Section 106 Agreements and the Community Infrastructure Levy are the current infrastructure funding sources in place, covering charges payable to the local authority. In this blog post we explain the differences between the two and the proposals for a new Infrastructure Levy.
Section 106 Agreements
Section 106 of the Town and Country Planning Act 1990 enables local planning authorities to enter into legal agreements with developers (S106 Agreements). They are linked to planning permissions and impose planning obligations and are entered into to mitigate the impacts of development on local communities.
If a development is liable for s106, this will be decided during the consultation period after the planning application has been submitted.
Section 106 Agreements will vary depending on the nature of the development and based on the needs of the area. The content of the s106 agreement is negotiated between the local authority and the developer. Some of the most common obligations include provisions for affordable housing, open spaces, education facilities, transportation improvements and environmental enhancements.
Community Infrastructure Levy
The Community Infrastructure Levy (CIL) was introduced by the Planning Act 2008 and came into force under the 2010 Community Infrastructure Community Regulations. It is a charge that local authorities can (but are not required to) set on new development in order to raise funds for infrastructure that the development will rely upon, such as schools and roads.
CIL only applies in areas where the local authority has a charging schedule in place which sets out CIL rates. Once a CIL charging schedule is in place, CIL payments are mandatory, flat-rate and non-negotiable.
Most new development which creates additional net floor space of 100 square meters or more or creates a new dwelling is potentially liable for CIL. Some developments may be eligible for relief including residential annexes and extensions, and houses and flats which are built by ‘self-builders’.
If a development is liable to pay CIL it should be included in the planning application.
A new infrastructure levy?
A new Infrastructure Levy (IL) was proposed under the Levelling Up and Regeneration Bill and is a reform to the existing developer contributions –of s106 planning obligations and CIL. A technical consultation on the reform ran from 17th March to 9th June 2023. The outcome to this public feedback is expected shortly and the Government has indicated that a further consultation on the drafting of regulations will be published in due course.
Whether you are a seasoned property developer or a first time buyer, if you require any assistance in relation to your property, our experienced solicitors at Alfred Newton are here to help. We pride ourselves on providing a personal service and like to build long standing relationships with clients, often serving generations of the same family.
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Janine Murphy, Solicitor
Janine is a Solicitor, with over 10 years’ experience in conveyacning