A total of 30 organisations – Councils, housebuilders, housing associations and planners have written to the Levelling Up Secretary of State, Michael Gove calling on the government to scrap a key part of its flagship planning reforms, the proposed Infrastructure Levy, and instead to reform the current system for developer contributions for infrastructure and affordable housing.
The letter and full press release can be read here
At present developers pay towards the costs of infrastructure and affordable housing via Section 106 contributions – this usually obliges them to provide agreed infrastructure and Affordable Housing directly onsite. They may also make cash payments towards provision offsite (generally for larger scale projects) via the Community Infrastructure Levy (CIL), which involves payments based on the size of the development. The current system is imperfect as it can result in protracted negotiations, challenges to original agreements if original plans appear financially unviable.
The proposed Infrastructure Levy is a fundamentally different approach whereby payments depend on the value of the housing when it is sold at the end of the process. This creates the potential for councils to benefit if housing is sold for more than anticipated.
However, there is concern across the whole of the housing sector about the Infrastructure Levy could make it harder, not easier, for local leaders and communities to secure the benefits of new development – resulting in councils and housing providers delivering fewer homes for affordable and social rent, while less critical infrastructure could be built in tandem with development such as roads, health centres, and schools.
As the cross-sector body for housing organisations, The Housing Forum has added our name to the list of organisations signing the letter. Shelagh Grant, Chief Executive said:
“We are very concerned that the proposed Infrastructure Levy increases risks for developers, and also for local authorities – who will have to borrow money to build the infrastructure knowing neither the timing nor the amount of payments they will receive back from it. The current system, while imperfect, does deliver around half the Affordable Housing nationally, meaning a lot of housing delivery at the risk of losing”
The letter argues that “this radical overhaul of the developer contribution system…presents significant operational and economic challenges that will make it difficult for existing communities to realise the benefits of new development in their area.”
The signatories are keen to work together to play a constructive role in strengthening our developer contributions systems and hope to discuss the issues further with government.
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