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Developer contributions: reforms

Project iStock 000000224397XSmall 146x219The regime for developer contributions is set to be reformed. Stephanie David examines the proposals in the government's consultation.

There is no doubt that the system of developer contributions is complex, fragmented and uncertain – symptomatic, in part, of the partial uptake of CIL (the Community Infrastructure Levy) and the shrouded nature of s 106 negotiations. As Sajid Javid, the Housing Secretary, put it before the House of Commons, “it is vital that developers know what contributions they are expected to make towards affordable housing and essential infrastructure, and that local authorities can hold them to account.”

Hence, the objectives of the consultation on developer contributions are to reduce complexity, increase certainty, improve transparency and increase market responsiveness. Yet, how does the Government propose those objectives are translated into actual policies?

1) The evidence of local infrastructure need in the plan-making process will be the same as that used for setting a CIL charging schedule (except in circumstances of significant market changes, where the evidence may be supplemented for setting CIL).

2) The current statutory consultation requirements for amending or introducing CIL will be replaced with a published statement to be considered by an Examiner.

3) The pooling restriction on s 106 obligations will be removedin three circumstances: (a) where the LA is charging CIL; (b) where it would not be feasible for the LA to adopt CIL in addition to section 106 contributions; and (c) where significant development is planned on several large strategic sites.

4) The operation of CIL will be improved by: (a) relaxing the Commencement Notice requirement for exempted development; and (b) balancing CIL liabilities between different phases of the same development where permission is secured before the introduction of CIL.

5) CIL liabilities will be calculated on the basis of the existing use of the land (or the majority use, if over 80%, on sites with differential rates).

6) CIL will be indexed to the House Prices Index for residential development; and to either the Consumer Price Index or a combined proportion of HPI and CPI for nonresidential development.

7) Regulation 123 lists will be replaced with an annual Infrastructure Funding Statementto set priorities.

8) And finally, combined authorities and joint committees with strategic planning authority will be able to charge a Strategic Infrastructure Tariff, analogous to the London Mayoral CIL used to fund Crossrail.

By introducing further nuance, and therefore complexity, to the system of developer contributions, there seems to be a significant risk that the purported objectives, whilst laudable in theory, might in practice be thwarted. And the introduction of yet another levy, the Strategic Infrastructure Tariff, could well be the cherry on top of the developer contribution minefield.

Stephanie David is a barrister at 39 Essex Chambers. She can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..

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