UK Section Bond Specialists
Section Bonds, Road Bonds & Sewer Bonds for UK Developments
SB&G arranges Section Agreement Bonds for developers, housebuilders and contractors, including Section 38, Section 278 and Section 104 requirements as well as other highway, sewer and infrastructure security.
Specialist UK Surety Broker
Road & Sewer Bond Market Access
Developers & Housebuilders Supported
Single Bonds & Ongoing Facilities
Need a Section, Road or Sewer Bond? Use the enquiry form alongside this page and include the Section Agreement type, bond value, development location, beneficiary and required date where known.
Section Bonds UK
What Is a Section Bond?
A Section Bond is a surety guarantee used in connection with highway, sewer and other infrastructure agreements where a developer or contractor has obligations to complete specified works.
They are commonly referred to as Road Bonds, Sewer Bonds, Highways Act Bonds or Section Agreement Bonds.
The bond provides financial security to the relevant beneficiary, such as a local highway authority or water company, according to the obligations and claim provisions contained in the agreement and bond wording.
If the developer does not fulfil the secured obligations, the beneficiary may have recourse to the bond in accordance with its terms.
Common Section Agreements
What Types of Section Bond Can We Arrange?
Requirements vary between highway authorities, water companies and individual developments. The following are among the Section Agreement and infrastructure security requirements we are regularly asked about.
Highways Act 1980
Section 38 Bond
Commonly associated with agreements for new highways intended for eventual adoption and maintenance at public expense.
Highways Act 1980
Section 278 Bond
Used in connection with agreements concerning works to an existing highway, such as access, junction or highway improvements.
Water Industry Act 1991
Section 104 Bond
Associated with agreements for the future adoption of qualifying sewer, drain or sewage infrastructure by a sewerage undertaker.
Advance Payments Code
Section 220 / APC Security
Security can arise under the Advance Payments Code in connection with private street works. The precise requirement should be checked against the authority's notice and documentation.
Water Infrastructure
Section 98 Requirements
Security requirements may arise in connection with water or sewer infrastructure arrangements. The actual agreement and beneficiary wording should be supplied for review.
Water Industry Act
Section 185 Requirements
Requirements connected with diversion or alteration of water or sewer infrastructure can also generate security obligations, depending on the underlying agreement.
Scotland
Scottish Road Agreement Bonds
Road and infrastructure security requirements can also arise on Scottish developments under the relevant local and statutory arrangements.
Other Infrastructure
Bespoke Section Agreements
If your authority, utility provider or solicitor has supplied a different agreement or bond wording, SB&G can review the requirement.
Core Requirements
Section 38, Section 278 & Section 104 Bonds
Section 38 Road Bonds
Section 38 of the Highways Act 1980 allows highway authorities to enter into agreements concerning highways that may become maintainable at public expense. Development agreements can include financial security for the developer's obligations.
Section 278 Highway Bonds
Section 278 agreements relate to highway works and can be used where development requires alterations or improvements to the existing public highway network.
Section 104 Sewer Bonds
Section 104 agreements provide a route for qualifying sewer, drain or sewage infrastructure to be adopted by the relevant sewerage undertaker once the agreed conditions have been satisfied.
The Process
How Does a Section Bond Work?
The detail varies by agreement and authority, but a Section Bond requirement commonly follows a structure like this.
Step 1
Agreement Identified
The highway authority, water company or other beneficiary confirms the infrastructure obligations and required security.
Step 2
Bond Requirement Set
The agreement normally identifies the bond amount, parties, wording and conditions applicable to the security.
Step 3
Surety Underwriting
The surety assesses the developer or contractor, financial position, development and proposed bond exposure.
Step 4
Bond Issued
Once terms, indemnity and documentation are completed, the bond can be issued in favour of the beneficiary.
Beneficiaries & Applicants
Who Uses Section, Road & Sewer Bonds?
These bonds sit between the developer or contractor carrying out the infrastructure obligations, the surety providing the guarantee and the public authority or utility benefiting from the security.
Housebuilders
Residential developments frequently require highway and sewer agreements before infrastructure can ultimately be adopted.
Property Developers
Commercial, residential and mixed-use developments can create highway, access, drainage and utility obligations.
