In opposition, the Conservative Party's Green Paper "Open Source Planning" proposed the scrapping of the Community Infrastructure Levy (CIL), so it took many by surprise when the Coalition resolved to retain the scheme with some amendments. As originally introduced the CIL regime left affordable housing, along with other "site specific" requirements to be provided through section 106 obligations. The statutory definition of "Infrastructure" which may be funded through CIL in the Planning Act 2008 is wide enough to include affordable housing but the regulations specifically exclude it from CIL.
The proposed CIL amendments
During the debate on the (then) Localism Bill it was proposed that the regulations should be amended to allow for funding of affordable housing through CIL. As a result, the Government published a consultation paper and draft regulations on 10 October 2011. The Consultation, which seeks views on a number of proposals, will run until 30 December 2011.
Consultation on the proposed amendments
In the Consultation document, the Government restates its commitment to the provision of affordable housing as "a priority". It suggests that planning obligations would continue to provide for on-site affordable housing. However there would also be an option for local authorities to use CIL receipts to fund affordable housing where "there is robust evidence that doing so would demonstrably better support its provision and offer better value for money." The Consultation seeks views on whether this flexible approach would allow a more efficient provision of affordable housing and better support the delivery of local policies.
Potential issues with the proposed amendments
One matter that will surely raise concerns is the mechanism by which planning authorities will determine their approach. How will the system ensure that there is clarity as to which developments will be subject to a CIL payment for affordable housing and which will be subject to a section 106 obligation requiring on-site provision?
The Consultation document suggests that local authorities will need to set out clearly in local plans the approach they will take to ensure that the choices being made are both transparent and fair.
Another concern highlighted in the Consultation is that if affordable housing is to be capable of being funded through CIL, then the existing regulation will restrict the pooling of funds from planning obligations for a single project to five. The suggestion is that contributions to affordable housing made under section 106 agreements should be exempt from this restriction.
Impacts on developers
Opinion seems to be split on the proposed reforms, some arguing that the proposal will provide an additional source of funding for affordable housing at a time when funding has been severely cut. On the other hand, when the suggestion was first discussed, the British Property Federation raised concerns that "if CIL is diverted away from vital investment in new infrastructure then this will undermine the ability of authorities to deliver development and will compromise economic growth".
Non-residential developers may be concerned that the use of CIL to fund affordable housing may result in their developments making significant contributions towards affordable housing where these have not previously been required to do so.
The funding of affordable housing through CIL, will not secure on-site provision and this will inevitably break the link with the established policy of seeking the development of "mixed and balanced communities". It also presupposes that there are other off-site schemes available to the authority on which to expend the funds collected.
The current section 106 system has built into it an opportunity to take account of viability considerations. The planning authority will usually prioritise competing section 106 requirements and will often agree to variations to the affordable housing such as quantum, timing of delivery, dwelling type and tenure mix. Although when adopting a CIL Charging Schedule charging authorities will be required to take account of the viability of development in the area. By comparison, this seems a blunt instrument, lacking the flexibility of the section 106 regime. Any failure to properly address viability issues will result in stalled development schemes.
The way forward
As always the devil is in the detail and we await the outcome of the Consultation with interest. Provided there remains a genuine choice for authorities as to whether to seek provision via CIL or section 106 then the concerns above can be addressed. It is crucial however that the system should be transparent and fair, ensuring that stakeholders can input their views into the policy making of the authorities. Above all, developers must have certainty as to how and how much they are to contribute if development and the much sought after growth in the economy is to be secured.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
