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16 COMMENT THE INDUSTRY ADVOCATE


Sarah McMonagle, director of external affairs at the Federation of Master Builders


THE CIL: NOTHING IS MORE (UN)CERTAIN THAN TAXES


Taking over Brian Berry’s regular column slot this month, FMB director of external affairs Sarah McMonagle gives a qualified welcome to the Community Infrastructure Levy (CIL) Review.


development taxes (in all their forms) have been, for a long time, an inescapable fact. Unfortunately, certainty regarding the extent of these charges is the one thing that’s conspicuous by its absence. Few would argue that, in recent decades, the


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PROJECTS CAN STILL BE FUNDED FROM MORE THAN ONE S106 AGREEMENT, BUT NOT FOR MORE THAN FOUR SCHEMES. SIMPLE? NOT REALLY


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demands for developer contributions have crept steadily upwards – this is particularly the case as the pressure to provide affordable housing has grown. The Federation of Master Builders (FMB) has long expressed concerns about the level of expectation for funding which is placed on these contributions. In particular, we have pointed to the impact this has been having on the economic viability of smaller- scale development. The reality is that we probably have to


recognise that some form of developer contributions will always be a ‘fact of life’. The way that our planning system works to massively increase land values by the granting of planning permission, means that there will always be overriding pressure for the Government to claim back some of this gain for the provision of social goods (e.g. affordable housing, schools, infrastructure). In theory, it should be land prices not builders’ margins that take the brunt of it, though as we know it doesn’t always work like that. The question is, what is fair and how is this best raised and administered? The set of policies we currently have is a


rather strange hybrid in which the older Section 106 (S106) – which is negotiated on a site-by-site basis – sits awkwardly alongside the newer Community Infrastructure Levy (CIL) – a general levy set on a per metre square basis across a planning authority, although different rates may be applied according to areas or uses. The introduction of CIL meant S106 was scaled back so that it only applies to affordable


s the famous saying goes “Nothing is certain, except death and taxes”. For housebuilders and developers,


housing and ‘site-specific’ infrastructure. The idea is that CIL funds more general infrastructure requirements. In order to prevent ‘double-charging’, infrastructure to be funded by CIL must be listed in a ‘Regulation 123 List’. S106 monies should not then be used to fund these projects. Infrastructure can still be funded from more than one S106 agreement, but under so-called ‘pooling restrictions’, not from more than four developments. Simple? No, not really. The FMB argued successfully that the


introduction of CIL and the gradual extension of S106 demands to even the very smallest of sites was reducing the number of small sites coming forward, and making the economics of small scale development increasingly difficult. The Government listened and introduced the 10 unit threshold for affordable housing and pooled S106 contributions. Although there is still unhelpful ambiguity around this policy, we believe the change in policy will make a significant difference in terms of tilting the balance back in favour of small scale development and enticing more SMEs into the market. For those building below this threshold, CIL should now be less of a problem. Generally though, there has been widespread


dissatisfaction with how CIL works. The Levy was supposed to provide developers with certainty and transparency and be easy to administer. In reality, the administration of CIL has been complex and bureaucratic. The intersection with S106 and pooling restrictions is murky and has given rise to numerous complications, particularly on large sites, while none of the uncertainty and delay associated with S106 agreements has disappeared. So, it was not too much of a surprise when in


November 2015 the Government set up a ‘CIL Review’ panel. However, the Review’s findings were not released until the publication of the Housing White Paper in February of this year.


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