Latest reforms to developer contributions

18 Sep 2019

On 1 September 2019, the Government introduced a raft of changes to the existing rules relating to developer contributions.  Developer contributions are most typically secured in the planning process by way of s106 planning obligation or Community Infrastructure Levy.

The changes include:

1.    S106 agreements
  • Removal of the restriction on five or more s106 planning obligations which fund the same infrastructure project.  The restriction was intended to ensure that infrastructure contributions were obtained through Community Infrastructure Levy (CIL).  The removal of this has the effect of permitting CIL to be spent on the same items that s106 planning contributions have been collected for – ie. “double dipping”.  This could be unsatisfactory for some developers who may end up paying full CIL and full s106 contributions towards the same planning mitigation.
  • Specific provision to allow local planning authorities to secure monitoring costs.  This new provision directly deals with the High Court’s judgment in the case of Oxfordshire County Council v SSCLG 2015, where it was found that a monitoring fee may not always be a s106 obligation and identified that local planning authorities did not have specific statutory power to seek contributions towards monitoring.  The new rules confirm that the monitoring costs must be fairly and reasonably related in scale and kind to the development, and must not exceed the authority’s actual estimate of monitoring.
2.    CIL
  • Complete removal of Regulation 123 – which has the effect of removing Regulation 123 lists that collecting authorities published in order to itemise the infrastructure that the CIL was intended to be spent on.  
  • Allowing a surcharge to be imposed for failure to serve a valid Commencement Notice, instead of loss of any relief.  This deals with the unfortunate instance of persons losing the benefit of a relief as a result of forgetting to serve a Commencement Notice, or a technical error in the said Notice.
3.    Annual Infrastructure Funding Statements
  • Any authority which receives developer contributions must publish annual Infrastructure Funding Statements to identify revenue/spending and proposed revenue/spending of all developer contributions (including both s106 and CIL).
  • The first Statement must be published by 31 December 2020.  Until then, as there will be no Regulation 123 lists available, there is no requirement for any publication of what the collecting authority intends to spent its CIL receipts on.
Many of these changes are intended to speed up the ability of authorities to collect money in order to provide the infrastructure required to deliver new homes, and to make the system of development contributions simpler, more transparent and effective, and fairer.  It is anticipated that reforms to the planning system will support the government’s commitment to the delivery of ambitious numbers of new homes in coming years;  developers and authorities are equally keen to understand how these new rules are developed and implemented.

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