Developer contributions – significant changes to regulations

Developers may be asked to provide contributions for infrastructure in different ways. Planning obligations, known as section 106 (s106) agreements are legal obligations entered into to mitigate the impacts of a development proposal. Developers may also contribute towards infrastructure by way of the Community Infrastructure Levy (CIL) which is a fixed charge levied on new development to fund infrastructure and intended to address the cumulative impact of development in an area.

The Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019 came into force on 1 September 2019. The amended regulations make changes to how CIL is charged, collected and reported and seeks to clarify the relationship between CIL and s106 contributions. The Government have updated the national Planning Practice Guidance on Community Infrastructure Levy and Planning Obligations to reflect the amended regulations.

The amended regulations follow an independent review of CIL which concluded that the present system of developer contributions was too complex and uncertain and recommended to Government that CIL be replaced with a low-level Local Infrastructure Tariff combined with s106 agreements for larger developments. The Government has not pursued this and instead has amended the current system. Nevertheless, these amendments will result in significant change to the way developer contributions can be used to fund infrastructure.

The key changes

  1. Planning authorities were previously not allowed to pool more than five s106 obligations to fund a single infrastructure project. This pooling restriction has been removed.
  2. The CIL ‘Regulation 123’ List has been removed. Planning authorities can now use CIL and section 106 obligations to contribute towards the same piece of infrastructure, subject to three planning tests (Regulation 122) to ensure that s106 contributions are necessary, reasonable and directly related to the development.
  3. Guidance clearly distinguishes between the purpose of s106 obligations to mitigate site-specific impacts and CIL which can be used to address the cumulative impact of infrastructure in an area. Typically, s106 health contributions have not been sought from individual developments where ‘health’ was identified on an authority’s Regulation 123 List. The removal of the Regulation 123 List will remove this obstacle. 
  4. CIL Regulation 123 Lists will be replaced by an infrastructure funding statement (under Regulation 121A) which identifies the infrastructure required to support development in an area and how it will be funded, using CIL, or s106 obligations, or a combination of both. The first statement should be published by 31 December 2020.
  5. The infrastructure funding statement should also include details of how much money has been raised through CIL and s106 obligations and how it has been spent.
  6. The scale of s106 obligations is influenced by development viability. Previously viability was assessed as part of the planning application. Now, viability is assessed at the local plan stage and viability assessments submitted with a planning application should be based on the plan evidence.

    A briefing note on the impact of the changes can be viewed here.

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