Wales. It allows developers to carry out works to the existing public highways—usually improvements or modifications—that are deemed necessary in connection with new property developments. The agreement is entered into between the developer and the local highway authority.

These works can range from creating new access roads, installing traffic signals, constructing roundabouts, to improving footpaths, and enhancing traffic management infrastructure. The S278 ensures that such changes are carried out to the satisfaction of the local authority, maintaining public safety and the integrity of the highway network.

The Legal Background: How Section 278 Fits into Property and Development Law

The Highways Act 1980 is the primary legislation governing roads and highways in England and Wales, setting out the powers and duties of highway authorities. Section 278 is a specific provision that enables a local authority to authorize modifications to the public highway funded by developers. This legal route is crucial where proposed developments necessitate changes to the existing highway infrastructure in order to mitigate the development’s impact on traffic and public safety.

In essence, property and development law relies on S278 Agreements to formalize the partnership between the private sector (through developers) and the public sector (through highways authorities). Without this framework, it would be extremely challenging to ensure that new developments are responsibly integrated into communities and do not create highway safety or congestion issues.

When is a Section 278 Agreement Required?

S278 Agreements become necessary when a planning permission for a development is granted, subject to highway improvements needed as a result. Typically, this is flagged up during the planning process and is often tied to a planning condition that mandates highway modifications before occupation of the new development.

• Types of works requiring S278: New junctions and access points, traffic signal alterations, road widening, cycle path or pedestrian facility upgrades, new roundabouts, traffic calming measures.
• Trigger events: The trigger is typically the developer’s intention to commence construction, but sometimes it relates to a specific milestone (such as “prior to first occupation”).
• Who decides? The local planning authority (in consultation with the highway authority) determines whether a S278 is required under national planning policies and local plans.

It’s worth noting that Section 278 works are required in addition to any off-site highway improvements and are distinct from Section 106 Agreements (which regulate planning obligations more broadly, including affordable housing, education, and community provisions).

Step-by-Step Process: How Section 278 Highway Agreements Work

Understanding the end-to-end process of negotiating and executing a Section 278 Agreement is essential. Here is an overview:

1. Planning Application Stage: At this stage, highway authorities assess the transport and highway impact of a proposed development. Highways conditions or requirements for S278 works may be attached to planning consent.
2. Design and Technical Approval: Developers submit proposed highway works designs, often prepared by specialist engineers, to the highway authority for technical approval. This can involve rigorous safety and compliance checks.
3. Drafting the Agreement: Legal teams for both parties negotiate the S278 Agreement, detailing the specification of works, timing, funding arrangements, liabilities, bonds, and insurance.
4. Obligation and Security: The developer is usually required to provide a financial bond (or security) to the authority to guarantee completion of the works in accordance with agreed plans.
5. Construction Works: Upon execution, the developer (or a contractor approved by the highways authority) commences the highway improvement works, typically under the oversight of the local authority.
6. Inspection and Adoption: The completed works are inspected, and if satisfactory, they are often “adopted” into the highway maintainable at public expense, finalizing the obligations under the agreement.

Key Components of a Section 278 Agreement

While each S278 agreement may vary depending on project specifics, there are core legal and commercial components that most agreements will include:

• Scope of Works: Detailed engineering drawings/specifications describing the exact highway alterations to be delivered.
• Programme and Timing: Milestones for commencement, progress, and completion in line with the wider development timetable.
• Costs and Funding: The developer will usually fund all design, construction, inspection, and any ongoing maintenance costs.
• Legal Obligations: Indemnities, insurance requirements, and warranties protecting both the public and authority from defects or liabilities.
• Financial Security: Requirement for a performance bond, typically 100–120% of the works’ estimated value.
• Dispute Resolution: Procedures for resolving disagreements between the developer and authority.
• Maintenance Period: A ‘maintenance period’ (often 12–24 months) during which the developer must rectify any defects.
• Road Adoption: Provision for formal handover and adoption of works into the public highway network.

The Relationship with Section 106 Agreements

In the broader context of property and development law, it is important to distinguish an S278 Agreement from a Section 106 Agreement (S106). While S278s relate specifically to highway works on existing public roads, S106 agreements are a mechanism by which developers can provide a range of contributions—affordable housing, open space, education, or other infrastructure.

However, it is quite common for developments to require both S106 and S278 Agreements. For instance, a new housing estate might require improved public transport links (via S106) and junction improvements (via S278).

The Role and Responsibilities of Developers

Developers are at the heart of the S278 process. They bear the cost burden and significant risk associated with both delivery quality and timescales. For developers, the key tasks include:

• Commissioning detailed design work to highway authority specifications
• Negotiating the terms of the S278 and S106 agreements
• Appointing competent contractors with relevant experience
• Managing works according to agreed timelines and ensuring minimal disruption to existing road users
• Responding to defects and maintenance issues during the liability period

Proactive engagement with the local highway authority, clear communication, and robust project management are essential to a successful outcome.

Risks and Legal Pitfalls in S278 Agreements

As with all legal undertakings within property and development law, there are risks and potential pitfalls associated with Section 278 Agreements. These include: