Reforming developer contributions – proposed Government measures

It is widely recognised that the current system of developer contributions (section 106 obligations and Community Infrastructure Levy) is too complex and uncertain. In May 2018, HUDU responded on behalf of London NHS Clinical Commissioning Groups to the Government’s public consultation on reforms to developer contributions. The Government has responded to the consultation and has proposed measures which reflect some, but not all, of the recommendations of an earlier independent CIL Review (A New Approach to Developer Contributions) which was published in February 2017.

A number of measures will require new guidance and amendments to the Community Infrastructure Levy Regulations 2010, and the Government will consult on draft amended regulations in ‘due course’.

HUDU has prepared a briefing note which summarises the key measures and comments on the Government’s response to the public consultation and the need for further reforms as advocated by the CIL Review. The briefing note can be viewed here.

There is a tension between removing planning restrictions to increase the supply of homes and ensuring that the impact of development on infrastructure is adequately addressed. Permitted development rights, such as allowing offices to be converted into residential use without the need for planning permission can also lead to poor quality homes, built in the wrong places. The Town and Country Planning Association has recently launched a campaign ‘Room to Breathe’ urging the government to reconsider permitted development rights.

Draft new London Plan to be examined

From January to May 2019, the draft London Plan will be examined in public by independent inspectors. The new plan will provide the policy framework to shape how London evolves and develops over the next 20-25 years. In response to projected population growth, the draft plan aims to increase the supply of new housing from 42,000 to 65,000 new homes in London each year with a strategic target of 50% of all new homes being affordable. In many London boroughs higher housing targets will place additional pressure on existing infrastructure, including healthcare. Underpinning the draft plan are six ‘Good Growth’ policies, including a policy framework to create a healthy city which aims to help improve Londoners’ health and reduce health inequalities.

In 2017, HUDU contributed to the drafting of the new policies during an informal consultation stage. In early 2018, HUDU, on behalf of London NHS Clinical Commissioning Groups (CCGs), responded to a public consultation along with other NHS organisations. The examination provides a further opportunity to refine the policies ensuring that sufficient priority is given to health infrastructure needed to support housing growth and to ensure that the plan policies consistently and collectively help create a healthy city. Further information on the examination can be found here.

The draft Plan will be examined against the old (2012) National Planning Policy Framework. A new Framework was published in July 2018 following consultation. HUDU has produced a briefing note on the new Framework which can be viewed here.

Consultation on a revised National Planning Policy Framework and developer contributions

The Government are consulting on a revised national planning policy framework and reforms to developer contributions.

The National Planning Policy Framework is six years old and the revised framework focuses on proposals to speed up the delivery of new homes. Overall, the revised policy framework is more prescriptive requiring local authorities to plan positively and quickly to meet housing needs, review policies every five years, agree plans with neighbouring authorities and make more effective use of brownfield land. A housing delivery test to scrutinise local authority performance and a proposal to shorten the time limit to implement planning permissions to less than three years aims to ensure that more planned homes are built.

The revised policy framework proposes:

  • minimum densities for housing development in town and city centres and around transport hubs
  • to require local authorities to allocate at least 20% of their housing supply from small sites of 0.5ha or less
  • broaden the definition of affordable housing to include 10% of homes on major sites as affordable home ownership. Housing for essential local workers, including NHS staff, is also added to the definition.
  • to make best use of land by permitting housing on retail and employment land and, in future, upwards extensions on existing sites to create new homes, but bypassing a requirement for developer contributions for infrastructure
  • to include both non-statutory and statutory consultees in pre-application consultation to resolve issues, such as affordable housing and infrastructure requirements and to secure good design
  • to deliver a range of housing, but no extra emphasis on the need for housing for older people.
  • to continue to promote healthy and safe communities proposing that policies and decisions should consider the social and economic benefits of estate regeneration and additional recognition of the role that planning can play in promoting social interaction and healthy lifestyles.
  • to promote sustainable transport and require authorities to identify additional development opportunities arising from strategic transport infrastructure investment.
  • that plans should set out a clear design vision and expectations, supported by tools and checklists, including Building For Life.

The Government is also consulting on changes to developer contributions in response to an independent review of the Community Infrastructure Levy which was published in February 2017.

In the short term, it proposes to:

  • simplify consultation requirements for setting and revising a CIL charging schedule and to align it with the local plan process when assessing infrastructure needs and development viability.
  • remove the section 106 pooling restriction in areas that have adopted CIL or where significant development is planned on several large strategic sites
  • allow CIL charging schedules to be set based on the existing use of land to capture increases in land value
  • remove regulatory requirements for Regulation 123 lists and require the publication of Infrastructure Funding Statements
  • allow strategic local authorities to introduce a Strategic Infrastructure Tariff to help fund or mitigate strategic infrastructure, citing the success of the Mayoral CIL in London to help fund Crossrail.

In the longer term, the Government will explore the option of a national, non-negotiable developer contribution tariff for affordable housing and infrastructure. The independent CIL Review recommended that the Government should replace CIL with a low level Local Infrastructure Tariff (LIT) with section 106 agreements for larger developments.

The consultation ends on 10 May 2018 and the Government intends to produce a final version of the policy framework this summer. Further details on the consultation can be found here.