A Section 38 agreement is a legal agreement under Section 38 of the Highways Act 1980 in which a developer builds a new road to an adoptable standard and the local highway authority agrees to adopt it and maintain it as public highway at public expense. It is the usual route by which the roads inside a new housing or commercial development stop being the developer’s private responsibility and become part of the public highway network.
The rule itself is simple. What the council pages, solicitors and planning consultants rarely set out is how the road actually gets built to the standard the authority will accept, why inspections fail, and what the maintenance period really involves once the surfacing is down. This guide covers both the agreement and the construction that sits underneath it.
What a Section 38 agreement is
A Section 38 agreement is made between a developer and the highway authority, which for almost all estate roads is the local county or unitary council, and for trunk roads is the Secretary of State. Once the road is adopted, the authority takes on its future maintenance at public expense from an agreed date. Section 38 of the Highways Act 1980 sets out this power, and the agreement itself can cover the dedication of the road, the cost of construction and maintenance, and any related matters the authority thinks fit.
Adoption covers the road and the infrastructure that goes with it: the carriageway, footways and cycleways, surface water drainage, street lighting and any supporting structures such as retaining walls. Before an agreement can be entered into, the developer needs planning permission in place, including approval of any reserved matters, because the layout of the adoptable roads flows from the consented scheme.
A Section 38 deals with new roads inside the red line of a development. A Section 278 agreement, by contrast, covers changes to the existing public highway, such as a new junction or a widened access, that the scheme needs in order to connect to the network. Many developments need both. There is also a less common route, Section 37, where a developer offers a completed road for adoption without a prior agreement, but it is slower and less certain, the council can object on the grounds that the road is not of sufficient public utility to justify adoption, and it removes the authority’s power to require a commuted sum. For a road of any size, Section 38 is the standard and more reliable path.
| Detail | Section 38 | Section 278 |
|---|---|---|
| What it covers | New roads built inside a development, for adoption | Changes to the existing public highway |
| Typical works | Estate carriageways, footways, drainage, lighting | New junctions, roundabouts, turn lanes, widening |
| Trigger | New streets the council will adopt and maintain | Alterations a scheme needs to connect to the network |
| Maintenance after adoption | Highway authority, at public expense | Highway authority, at public expense |
When a road is adoptable, and when it isn’t
A road is adoptable when it serves a genuine public function and is built to the authority’s adoptable standard. In practice that means it connects meaningfully to the existing highway network, follows the local highway authority’s design guide, and, for residential streets, aligns with Manual for Streets, the national guidance the government publishes for the design, construction, adoption and maintenance of residential streets. Manual for Streets generally applies where the speed limit is 30mph or less, which covers most estate roads.
A Section 38 is not needed where the road serving a site is already adopted. It is also not available where the road cannot meet the standard. Private drives, gated accesses and roads with non-standard materials that would cost the authority more to maintain are the common cases where adoption is refused and the road stays private, with maintenance falling to the developer or, later, to the residents through a management company and service charges.
This is why the adoptable standard has to be designed in from the start rather than retrofitted. A layout drawn without adoption in mind, or a surfacing specification the authority will not accept, is far more expensive to put right at construction stage than it would have been to get right at design stage.
How an adoptable road is actually built to standard
An adoptable road is built up in layers, and each layer has to meet the specification before the next goes on top. The sequence starts with the formation, where the subgrade is prepared and tested to confirm it can carry the load. On top of that goes the sub-base, usually a Type 1 granular material laid and compacted to a set depth. The road base and binder course follow, then the kerbing and edge restraint that hold the carriageway together, and finally the surface course. Alongside the carriageway build sit the drainage, with gullies and connections laid to the correct falls, the ducting for street lighting and services, and the ironwork set precisely to level.
The whole build is carried out to the local highway authority’s adoptable design guide and to Manual for Streets. These documents govern the detail that decides whether a road passes: carriageway widths, visibility, drainage falls, material specifications and construction depths. This is ordinary groundworks discipline, but held to a standard that will be inspected and signed off by a public authority rather than simply accepted by a client.
