What is the legal framework behind Road and Sewer Bonds in the UK?

The legal framework for Road and Sewer Bonds in the UK is based on two Acts: The Highways Act and the Water Industry Act. Many different article agreements cover Road and Sewer Bonds, these are; 

Road/Highway 

• Section 38 Agreement Bond (Highway Act 1980)
• Section 278 Agreement Bond (Highway Act 1980)
• Section 184 Agreement Bond (Highway Act 1980)
• Section 220 Agreement Bond (Highway Act 1980)
• Section 21 Agreement Bond (Road/Scotland/Act 1984) 
• Section 56 Agreement Bond (Roads Scotland Act 1984)
• Section 96 Agreement Bond (Roads Scotland Act 1984)
• Article 24 Agreement Bond(The Private Streets | Northern Ireland | Order 1980/1992)
• Article 32 Agreement Bond(The Private Streets | Northern Ireland | Order 1980/1992)

Sewer 

• Section 98 Agreement Bond (Water Industry Act 1991)
• Section 104 Agreement Bond (Water Industry Act 1991) 
• Section 185 Agreement Bond (Water Industry Act 1991)
• Article 161 Agreement Bond (Water and Sewer Services Act/ Northern Ireland /2016) 

This article will discuss some of the key aspects of the legal framework of Road and Sewer Bonds in the UK, as well as why it is important to obtain one of these Bonds for your project.

Road Bond Legal Framework

Section 38 Agreement (Highways Act 1980)- Adoption of a New Highway

A Section 38 Agreement is used between a Developer and a Local Authority to ensure the adoption and completion of a new road on a new development. This Agreement requires a Bond to ensure the local authority has access to funds to cover any outstanding obligations if the Developer defaults on the Agreement. 

Section 278 Agreement Bond (Highways Act 1980)- Alteration to A Public Highway

As part of planning permission, a Developer may be required to enter into a Section 278 Agreement Bond, which obliges them to modify or improve the existing highway to account for the impact of a new development, including construction of new junctions, with and without traffic lights, roundabouts, cycle lanes or general improvement works. 

Section 184 Agreement Bond (Highway Act 1980)

A Section 184 Agreement Bond is required when a person or organisation wishes to change the highway layout temporarily. This includes changes to the verge, footway, and carriageway. At the end of the period, the new highway layout will be returned to its original.

Section 220 Agreement Bond (Highway Act 1980) – Advanced Payment Code

The Highway Authority assesses the cost of constructing a highway on a development, which can be in the form of charges for individual plots or a block assessment covering the entire development. The Developer must obtain a surety Bond covering the estimated highway construction cost to get an S220 Bond. 

Section 21 Agreement Bond (Road/Scotland/Act 1984) – Adoption of a new Highway

A Scottish Road Agreement Bond is a financial guarantee a Bondsman provides to the Adopting Party (Scottish Local Authority) before work can begin on a housing development. This surety Bond guarantees the Scottish Local Authority that the road will be completed to an adoptable standard.

Section 56 Agreement Bond (Roads Scotland Act 1984)

Under Section 56 of the Roads (Scotland) Act 1984, any developer wishing to execute works on a public road (including the verge) must apply for a Section 56 permit and obtain Road Technical Approval. 

Section 96 Agreement Bond (Roads Scotland Act 1984)

Under Section 96 of the Roads (Scotland) Act 1984, local authorities can recover maintenance costs from damage caused by excessively heavy or other extraordinary vehicles or traffic. This applies to Wind Farms or other major infrastructure project developments. 

Article 24 Agreement Bond(The Private Streets | Northern Ireland | Order 1980/1992)

An Article 24 Agreement allows a developer to request that determined streets remain private. Developers should note that streets which have been determined but are to remain private under an Article 24 Agreement must still be designed and properly constructed to the Department’s standards.

Article 32 Agreement Bond(The Private Streets | Northern Ireland | Order 1980/1992)

An Article 32 Agreement Bond provides the statutory basis for adopting roads developed by Developers. Developers are required to sign an Agreement with the Department of Infrastructure (DFI) before constructing roads. Upon satisfactory completion of the road construction, the DFI can approve the final layout. Once the roads are deemed satisfactory, they become public roads.

Sewer Bond Legal Framework

Section 98 Agreement Bond (Water Industry Act, 1991) – Sewer Requisition

Under a section 98 agreement, the requisitioner will agree to meet the annual deficits on the sewer for 12 years following the provision of the public sewer, in which a reasonable guarantee in the form of an S98 Bond or cash is required. This can be paid in either a 12-year repayment agreement or a commuted lump sum.

Section 104 Agreement Bond (Water Industry Act, 1991) – Sewer Adoption

These agreements are entered into by Developers to provide a legal vehicle to enable the status and responsibility of new sewer networks to be transferred from them to the Statutory Water Company, providing they have been constructed to the required specification and standards.

Article 161 Agreement Bond (Water and Sewerage Services Act / Northern Ireland / 2016) – Sewer Adoption

Any Developer in Northern Ireland proposing to connect a private sewer to a public sewer must require consent by the Statutory Water Company and enter into a Sewer Adoption Agreement (Article 161). These agreements provide a legal vehicle to enable the status and responsibility of the new sewer networks to be transferred from the Developer to the Water Company.

Section 185 Agreement Bond (Water Industry Act, 1991) – Public Sewer Diversion

These agreements are entered into by Developers where it has been identified that a public sewer is compromising the viability of a development project and the Developer wishes to divert or alter the route of an existing adopted public sewer.

Specialist Road & Sewer Bonds from RS Bonds

RS Bonds are the only UK company that is dedicated solely to Road and Sewer Bonds, which means we can guarantee the lowest-priced quote, and ensure that your entire application process goes smoothly. We work with an exclusive panel of underwriters to ensure our customers get the best surety Bond for their project.

Fill in our application form today to speak to one of our dedicated account managers about your Bond requirements.