Contractors
Depending on the agreement structure, contractors may also require surety support for infrastructure obligations.
Authorities & Utilities
Bonds commonly benefit highway authorities, water or sewerage undertakers and other bodies requiring financial security.
Bond Value
How Is the Section Bond Amount Decided?
There is no universal fixed percentage that applies to every Section Bond. The required bond value is generally determined through the relevant agreement or authority process and can reflect the estimated cost of completing the secured infrastructure works.
The amount can therefore vary considerably between developments depending on the roads, sewers, drainage, structures and other works being secured.
Where the authority has already confirmed the required bond value, providing that figure with the agreement allows the surety requirement to be assessed more efficiently.
Bond Reduction & Release
Can a Section Bond Reduce as Works Are Completed?
Potentially. Many infrastructure agreements contain mechanisms allowing the secured amount to reduce as specified works are completed, certified or accepted.
A residual amount may remain outstanding during a maintenance or defects period before final release, depending on the agreement.
The reduction and release mechanism is agreement-specific. The surety should therefore receive formal evidence of any reduction or discharge rather than assuming exposure has automatically ended when physical construction is complete.
Why formal release matters
Until the bond has reduced or been released in accordance with the agreed mechanism, the outstanding amount may continue to count towards the developer's aggregate surety exposure.
Application Information
What Information Is Needed for a Section Bond?
Requirements vary, but sending a complete submission at the start can reduce unnecessary delay between the developer, broker, surety and beneficiary.
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Developer or contractor details
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Latest financial accounts
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Current management accounts where available
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Development or project details
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Section Agreement or draft agreement
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Beneficiary / authority details
Underwriting
What Will the Surety Assess?
The underwriting assessment considers more than the development itself. The surety also needs to understand the applicant's financial strength and total existing exposure.
Financial Strength
Accounts, profitability, liquidity, working capital and current trading can all influence the underwriting position.
Development Profile
The scale, stage and nature of the development and infrastructure works may be considered.
Existing Exposure
Existing Section Bonds and other outstanding surety obligations can affect available capacity.
Experience
Relevant housebuilding, development and infrastructure experience may form part of the overall underwriting assessment.
Multiple Developments
Do You Need a Section Bond Facility?
Housebuilders and developers with multiple live developments may have recurring Section 38, Section 104 or other infrastructure bond requirements.
Rather than treating every future requirement as entirely isolated, it may be possible to establish an ongoing surety facility or capacity framework for repeat bonds, subject to underwriting and the individual requirements falling within the agreed appetite.
This can make future requirements easier to plan and gives both the applicant and surety a clearer picture of total aggregate exposure.
Surety Market
Surety Bond vs Bank Security
Where acceptable to the beneficiary, arranging Section Agreement security through the surety market can provide an alternative to using bank-backed facilities or depositing cash.
This can help a developer preserve banking capacity and working capital for land, construction and other development requirements.
Acceptance and structure remain subject to the relevant agreement, beneficiary and surety-market terms.
Why SB&G?
Specialist Section Bond Market Access
Section Agreement requirements combine surety underwriting with development-specific documentation, authority requirements and often long-running aggregate exposure. The right market therefore matters.
Broad Market Access
Different surety providers can take different views on developer strength, exposure, security and individual agreements.
Road & Sewer Requirements
Section 38, 278, 104 and other road, sewer and infrastructure requirements can be considered.
Repeat Development Needs
Developers with multiple sites can discuss ongoing capacity rather than considering only a single bond in isolation.
Complex Applicants
Group structures, SPVs and more complex financial positions can potentially be considered across the available market.
Indemnity & Security
Will Additional Security Be Required?
A corporate indemnity is commonly part of a surety arrangement. Additional support depends on the applicant, bond exposure and market considering the requirement.
Parent-company support, personal guarantees or collateral may be requested in some cases but should not be assumed to be universally required.
Development Timetable
Need a Section Bond Quickly?
Section Bonds can become time-critical where execution of an agreement, commencement of works, development milestones or adoption processes depend on acceptable security being in place.
Providing the agreement, required wording, bond amount, beneficiary details and current financial information at the outset gives the best opportunity to progress underwriting efficiently.
