Policy Summary: The government's position on developer contribution changes

POLICY: Government response to supporting housing delivery through developer contributions.

Infrastructure: levy advice to change
Infrastructure: levy advice to change

ISSUED BY: Ministry of Housing, Communities and Local Government

ISSUE DATE: October 2018

Background: The government believes the "complexity and uncertainty of the current system of developer contributions is acting as a barrier to the delivery of housing". In March, the government consulted on a series of legislative reforms to the system for developer contributions. This document summarises the consultation responses and the government’s proposed next steps.

Key points: Revised guidance will be issued to align the evidencegathering process for Community Infrastructure Levy (CIL) charging schedules and plan-making, the document says. Infrastructure planning and viability evidence produced for plan-making will be accepted as evidence for CIL charging schedules.

In the document, the government says that CIL-charging authorities will still need to consult on draft charging schedules, but there will no longer be a statutory requirement to conduct two rounds of consultation.

Restrictions on pooling of section 106 contributions will be lifted in all areas, the document says. It explains that the government intends that the CIL should still be used to secure developer contributions to address the cumulative impact of development in an area and measures will be put in place in an attempt to incentivise use of the CIL.

Developers failing to submit a commencement notice will no longer be required to pay full CIL liabilities immediately: changes are proposed to set penalties for failure to submit commencement notices at a "proportionate level".

Regulations and guidance will be amended to allow levy liabilities to be balanced between different phases of a development in cases where plans were permitted before the CIL came into force.

Plans to amend legislation to allow councils to set differential CIL rates based on existing uses of land have been dropped. Guidance will instead be amended to support councils wishing to set differential CIL rates.

The government will consult on the indexation of CIL rates to house prices. Rates for residential development are proposed to be linked to the House Price Index using local data. Non-residential rates will link to the Consumer Price Index.

Restrictions on the use of section 106 to fund projects on local authorities’ regulation 123 lists will be lifted, according to the government response. Combined authorities with planning powers will be allowed to introduce cross-boundary levies known as Strategic Infrastructure Tariffs, the document says. In the long term, joint planning committees will also be allowed to charge strategic tariffs. Other charging authorities will be encouraged to pool CIL receipts.

The response adds that changes to the Community Infrastructure Levy Regulations 2010, required to introduce the above measures, will be consulted on in due course.

The document can be read here. 

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