Consultation on the proposed replacement for Section 106 and the Community Infrastructure Levy ended today

Industry bodies including the National Housing Federation (NHF) and the Chartered Institute of Housing (CIH) have today expressed concern over the impact of the government’s new infrastructure levy on the delivery of affordable housing. 

Consultation on the new proposals, which would replace Section 106 affordable housing contributions and the Community Infrastructure Levy (CIL), closed today. 

Under the government’s new proposals, councils will have a “right to require” that a proportion of the cash contribution of a scheme is given “in kind” as effective subsidy in lieu of on-site affordable housing.

But professional networks and watchdogs have today expressed fears that the new levy will cause uncertainty for developers, funders and local authorities and that this will impact on the delivery of affordable housing. 

“We have grave concerns that the new Infrastructure Levy proposed by the government risks significantly reducing the number of new affordable homes, concerns we have laid out in our consultation response,” National Housing Federation policy leader Marie Chadwick told Housing Today.

 “The Infrastructure Levy, in its current form, puts no duty on local authorities to spend levy receipts on affordable housing and only has a vague requirement to ‘regard….the desirability of’ affordable housing. 

“With councils under enormous financial pressures this means that money from the levy risks being diverted away from affordable housing and towards other unspecified forms of council spending.”

The CIH said it  “remained concerned” that “this new system will lead to a reduction in much needed truly affordable homes, particularly social rented homes.”

Hannah Keilloh, CIH policy planning lead told Housing Today: “While we recognise the current Section 106 system is not perfect, and welcome government’s drive to improve the process, we are concerned that the proposed Levy will not achieve its stated aims and could lead to a reduction in much needed affordable homes, particularly for social rent.

”The new approach will add layers of complexity rather than simplifying the process and may not deliver for the many areas most in need of “levelling up”. Whilst site by site flexibility will be removed, the Levy could decouple the contributions collected from the site itself and create a system with many variables where the scope for negotiation will be moved to the levy setting stage. “

Jargon buster

Section 106 contributions: councils currently can require developers to ensure a certain percentage of homes in a development are for affordable tenures as a condition of planning permission. Housing associations often forward buy these units off volume housebuilders and manage them post-completion. Section 106 typically accounts for nearly half of affordable homes delivered.

Community Infrastructure Levy: a charge levied by councils on new developments to help fund the delivery of infrastructure.

Infrastructure Levy: a locally-set, mandatory charge levied on the final value of completed development to replace the existing system of developer contributions. 

The Community Infrastructure Levy (the ‘levy’) is a charge which can be levied by local authorities on new development in their area. It is an important tool for local authorities to use to help them deliver the infrastructure needed to support development in their area.

The British Property Federation (BPF) today urged the government to abandon its proposals for new infrastructure levy and to improve CIL and Section 106 instead.

“The new levy has fundamental structural challenges and will do little to reduce complexity. We are incredibly concerned about the impact the new levy would have on the timely provision of new infrastructure, the delivery of new affordable homes, and the uncertainty it would create in the market,” Ian Fletcher, director of policy at BPF, said in a statement.

“It will take time for a new levy to be introduced and during that period local authorities and developers will have to continue to rely on Section 106 and Community Infrastructure Levy, which will not be reformed under the current proposals.  

“We urge the Government to reform the current contribution systems, rather than press ahead with an unnecessary overhaul of the entire system.”

Section 106 delivered 47% of all affordable homes built last year, equating to 25,000 homes, according to government data.

Over the past three years, an average of 48% of the new affordable homes built in the UK have been provided by Section 106 contributions.

In March, the government said it recognised that moving from the current system to the new Levy “represented a significant change”.

>> See also: Government delays introduction of Infrastructure Levy by a decade

>> See also We need clarity on the Infrastructure Levy

It said previous attempts to change systems of developer contributions had been stymied by too rapid implementation periods. “Given this combination of factors, the government will introduce the Levy over an extended period through a ‘test and learn’ approach”, the consultation said, with the levy piloted first in a “representative minority of planning authorities before nationwide rollout,” it continued. The “test and learn” period will last for 10 years. 

The Department for Levelling Up, Housing and Communities press office told Housing Today that it will consider all views before responding to the consultation process which ended today.