Exemptions for S.106 contributions for small scale developments

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The Government has recently amended the National Planning Policy Guidance.  Small scale residential developments will now be exempt from paying commuted sums for affordable housing as well as other tariff style S.106 contributions.

What developments will be exempt?

The exemptions will benefit residential developments of 10 units or less with a total combined floorspace of less than 1000m2.  However, local planning authorities can reduce this threshold to 5 units if the development is to be located in a designated rural area, such as a national park or an area of outstanding natural beauty.

What payments will the development be exempt from?

The Government have stated that small scale developments will be exempt from paying:

  • contributions towards affordable housing; and
  • contributions to pooled funding ‘pots’ intended to provide common types of infrastructure for the wider area, for instance, an education contribution to help enhance education facilities at a local school.

If the development is in a designated rural area and the local planning authority has implemented the lower threshold then developments of up to 5 units will be exempt from paying the above payments. Developments of 6-10 units will have to pay the above contributions but only on completion of the development i.e. once all the units have been built. The Government has stated that this should help smaller developers as they can utilise the receipt of the earlier sales to fund the commuted sums.

What obligations are not exempt?

  • Local Planning Authorities can still seek contributions for site specific infrastructure. For instance, widening the access junction or to improve street lighting or traffic signals that are necessary for the development;
  • it could also be argued that other planning obligations such as a contribution to fund an ecological project with the intention of offsetting the impact of the development on the habitat of a bird species is a site specific issue and would therefore not be exempt; and
  • such site specific contributions would still need to be necessary to make the development acceptable in planning terms, be directly related to the development, and be fairly and reasonably related in scale and kind in order to pass the NPPF policy test.

Is CIL exempt?

  • for those developments that are located in an area where the local planning authority has adopted the Community Infrastructure Levy (“CIL”), it does not appear from the NPPG guidance that CIL is to be exempt even though it bears the hallmarks of tariff style contribution; and
  • CIL regulations do contain exemptions and reliefs that can be used in certain circumstances. In summary, these include some social housing and developments by charitable institutions as well as self built dwellings. In exceptional circumstances it is possible for a development to be exempt from paying CIL where the payment of CIL would render the scheme uneconomically viable.

For more information, help or advice please contact Adrian Hicks on 0191 211 7981 or Ian Gibson on 0191 211 7923.