Section 38 Agreement

 

A Section 38 Agreement is the usual route for a new road to become adopted. Under section 38 of the Highways Act 1980, the developer builds the road to the highway authority’s approved specification and maintains it through the period set by the agreement. If the agreement’s requirements are met, the road becomes a highway maintainable at the public expense from the agreed date or trigger.

The distinction that matters is this: a Section 38 covers a new road intended for adoption. A Section 278 covers works to the road that is already there. Many larger housing schemes need both, but only where existing-highway works and adoptable new roads are both required.

 

 

What a Section 38 Agreement actually does

 

Section 38(3) lets a local highway authority agree with anyone to take on the maintenance of a way that person is willing to dedicate as a highway, or that they propose to build and then dedicate. On the date the agreement specifies, that way becomes a highway maintainable at the public expense.

Two things follow from that wording, and both matter commercially. The authority takes on the statutory maintenance responsibility once the adoption provisions take effect. The agreement also specifies the adoption date or the event that triggers adoption, so the drafting and completion requirements matter just as much as the construction drawings.

Section 38(6) is the sweeper: an agreement may contain whatever provisions the authority thinks fit as to dedication, the bearing of construction and maintenance expenses, and other relevant matters. That is a wide power, and it is where commuted sums come from — more on that below.

Adoption normally covers the associated infrastructure too: drains, lighting columns, footways and supporting structures. What exactly is included is set out in the agreement, not assumed.

 

The Advance Payments Code — why developers sign

 

You will read, on plenty of council websites, that the highway authority cannot force you into a Section 38 Agreement. That is true. It is also the least useful true thing you can be told, because it leaves out the mechanism that makes the question academic.

That mechanism is the Advance Payments Code, at section 219 of the Highways Act 1980. Where a building is proposed with a frontage on a private street, no work may be done to erect it unless the owner has first paid the street works authority — or secured to its satisfaction — a sum covering the cost of street works in that street.

Build anyway and it is a criminal offence. Both the landowner and whoever is putting the building up may be liable to a level 3 fine, and every further contravention on the same building is a fresh offence. If you are not the owner, the statutory defence turns on having reasonable grounds to believe that the required sum had been paid or secured.

Then comes the release valve. Section 219(4) lists the situations where none of that applies, and section 219(4)(d) is the entry into a Section 38 Agreement — where an agreement has been made providing for the street works to be carried out at that person’s expense, and for the street to become maintainable at the public expense on completion.

So the honest answer is not that developers find a Section 38 “the better option”. It is that the alternative is depositing a substantial sum with the council before you may lawfully lay a brick, and the Section 38 is the statutory way out of it. Some of section 219(4)’s other exemptions may also apply — there is one where the street is already substantially built up, for instance — and councils publish their own practice on small schemes. Ask before you assume you are caught.

 

Section 38 or Section 37 — is there a way round it?

 

There is, and it is worth knowing about precisely so you can decide against it with your eyes open.

Section 37 lets you build the road first and then require the council to adopt it. You give notice at least three months before you intend to dedicate, with a plan showing where the highway will run and how wide it is. If the council thinks the road “will not be of sufficient utility to the public to justify its being maintained at the public expense”, it can complain to a magistrates’ court for an order to that effect. If it certifies the road instead, you keep it in repair for twelve months from the date of the certificate, the road must actually be used as a highway during that time, and at the end of the twelve months it becomes maintainable at public expense. Refuse to certify and you can appeal to the magistrates.

Section 37 does not involve a bilateral adoption agreement, so the authority cannot use that route to impose the contractual terms it might negotiate under Section 38. The price of that apparent freedom is uncertainty: the road is built at the developer’s risk, the public-utility test still applies, and a dispute may end up before the magistrates’ court. It is therefore a materially less certain route than agreeing the adoption requirements before construction.

Section 228 is a third route, for streets already built, but it is a private street works mechanism rather than a developer’s tool and behaves differently again.

