Regulations laid before parliament this week will make a series of changes to the way in which local authorities charge, collect and report on developer contributions raised through section 106 and the Community Infrastructure Levy (CIL). Here are eight key things you need to know about them
- The regulations will come into force on 1 September 2019. The Ministry of Housing, Communities and Local Government (MHCLG) published draft regulations for consultation just before Christmas.
- The regulations introduce a requirement for councils to publish “infrastructure funding statements”. These statements will replace existing Regulation 123 lists and should include details of how much money has been raised through developer contributions and how it has been spent. Statements must be published on local authority websites at least once a year. Councils will be required to publish their first statements by 31 December 2020.
- Restrictions on the ‘pooling’ of section 106 planning obligations to fund infrastructure are removed. Local authorities are currently allowed to pool no more than five developer contributions to fund a single infrastructure project. The regulations remove any upper limit on the number of developer contributions that can be pooled.
- Local authorities will be allowed to charge a fee through section 106 to contribute toward the cost of monitoring and reporting on developer contributions. The regulations state that this fee should be “fair” and “reasonable” and reflect the authority’s estimate of the cost of monitoring.
- The regulations relax the requirements for local authorities to consult on CIL charging schedules before adoption. Charging authorities will now be required to conduct one round of consultation, rather than the two rounds previously required, with any further consultation “at the authority’s discretion”. However, councils will also be required to conduct a consultation if they are considering stopping charging CIL, setting out the expected impacts and how any lost funding will be replaced.
- Penalties charged on CIL-exempt projects, in cases where the developer fails to submit a commencement notice before the start of works, have been reduced. Certain developments are exempt or entitled to relief from CIL. In most cases, developers must submit a commencement notice to the charging authority before work starts or the exemption/relief is lost and the full CIL amount has to be paid. The new regulations instead stipulate that a surcharge equal to 20 per cent of the notional chargeable amount, or £2,500, whichever is the lower, will be charged if a commencement notice is not submitted.
- Charging authorities should apply an index of inflation “to keep the levy responsive to market conditions”, the regulations state. This figure will be published by the Royal Institution of Chartered Surveyors and will come into effect from 2020.
- In cases where planning permissions are amended, the regulations state that CIL should be charged on any additional floorspace at the latest indexed rate. The remainder of the floorspace will be charged at the rate that was in place when that element of the development was first permitted. Any decreases in the chargeable amount will be calculated on the basis of the rate charged when permission was first granted.