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The government is considering a radical shake-up of planning negotiations, by rolling affordable housing payments into a new Community Infrastructure Levy (CIL) regime.
Housing minister Gavin Barwell confirmed site-specific negotiations over Section 106 payments for affordable housing could be axed and these contributions rolled into the infrastructure payment to create a centralised fixed tariff in the next Budget – covering all new developments.
Under the current system, Section 106 payments towards affordable housing are agreed after talks over viability, and only apply to larger schemes. Meanwhile, CIL rates are fixed locally as a percentage of development value, and are based on local infrastructure priorities; they are optional for councils to implement, creating an uncertain patchwork for developers at planning stage.
Speaking to Inside Housing at the MIPIM property conference in France last week, Mr Barwell said: “There would be the potential to have a national system that captured infrastructure and affordable housing. The question I would ask people is: would it be better to have a system where people knew up front, ‘this is the contribution I’m going to be asked for in terms of infrastructure and affordable housing’?”
The government published an independent CIL review alongside its White Paper last month, with the aim of simplifying the system of developer taxes. It recommended a mandatory tariff for all new developments called a Local Infrastructure Tax, based on a centralised methodology, but charged and collected locally. It did not recommend centralisation of affordable housing payments.
Simplification of the system nationally would echo planning policies currently being pursued by London mayor Sadiq Khan: to avoid protracted viability negotiations, he is suggesting that developers which achieve 35% affordable housing on their schemes would be fast-tracked through the planning system.
Mr Barwell said arguments between developers and councils over viability are delaying developments. He added: “A lot of time and money is spent arguing about these things and that’s one of the things that is slowing up our build-out rates in this country, which is something I want to change.”
Nick Sharpe, planning partner at Montagu Evans, said a centralised tax would “bake the affordable housing costs into land values… it is a tax that can’t be negotiated away” but in some lower-value areas this may make sites “undeliverable”.