Legal Viewpoint: Time for ministers to get real over pooling rules

It is astonishing how unclear and confused many practitioners are about the operation of regulation 123 of the Community Infrastructure Levy (CIL) Regulations and what its implications are. As its effects become clearer, it seems inevitable that it will need to be reviewed and amended.

The benefit of pooling section 106 contributions, especially for large and strategic sites, is that it enables multiple developments to contribute to infrastructure costs and offers certainty of delivery, either by the developers or in partnership with the public sector.

But regulation 123(3) requires that, from 6 April this year, planning obligations cannot constitute a reason for granting permission where five or more separate obligations have already been entered into since 6 April 2010 to fund or provide the same infrastructure project or type of project.

The effect is to restrict "pooling" of contributions under section 106 and thereby encourage local authorities to adopt a CIL to fund infrastructure. The reality of this is rapidly dawning on the many councils that have not yet implemented CIL and consequently have no mechanism to collect pooled contributions towards vital infrastructure such as education, highways, libraries and other community facilities.

Although not yet tested, the interpretation of regulation 123 will undoubtedly end up in the courts. It is not clear, for example, how the term "planning obligation" will be read. Does it mean a single obligation or the whole agreement? Is it an obligation given by a single or multiple landowners? Can it be a credible argument that an obligation has not been relied on as a reason for approval?

There are also some very real practical issues over the operation of the regulation. For example, how many local authorities keep an accurate record of the number of obligations that relate to a specific type of infrastructure? How can a developer be certain of the position? In the absence of pooling, will a CIL deliver sufficient funding for the necessary infrastructure?

As it stands, regulation 123(3) is a barrier to the effective funding and delivery of infrastructure, particularly for strategic and large sites. If the new government is serious about housebuilding, it does need to tackle the issue of infrastructure funding to support work on such sites. Regulation 123(3) could be easily amended to allow pooling for large and strategic sites, as last year’s Lyons housing review recommended. It would be an easy win for new secretary of state Greg Clark to address this as he settles into the driving seat at the Department for Communities and Local Government.

Stephen Webb is a partner at law firm King & Wood Mallesons LLP

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