Client Feedback
Trusted by UK Contractors, Developers & Businesses
Specialist surety advice, market access and responsive support throughout the bond placement process.
Section Bond Questions
Frequently Asked Questions
What is a Section Bond?
A Section Bond is a surety guarantee used in connection with infrastructure obligations such as highway, road or sewer works. The exact obligation depends on the underlying agreement and wording.
Is a Section Bond the same as a Road and Sewer Bond?
Road and Sewer Bond is a broad industry description commonly used for several types of Section Agreement security, including Section 38, Section 278 and Section 104 requirements.
What is a Section 38 Bond?
It is commonly associated with a Section 38 highway agreement for new roads intended to become maintainable at public expense once the agreement conditions have been satisfied.
What is a Section 278 Bond?
It is security associated with a Section 278 agreement concerning works to the existing highway, such as junction, access or other highway improvements.
What is a Section 104 Bond?
It is commonly associated with a Section 104 agreement for the future adoption of qualifying sewer, drain or sewage infrastructure by the relevant sewerage undertaker.
What is a Section 220 or APC requirement?
Section 220 sits within the Highways Act Advance Payments Code. Security can be required in connection with private street works. The authority's notice and proposed security wording should be reviewed because this is not identical to a Section 38 adoption agreement.
Who is the beneficiary of a Section Bond?
Depending on the agreement, the beneficiary can be a local highway authority, water or sewerage undertaker or another relevant public body.
Who normally arranges the bond?
The developer, housebuilder or other party responsible for the secured obligations will normally arrange the required surety security.
How much is a Section Bond?
There is no single universal percentage. The required bond amount is generally established through the agreement or authority process and may reflect the estimated cost of the secured works.
Can a Section Bond reduce over time?
Potentially. Many agreements provide for reductions as specified works are completed or certified, although the exact mechanism varies.
When is a Section Bond released?
Release depends on the agreement. It may follow completion, certification, adoption and any applicable maintenance or defects period rather than simply occurring when physical works finish.
Can a new development SPV obtain a Section Bond?
Potentially. The surety may assess funding, parent or group support, development experience, financial resources and the individual project.
Can one facility cover bonds across multiple developments?
Potentially. Developers with recurring requirements may be able to establish an ongoing surety facility or capacity framework, subject to underwriting and individual bond requirements.
Do existing Section Bonds affect future capacity?
They can. Outstanding bonds generally contribute to the surety's aggregate exposure until they reduce or are formally released.
Can a surety bond replace a bank guarantee or cash security?
Potentially, where the beneficiary accepts the proposed surety. This can help preserve banking facilities and working capital, subject to the individual agreement.
How quickly can a Section Bond be arranged?
There is no universal timeframe. Complete financial information, an agreed bond amount and clear wording can help a straightforward requirement progress more efficiently.
What if my Section Agreement is not listed here?
The list is not exhaustive. If an authority, utility or solicitor has supplied a different infrastructure bond requirement, send the agreement and proposed wording to SB&G for review.
Specialist Guidance
Section Bond & Surety Guidance
Surety Underwriting
How financial strength, development exposure and bond obligations are assessed.
Read the Guide ›
Surety Facilities
Ongoing capacity for developers and businesses with repeat bond requirements.
Read the Guide ›
Bond Capacity Explained
Understand aggregate exposure, single-bond limits and available headroom.
Read the Guide ›
Information Required
See the information and documents that may be required for underwriting.
Read the Guide ›
New Companies & SPVs
How SPVs and new entities can potentially obtain surety support.
Read the Guide ›
Bond Security
Corporate indemnities, parent support, personal guarantees and collateral.
Read the Guide ›
Other Contract Bonds
Other Surety Bonds You May Require
Performance Bonds
Contract performance security for contractors and construction projects.
Advance Payment Bonds
Security for advance and stage payments released under construction contracts.
Ready to arrange the Section Bond? Use the Section Bond enquiry form on this page or call 02476 017646 to discuss the agreement with a specialist surety broker.
Section Agreement requirements, bond values, wording, reduction mechanisms, beneficiaries and release procedures vary between authorities, undertakers, developments and agreements. References to statutory sections above are general guidance only and should not be treated as legal advice on the effect of a particular agreement or statutory provision.