Most agreements split the construction into two stages. The Part 1 works cover everything up to base course, including the drainage, kerbs and lighting ducts, and are completed and certified before houses are occupied. The Part 2 works, principally the final surface course, are laid later, once the bulk of the plots are built out. The reason is practical: laying the finished surface too early means construction traffic, deliveries and follow-on trades chew it up before the road is ever adopted, so the surfacing is deliberately held back to the end.
Technical approval, and what site inspections really check
Section 38 involves two separate gates, and confusing them is where a lot of programmes slip. The first is technical approval of the design: the authority checks the drawings, the drainage calculations and the specification against its adoptable standard before the agreement is signed. This stage can be lengthy if the submitted drawings are not to standard, which is why the design work matters so much up front.
The second gate is the physical inspection of the works during construction. The authority inspects at the critical stages, typically at formation level, at sub-base, before the Part 1 certificate, and again before the Part 2 certificate and final adoption. At each visit the inspector is checking workmanship and compliance with the approved drawings, allowing for any changes agreed on site due to ground conditions.
Builds fail inspection for a small number of recurring reasons: levels that drift from the approved design, inadequate compaction of the sub-base, drainage laid to the wrong falls, construction depths that come up short, or materials that do not match the specification. None of these is exotic, and all of them are avoidable by building to the approved detail, holding levels through the job, and having compaction tested rather than assumed. There is also a hard commercial reason to get the early stages right: on most schemes, occupation of the completed dwellings cannot take place until the Part 1 certificate has been issued, so a road that will not pass its early inspections holds up sales.
What’s in the agreement, and what the specification demands
A Section 38 agreement follows a fairly standard shape. It names the parties, attaches the approved drawings and specification, sets a programme and timescales, sets out how and when the authority will inspect and certify, states the maintenance arrangements, and requires financial security and the payment of the authority’s fees. The document is signed before construction begins and works on the assumption that the road is yet to be built.
Underneath that structure, the part that actually governs the work is the specification. The road must be constructed to the authority’s adopted standard, which fixes the materials, the layout, drainage systems, load capacity, visibility and safety features. The generic contents list tells you what the agreement contains; the specification tells you what has to be built, and it is the specification the inspections are measured against.
The construction is also a project under the Construction (Design and Management) Regulations 2015, so it runs with the principal designer and principal contractor duties those regulations require. This is rarely mentioned in the legal or council summaries, but it is the framework the build is actually managed under, and it sits alongside the highway specification rather than replacing it.
Bonds, commuted sums, and why bonds get called
A Section 38 agreement is backed by financial security so that public funds are protected if the developer does not finish the job. The security takes the form of either a surety bond from a bank or insurer, or a cash deposit, and the amount is set by the authority to cover the cost of completing the works to adoptable standard. If the developer becomes insolvent or walks away, the authority can call on the bond to finish or repair the road.
Separately, the authority can require a commuted sum, a one-off payment towards the extra long-term maintenance of anything non-standard in the scheme, such as special surfacing, traffic calming features, structures or trees within the highway. Case law has confirmed that these post-adoption maintenance costs can lawfully be included in a Section 38 agreement, so they are a genuine cost to plan for rather than a negotiable extra.
Bonds are not a formality, and it is worth being clear about what triggers a call on one. The common causes are developer insolvency, works left incomplete, and works that fail inspection and are not put right. In other words, the bond is the authority’s protection against exactly the construction shortfalls that good build discipline avoids. A scheme built to the approved detail and signed off cleanly releases its bond; a scheme that cannot pass its inspections is where the bond starts to matter.
The timeline, and the maintenance period from the builder’s side
The full cycle from design to adoption generally takes 18 to 24 months. Technical approval of the design typically accounts for three to six months, construction takes as long as the scheme requires, and then a maintenance period, usually 12 months, runs before final adoption.
