Councils face losing millions in developer contributions
Posted: April 29, 2015 By Michael Davies
DISTRICT and borough councils in Surrey are in danger of losing £3 million in payments from property developers during this financial year because of changes being implemented by the Government.
Under current policies, local authorities are able to demand Section 106 (S106) payments from house builders in order to improve local infrastructure and minimise the impact of new developments.
Councils have previously been able to pool contributions received for up to five developments where the infrastructure is not supported by a Community Infrastructure Levy (CIL), which is similar to an S106.
But imminent policy changes will stop councils being able to pool S106 funds and require them to put CIL plans in place.
And councils in Surrey – specifically Mole Valley and Reigate and Banstead, both of which are expected to adopt CIL in April next year – have been warned they face the biggest challenges to funds when the changes come in.
A report prepared for Surrey County Council’s environment and transport select committee states: “Whilst this will be detrimental to the majority of authority areas, it will prove particularly challenging in the areas where tariffs have been collected since 2008 – Waverley, Surrey Heath, Runnymede, Elmbridge, Epsom and Ewell, Mole Valley and Reigate and Banstead – as a result of the historic number of obligations secured for the majority of new development in those areas.”
As well as changes to S106 and CIL payments, councils are also expecting to suffer the effect of changes to the size of developments for which they can demand development contributions.
It has been suggested that while major developments that will have a wider impact on the surrounding area will still be subject to payments, smaller and medium-sized schemes, which are most common on planning agendas, will find it more difficult to secure funding under CIL plans.
According to the report: “The impact of the changes are already beginning to be felt in Surrey in that a number of small and viable developments, that had previously agreed to pay the tariff, have now applied to have the obligations discharged, so reducing the costs of their development but in turn no longer mitigating the impact of their development on the local infrastructure, which officers estimate could mean up to £3 million in developer contributions being at risk.”
Mole Valley District Council’s (MVDC) head of service, James Lalor, said: “Although MVDC has not been able to collect planning infrastructure contributions funds since April 1, 2015, due to a change in government policy, it will be using the funds it received up to that point to deliver infrastructure improvements that will continue to mitigate the impact of new development.
“MVDC will also continue to use S106 agreements to ensure the delivery of site-specific infrastructure, such as the provision of equipped play space, as a requirement of granting planning permission for development.”
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