Sunday, 16 October 2011

...on the development tax


For many years many of my councillor colleagues have worried and fussed about things called "Section 106 Agreements". Essentially these constitute a tax on development;

Section 106 (S106) of the Town and Country Planning Act 1990 allows a local planning authority (LPA) to enter into a legally-binding agreement or planning obligation with a landowner in association with the granting of planning permission. The obligation is termed a Section 106 Agreement.

These agreements are a way of delivering or addressing matters that are necessary to make a development acceptable in planning terms. They are increasingly used to support the provision of services and infrastructure, such as highways, recreational facilities, education, health and affordable housing.

Now under more recent legislation - courtesy of the last Labour government but implemented by the current Coalition government - most of this tax regime is to be replaced with a different tax. We are to get a "Community Infrastructure Levy", the level of which will be determined by the local authority. And, of course, all those useless, Labour-led councils are getting inordinately excited at the prospect of zillions in lovely developer cash winging its way into the Council coffers as a result of this new arrangement.

However, there's a catch. Developers aren't keen and, as is the wont of the market, plan to gravitate to places with lower levies. And - even more importantly - the new levy doesn't include "affordable housing". You still needs a Section 106 Agreement to get that stuff. So the National Housing Federation (the body representing all the housing associations) is frothing:

But the National Housing Federation has warned that without further safeguards many councils will set CIL at a level that jeopardises affordable housing development as CIL can be spent on anything and developers won’t be prepared to spend money on Section 106 agreements as well.

Cameron Watt, head of neighbourhoods at the NHF, said if councils set an unrealistically high level of CIL developers will push to provide a much lower number of affordable homes.

However, the NHF should be worrying that, in their eagerness for some extra cash, Councils will actually stop development altogether. After all, the developer isn't going to build at a loss is he?


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