All change for developer contribution rules.
16 July 2019 | Planning Policy Updates
Key changes as to how local authorities (LA) charge, collect and report on developer contributions are to come into effect on 1st September 2019. The main changes and their implications are summarised below.
1. Infrastructure Funding Statements
Councils are required to publish new annual infrastructure funding statements which must provide information on the infrastructure projects to be funded wholly or partially by CIL. The statements must include details of the S106 planning obligations, money collected and spent.
These statements must be published on the LA websites from 2020. Parish Councils will also be required to prepare reports for any financial year in which they receive CIL receipts.
Whilst this change clearly represents another duty for LAs, it will provide transparency and provide an opportunity for LAs to work proactively with developers and the community to set out in a clear manner the infrastructure requirements they have. This transparency will ensure that here will be greater clarity on how the developers’ contributions are spent, thus avoiding any potential ‘double dipping’ (i.e. the same development paying twice, and it not being accounted for).
2. Removal of restrictions on pooling S106 Statements
The existing restriction on pooling will be lifted.
Removing such restrictions will allow CIL and planning obligations to fund the same piece of infrastructure and accordingly remove what can be a barrier to development. This change will make the delivery of large regeneration projects quicker and easier for councils as it will provide LAs the flexibility to top up CIL receipts to deliver major infrastructure.
3. Monitoring Fees
LAs will be allowed to charge a fee through S106 to assist with meeting the cost of monitoring and reporting on developer contribution. Regulations stipulate that the amount should be ‘fair’ and ‘reasonable’.
Whilst the RTPI has pointed out that this change will help LAs to carry out their duties effectively, the debate will perhaps be focussed on what is ‘fair’ and ‘reasonable’.
4. CIL consultation requirements
LAs are no longer required to conduct two rounds of consultation on CIL charging schedules, one is deemed sufficient.
This reduced requirement should speed up the CIL adoption process.
5. CIL commencement penalties
Those exempt or entitled to CIL relief (such as self-build) have been obliged to submit a commencement notice to the charging authority prior to the start of work or face losing the relief and having to pay the full amount. The new regs confirm that instead a surcharge of 20% of the notional chargeable amount, or £2,500 whichever is the lower, will apply if a commencement notice is not submitted.
Developers who have inadvertently breached the regulations due to their unfamiliarity with the requirements are likely to benefit from the fixed smaller penalties.
6. CIL Indexation
CIL will be adjusted over time to keep pace with inflation and "keep the levy responsive to market conditions". A bespoke index based on the Building Cost Information Service’s All-in Tender Prices Index is due to be published by RICS and come into effect from 2020. This will be known as the ‘RICS CIL Index’ and will be produced annually. LAs will have to produce annual summaries showing the index linked CIL rates "to further improve transparency".
In cases where planning permissions are amended through section 73 of the Town and Country Planning Act, CIL will be charged on any additional floorspace at "the latest indexed rate". The rest of the floorspace will be charged at the rate that was in place when that element of the development was first granted consent. Any recalculation of a CIL charge required by a reduction in floorspace will be made based on the rate charged when permission was first granted.
The government has yet to confirm whether the RICS CIL index will be available free of charge.
A number of responses to the initial consultation have warned that the increased charges caused by index linking CIL "could affect the viability of developments" and "could lead to a shortfall in funding for infrastructure". However, in theory, the new regulations could offer a simpler approach to the indexation of CIL charges.