When revisions to the National Planning Practice Framework (NPPF) were published last month, the government began consultations on proposed changes to the system of developer contributions, CIL regulations and section 106 agreements.

Nick sharpe partner montagu evans

This represents a serious attempt to reform some of the most frustrating aspects of the planning system. The question is: will it work?

The most significant proposed changes centre around housing and housing delivery, including long-overdue reforms such as standardising the method for calculating housing need. Introducing policies to address housing requirements for groups with particular needs could help to bring forward sites for specialist housing. Moreover, support for higher-density developments is welcome.

Perhaps the most far-reaching aspect of the consultation is the approach to viability. The government wants local authorities to carry out strategic viability assessments as part of the process, taking into account all relevant policies, including for CIL and section 106 contributions. It is also suggesting that broadly average costs and values could be used to allow affordable housing contributions to be determined.

Construction

The government has proposed some major changes that will impact on housing delivery

Source: Shutterstock/SpeedKingz

In relation to some sites, however, the guidance suggests that plan makers can undertake individual site-specific viability assessments if they are “critical to delivering a strategic […] priority”. Rather than negotiate on a case-by-case basis at application stage, the guidance aims for a front-loaded approach, identifying an appropriate level of contribution at the plan-making stage and anticipating the burden will be set at a sensible level.

The guidance also formalises the use of ‘review mechanisms’ in section 106 obligations – a practice already widespread in some places – to capture significant upside over and above reasonable developers’ profit. This must consider how to accommodate changes in market dynamics to determine whether or not development is viable.

Developers can still submit viability assessments when applications are made to propose a lower level of contribution than is ‘strategically’ required but will have to make the case to local authorities. The intention to simplify the process is welcome but care must be taken when setting contributions and CIL levels to ensure viable development is not prevented.

Overall, the changes are designed to simplify an extremely complex system. The key to success will be early engagement by developers and housebuilders, to make sure the front-end viability assessments are reasonable. If this can be achieved, these reforms could go some way to simplify the process and ensure that housing delivery rates are maintained or increased.

Nick Sharpe is a partner in Montagu Evans