The maintenance period is measured from the Part 2 certificate, once the surface course is down and the works are substantially complete. During it, the developer or its contractor keeps the road in good order and puts right any defects that appear. The defects that show up in this window are predictable: settlement around ironwork and over service trenches, minor surface defects, and drainage or gully problems. Dealing with them is a normal part of the work, and the aim is to reach the end of the period with only minor items outstanding.
At the end of the maintenance period the authority carries out a final inspection. If the road meets the standard and the obligations under the agreement have been met, the authority adopts it, it becomes highway maintainable at public expense, and any remaining bond is released. On a phased development, adoption generally follows the completion of the final phase rather than happening piece by piece.
One point specific to this region is worth noting. In Hertfordshire, a contractor must be on the county council’s Accredited Contractor List before carrying out Section 38 or Section 278 works on the public highway, and Hertfordshire County Council publishes the criteria and the design guide that adoption is measured against. Requirements of this kind vary between authorities, so the local highway authority’s own process is always the definitive reference for a specific scheme.
Building to a standard that gets adopted
A Section 38 agreement is a legal instrument, but it stands or falls on the build. The agreement, the bond and the certificates are all measured against one thing: whether the road has been constructed to the authority’s adoptable standard. Design for adoption early, build to that standard, hold your levels, get the drainage right, and the maintenance period is uneventful and the bond is released without drama.
That construction discipline is the heart of it, and it is the same discipline that underpins any adoptable groundworks or civil engineering scheme. For related reading, our guides to the water adoption agreement and the SROH reinstatement specification cover the adoption of mains and the reinstatement standards that sit alongside highway works.
Questions the Section 38 Agreement
A Section 38 agreement covers new roads built inside a development that the highway authority will adopt and maintain. A Section 278 agreement covers alterations to the existing public highway, such as a new junction or access, that the development needs in order to connect to the network. Many schemes require both: a Section 278 for the works on the existing road, and a Section 38 for the new estate roads inside the site.
The full cycle from design to adoption usually takes 18 to 24 months. Technical approval of the design accounts for roughly three to six months, construction takes as long as the scheme needs, and a maintenance period of around 12 months then runs from the point the surfacing is complete before the road is finally adopted.
The developer meets the authority’s fees for checking the design, preparing the agreement and inspecting the works, provides financial security in the form of a bond or cash deposit sized to complete the works if it defaults, and may pay a commuted sum towards the long-term maintenance of any non-standard items. On top of that sits the cost of actually constructing the road to the adoptable standard. Figures vary by authority and by the size and complexity of the scheme.
It is not compulsory, but it is the standard and most reliable way to have new estate roads adopted. Without an adoption route the roads remain private and their maintenance falls to the developer and then to residents. There is an alternative under Section 37, where a completed road is offered for adoption, but it is slower and less certain, so Section 38 is used for most schemes.
The authority can call on the bond or cash deposit provided under the agreement and use it to complete or repair the road to the adoptable standard. This is why the security is sized to cover the cost of finishing the works, and why a call on the bond is usually triggered by insolvency, incomplete works, or works that fail inspection and are not put right.
Yes. A road is only adoptable if it serves a genuine public function and is built to the authority’s adoptable standard. Private drives, gated accesses, roads that do not connect usefully to the network, and roads with non-standard materials that raise maintenance costs are the common cases where adoption is refused and the road stays private.
A commuted sum is a one-off payment the developer makes towards the authority’s extra long-term maintenance costs for anything non-standard in the scheme, such as special surfacing, traffic calming features, structures or trees within the highway. It covers the difference between maintaining a standard road and maintaining the non-standard items the authority is being asked to adopt.
Usually not. If the roads are to remain private and are not offered to the authority for adoption, no Section 38 agreement is required, but the maintenance of those roads then stays with the development in perpetuity, typically funded through a management company and service charges paid by residents.
On a new-build or recently built estate, a buyer’s solicitor will check whether a Section 38 agreement is in place for the roads that serve the property. If it is, the roads are on a clear route to becoming publicly maintained. If it is not, the road may remain unadopted, and the buyer should understand who is responsible for its upkeep, whether indemnity insurance is being offered, and what a land charges search reveals about its status.
