Supporting housing delivery through developer contributions
Following the announcements at Autumn Budget 2017, the government is seeking views on a series of reforms to the existing system of developer contributions
In addition to the Government publishing the draft revised NPPF on Monday 5th of March, it also published the Developer Contributions Document ‘Supporting housing delivery through developer contributions: Reforming developer contributions to affordable housing and infrastructure”.
This Document sets out the Government’s proposed changes to Section 106 Agreements, Community Infrastructure Levy (CIL) and Strategic Infrastructure Tariffs.
The Government’s objective is to make the contributions system more transparent and accountable. By focusing viability assessment at the ‘plan making’ stage rather than the ‘decision making’ stage, the government believes delays caused by negotiation of developer contributions will be reduced.
However, the extent to which viability can be fully tested at the Local Plan stage remains to be seen, particularly as Local Plan Examinations do not currently lend themselves to detailed consideration of individual sites and because at the Local Plan stage the full details of the costs and value of development are not always known. The ‘front loading’ of viability assessment to the Plan making stage could increase site promotion costs for developers and lead to delays in bringing forward Local Plans.
The following paragraphs summarise the key proposals:
Reducing complexity and increasing certainty
The consultation document proposes to streamline the current CIL setting process by replacing the current statutory requirements for two rounds of consultation with a requirement to publish a statement on how the charging authority has sought an appropriate level of engagement.
The Government also proposes removing the current s106 pooling restrictions where the local authority is charging CIL. The pooling restrictions have led to some curious and unexpected outcomes (such as Councils not always collecting s106 contributions where they might otherwise because of a desire to use the 5 permissible pooled contributions on the largest schemes), it is not clear how a mix of CIL and pooled s106 contributions would assist in reducing complexity or providing clarity.
Supporting Swifter Development
There has been a large increase in the use of viability assessment in planning application negotiations alongside concerns that such assessments are not open to public scrutiny. The government plans to combat this by getting viability right during Local Plan production in a manner that achieves greater transparency and requiring subsequent viability assessments to be open to public scrutiny.
Increasing market responsiveness
CIL charging schedules may become quickly out of date if they do not respond to changes in the housing market. This could mean that local authorities do not capture as much value as they might otherwise in a rising housing market or it can affect development viability in a falling housing market. To address this problem, the Government proposes to introduce the concept of setting CIL charging based on the existing land use by indexing residential development to regional or local house prices.
Improving transparency on CIL usage
CIL charging authorities are required to report annually on how much CIL has been received, how much has been spent and what it has been spent on, but both public and developers alike have concerns that there is a lack of clarity on how CIL is being used.
Regulation 123 of the CIL regulations enables local authorities to publish lists of infrastructure they intend to fund through CIL. There is a considerable amount of confusion and variation in relation to Regulation 123 lists.
The Government seeks to resolve this through replacing Regulation 123 with the requirement to publish Infrastructure Funding Statements that explain how CIL and Section 106 monies will be spent over the next five years. One of the main reasons for having the Regulation 123 lists was to avoid Councils ‘double dipping’ i.e collecting more money than is required for infrastructure through both CIL and S106 Agreements. If the Regulation 123 list is therefore to be removed, it will be important to have an alternative safeguard to prevent ‘double dipping’.
Introduce a strategic infrastructure tariff
Following the success of the Mayoral CIL in London, the Government proposes to allow combined authorities and joint committees, where they have strategic planning powers, to introduce a Strategic Infrastructure Tariff. This would encourage cross boundary planning to support the delivery of strategic infrastructure.
Provided strategic infrastructure CIL charges are clearly set out up front in adopted policies and are set at viable rates, such provisions have the potential to provide a clearer link between new development and infrastructure delivery and ensure that even smaller development schemes make a proportionate contribution.