Is this the end of the road for Section 106?

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The Government wants to replace Section 106 with a new Infrastructure Levy

Section 106 agreements could be scrapped if the Government’s planning reforms go ahead. The White Paper Planning for the Future published in August sets out radical change to the way new developments are delivered. One of the most controversial is the plan to throw out Section 106 agreements and the Community Infrastructure Levy. Instead, there will be one Infrastructure Levy to be set nationally and charged for every development above a certain value. The new levy will be paid on occupation of the site and the Government thinks it’s a better solution than the two separate obligations formerly placed on developers.

Not everyone agrees. The White Paper is focused heavily on the benefits of this change for housing delivery – obviously very important. But the new levy won’t be like for like and critics say it won’t fulfil all the functions of, or be as flexible in use, as the existing system.

As law and tax specialist CMS points out in a well-argued discussion of the planned changes, “Section 106 is an incredibly flexible tool… that can cater for changing circumstances and unknowns at the time of grant of permission in order to maximise or tailor affordable housing and other commitments to best suit the local community, environment or market as it evolves during the lifetime of the development”.

The planned reforms have the all-important financial contributions from developers and affordable housing in their sights. We can all agree that these are vital. But what about the other aspects of development that Section 106 deals with? What happens to the obligation to consider management of open space and community facilities, road improvements, local employment and training, education, health facilities, and community assets?

And what about other, perhaps less obvious issues such as linking new developments, setting occupancy controls for specialist forms of housing, noise mitigation, carbon reduction and habitat offsetting. All these are often part of Section 106 agreements too.

Grampian conditions to planning permissions – which prevent the start of a development until off-site works have been completed on land not controlled by the developer – could still be used and the new Infrastructure Levy would provide the funding. But the key point here, as CMS highlights, is that there is no guarantee that off-site infrastructure will be put in place. Instead, this will be left to the discretion of local authorities.

With ever-tightening purse strings post-pandemic, local authorities may not have these funds at their disposal. This lack of joined-up thinking can only be to the detriment of the many housing developments that the Government is putting at the top of its wishlist.

We wait with interest to see how Parliament responds to this White Paper – and how the industry reacts in turn. To read it in full go to https://www.gov.uk/government/consultations/planning-for-the-future

www.ringley.co.uk
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