Since its introduction in 2010, the Community Infrastructure Levy (CIL) has been far from the fairer, faster and more transparent system of securing developer contributions to infrastructure that it was intended to be.
The CIL regulations are overly complex and practically unworkable and, despite claims that the CIL would largely dispense with individually-negotiated section 106 agreements, they are still widely used. Regrettably, given the need for homes, the CIL regulations have proven inflexible to the various viability issues that affect the large strategic sites relied on to tackle the UK’s housing crisis.
It is no surprise the independent CIL review report published earlier this year recommends the CIL be replaced by a “simpler contribution system”. Sadly, the aim sounds all too familiar.
Broadly speaking, the review proposes a hybrid system comprising a low-level Local Infrastructure Tariff (LIT) and section 106 agreements in respect of site-specific mitigation for strategic developments.
Combined authorities would also be permitted to charge a Strategic Infrastructure Tariff (SIT), akin to mayoral CIL, to be used to contribute toward major pieces of infrastructure.
The review says small developments (10 units or fewer) would only pay LIT and would not pay section 106 contributions, but it is unclear on the inter-relationship between LITs, SITs and section 106 agreements on larger sites and how competing needs for local and strategic infrastructure will be met.
As at present, strategic sites are likely to feel the pinch if all three levies are applied. The size of developer contributions would rise for most developments, while reducing the burden for smaller residential schemes.
Ambitious for 2020
That aside, the review proposes ending the pooling restrictions on section 106 contributions. This will simplify the delivery of infrastructure attributable to multiple developments and reduce the risks of relying on multiple section 106 agreements to contribute towards strategic infrastructure on large, multi-phase, multi-developer schemes.
Given the lack of detail in the review, it seems ambitious to suggest a transition to the new regime will be completed by 2020. Primary legislation would be required, followed by comprehensive LIT/SIT regulations and revised guidance.
This suggests at least three to four years. I am still of the view that complete abolition of the CIL is required in order to encourage more development to come forward. There are fundamental problems with the proposals in the review and I doubt there can be any quick fixes.