In practice, almost everyone uses Section 38, and the reason is certainty. Your plot buyers’ solicitors will ask whether one is in place. If it is not, they may well advise their clients not to complete.

 

Adoptable standards, and roads that stay private

 

An adoptable road is built to the highway authority’s specification, and that specification is more demanding than one for a road nobody else will ever maintain. Construction depth, drainage, lighting, visibility splays, the lot. You will need technical approval of the design before the agreement is signed, and there will be inspections during construction.

Plenty of new estate roads are never built to adoptable standard, and that is a legitimate choice — but it is a choice with a long tail. The road stays private, and its maintenance stays with whoever owns it, which in practice means a management company and an estate charge on every house on the scheme. Buyers increasingly ask about this, and it has become politically live. Decide early, not once the layout is fixed. What each authority will and will not adopt varies, and some are markedly less willing than others.

 

Bonds, commuted sums and what it costs

 

There is no national fee for a Section 38 Agreement, and anyone quoting you a figure is quoting you their council’s figure — which is exactly why we do not print one. What is consistent is the shape of the cost, and it has four parts.

• The works themselves — built to adoptable standard, at your expense
• A bond or cash deposit, calculated by the highway authority from the proposed works. It exists so that if you go into liquidation or default, the council can finish the road without the public paying for it. It is released once the road is adopted
• The council’s costs – technical approval, legal fees, inspections and road safety audits, charged at the authority’s current rates
• A commuted sum, where the authority requires one — a lump sum towards maintaining the road, or particular structures on it, after adoption

The commuted sum deserves a moment, because developers have tried to argue it away and lost. The Court of Appeal has held that section 38(6) is wide enough to let an agreement require payments referable to maintenance expenses even after the road has become maintainable at the public expense. So a demand for a commuted sum is not, on its face, beyond the council’s power. It is a matter for negotiation, not a matter of principle.

 

What the agreement contains and how long it takes

 

A Section 38 Agreement is usually signed before construction starts. Expect it to deal with:

• the relevant planning permission, including approval of any reserved matters
• drawings showing the extent of the area to be adopted, and technical drawings of the works
• the bond or cash deposit, and any commuted sum
• a programme for the works and for adoption
• inspection and certification arrangements
• the maintenance period before adoption — typically twelve months, though it is set by the agreement rather than by statute
• which supporting structures, if any, are to be adopted

Two practical points. On a phased scheme, adoption may be delayed while the roads continue to carry construction traffic. A Section 38 agreement is also not a planning obligation that automatically binds successors in the same way as a Section 106. Assignment, novation, bond arrangements and the sale contract all need to be checked rather than assumed.

The process is slow — technical approval alone runs to weeks of iterations before anyone reaches the legal drafting. Start talking to the highway authority early, ideally while the planning application is still live.

 

Section 38 and Section 278 together

 

Many larger schemes need both, and they do different jobs. The Section 278 handles any required alterations to the existing public highway, such as a junction, signals or a right-turn lane. The Section 38 handles new roads within the development that are intended for adoption.

Both are commonly required by a planning condition or secured through a Section 106, which is the thing that catches people out: the highway agreements are often not optional extras but the mechanism by which your permission actually gets implemented. If you are not sure which highways agreement your scheme needs, our guide to highways agreements lays the four out side by side. If your application is refused and you are considering your position, see our guide to how to appeal against a decision. For the application itself, our page on planning fees covers what the council charges — note that highway agreement costs sit entirely outside that regime and are additional to it.

Relevant legislation

 

Read the “Changes to Legislation” panel at the top of each page before relying on the text — legislation.gov.uk flags amendments its editorial team has not yet applied.

• Section 38, Highways Act 1980 — power of highway authorities to adopt by agreement
• Section 37, Highways Act 1980 — dedication by notice, the alternative route
• Section 219, Highways Act 1980 — the Advance Payments Code
• Section 278, Highways Act 1980 — works to an existing highway
• The Advance Payments Code — sections 219 to 225 in full

Developer contributions & planning agreements

 

Section 38 Agreement Page Updated: 25th August 2026