Section 38 Agreement – Creation of New Public Highways

Section 38 Agreements are a legal agreement between a developer and the Local Highway Authority (LHA) which allows the developer to construct new highway which is to be maintained at the public expense as part of a valid planning permission. The Section 38 Agreement is outlined within Section 38 of the Highways Act 1980 and exists to ensure that all new highway works that are to be adopted by the LHA are constructed to a suitable standard.

S38 Pre-application

Given that there will be a provision of new highway, the Section 38 Agreements are heavily linked to the layout of a proposed site. Therefore, it is recommended that a discussion between the developer and the LHA is undertaken at the earliest possible point in order to confirm that the proposed site’s internal road layout meets adoptable standards on a range of parameters including vertical and horizontal alignment, proposed materials and visibility. If approved as part of the planning application, the planning permission will often include conditions which state that the highway works must be delivered as per the proposed preliminary designs, subject to a suitable detailed review of the proposed designs.

Section 38 Agreement Application

Following planning approval, an application should be submitted to the LHA for entry into a Section 38 Agreement. The application should include construction details for the entire highway scheme, including paving materials, drainage plans and reports, agreement areas and cross-sections and long-sections of the proposed highway. Additional information specific to the scheme may also be requested by the LHA. A Stage 1/2 Road Safety Audit may also be requested to be undertaken which seeks to assess the road safety of the proposed scheme.

Following the receipt approved plans, the LHA legal team will send through the Section 38 Agreement to the developers solicitors to be signed by all parties.

Section 38 Agreement Costs

Upon submission of the application, a fee will be required to be paid to the LHA in order to undertake design checks, issue technical approval and to cover inspection fees of the works. These fees are often dependent on the scale of the new development, but may range from £2,000 – £10,000, with the inspection fees totalling between 7% – 12% of the total cost of the proposed highway works. These fees are sometimes deducted from the surety bond when this is returned following completion of the works. 

A surety bond will also need to be provided to secure the Section 38 Agreement. The bond protects the LHA if the developer for whatever reason cannot complete the works, such as bankruptcy. For this reason, the bond provided to the LHA is usually between 100% – 150% of the total scheme cost as calculated by the LHA or as outlined in a Bill of Quanities (BoQ), and would allow the LHA to undertake the works themselves if works cannot be completed. The bond is returned on satisfactory completion of the highway works.

A completed Section 38 Agreement scheme, where the road which has been adopted by the Local Highway Authority following suitable construction.

Section 38 Agreement Process

Once the Section 38 Agreement has been issued works to construct the highway may begin. The works will be subject to inspection by LHA officers, who will generally visit the works during and after the construction, as well as a period of time following adoption. These visits seek to ensure that the works are being constructed in a safe manner, in-line with the agreed design package. 

It is important to note that the highway will not be adopted by the LHA until the full agreement area is constructed to a suitable standard. This means that for larger development sites, the full highway layout would need to be constructed prior to the LHA adopting the section of new highway. 

The surety bond is often returned in phases, as the construction of the new highway layout progresses. It is often the case that 50% of the bond is released following the construction of the highway layout to the binder course, and when street lighting columns have been erected (to the satisfaction of the LHA officer). A further 25% of the bond is returned once the full highway construction has been completed (to the satisfaction of the LHA officer). Finally, following a 12-month maintenance and monitoring period, where the LHA ensure that any remedial works that are required are completed, the final 25% of the bond will be released. Following the return of the bond, the LHA will maintain the highway as part of the adopted highway network at the public expense.

Any development site subject to a Section 38 Agreement will have an interface with the existing highway network, usually at a junction. Developers looking to tie-in to the existing highway network will require a Section 278 Agreement (see Section 278 Agreements – Permanent Alterations to the Highway) in order to permanently alter the existing highway network at the development tie-in.

If you would like any assistance at any part of a Section 38 Agreement, including the preparation or preliminary or detailed design packages or liaison with the LHA, book a free consultation or call us today.

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